Katapult Holdings, Inc DEFA14A, filed Nov 3, 2025
Katapult Holdings, Inc. (KPLT)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2025
KATAPULT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 001-39116 | 84-2704291 |
| (Commission File Number) | (IRS Employer Identification No.) |
| 5360 Legacy Drive, Building 2 Plano, TX | 75024 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (833) 528-2785
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.0001 per share | KPLT | The Nasdaq Stock Market LLC |
| Redeemable Warrants | KPLTW | The Nasdaq Stock Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
As described in greater detail below, on November 3, 2025, Katapult Holdings, Inc., a Delaware corporation (the “Company”), entered into the following agreements and closed the transactions contemplated thereunder:
| · | Series A Investment Agreement (as defined below) pursuant to which the Company issued and sold to HHCF Series 21 Sub, LLC, a Delaware limited liability company and subsidiary of Hawthorn Horizon Credit Fund, LLC (the “Purchaser”), an aggregate of 35,000 shares of a newly created series of the Company’s preferred stock, par value $0.0001 per share, designated as “Series A Convertible Preferred Stock” (the “Series A Convertible Preferred Stock”) at a purchase price of $1,000 per share, resulting in total gross proceeds to the Company of $35.0 million (the “Series A Issuance”) and has used the net proceeds from the Series A Issuance to repay in full the Company’s term loan and for certain other agreed purposes. The initial conversion price of the Series A Convertible Preferred Stock is $12.32 and if the Purchaser were to convert all of its shares of Series A Convertible Preferred Stock to Company’s common stock, par value $0.0001 per share (the “Common Stock”), the Purchaser would beneficially own an aggregate of 2,840,910 shares of Common Stock representing approximately 28.3% of the issued and outstanding Common Stock, subject to the Ownership Limitation (as defined below). |
| · | Series B Investment Agreement (as defined below) pursuant to which the Company has issued and sold to the Purchaser an aggregate of 30,000 shares of a newly created series of the Company’s preferred stock, par value $0.0001 per share, designated as “Series B Convertible Preferred Stock” (the “Series B Convertible Preferred Stock” and together with the Series A Convertible Preferred Stock, the “Preferred Stock”) at a purchase price of $1,000 per share, resulting in total gross proceeds to the Company of $30.0 million (the “Series B Issuance”, and together with the Series A Issuance, the “Preferred Stock Issuances”) and has used or agreed to use the net proceeds from the Series B Issuance to partially prepay the Company’s revolving loan, pay transaction expenses and for general corporate purposes subject to the prior approval of the Company’s Board of Directors (the “Board”). The initial conversion price of the Series B Convertible Preferred Stock is $11.39 and if the Purchaser were to convert all of its shares of Series B Convertible Preferred Stock to Common Stock, the Purchaser would beneficially own an aggregate of 2,633,890 shares of Common Stock representing 26.2% of the issued and outstanding Common Stock, subject to the Ownership Limitation. If the Purchaser were to convert all of its shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock to Common Stock, the Purchaser would beneficially own an aggregate of 5,474,800 shares of Common Stock representing 54.5% of the issued and outstanding Common Stock, subject to the Ownership Limitation. |
| · | Registration Rights Agreements (as defined below) pursuant to which the Company granted to the Purchaser certain customary demand, “piggy-back” and shelf registration rights with respect to shares of Common Stock to be received by the Purchaser upon conversion of its Preferred Stock, subject to certain customary thresholds and conditions. Under the terms of the Registration Rights Agreements, the Company has agreed to file a registration statement covering the resale of the shares of Common Stock issuable upon conversion of the Preferred Stock within 45 days following the closing of the Preferred Stock Issuances. |
| · | As described in greater detail below, on November 2, 2025, the Company, Katapult SPV-1 LLC and Katapult Group, Inc., entered into that certain Limited Waiver and First Amendment to the Loan Agreement (as defined below) pursuant to which (1) the lenders under the Loan Agreement waived the Company’s existing default arising from the Company’s failure to achieve required thresholds for Minimum Trailing Three-Month Originations for the periods ended August 31, 2025, September 30, 2025, and October 31, 2025, and (2) the Loan Agreement was amended to (i) adjust thresholds under the Minimum Three-Month Originations financial covenant for certain periods ending on and after November 30, 2025, (ii) increase the threshold under the Minimum Liquidity financial covenant for certain future periods, and (iii) reduce the advance rate under our revolving loan. |
The Preferred Stock has been validly issued and delivered to the Purchaser and is convertible to Common Stock at the option of the Purchaser. Under Nasdaq rules, the convertibility of the Preferred Stock to Common Stock is subject to the Ownership Limitation (as defined below) until the Company obtains the Requisite Stockholder Approval (as defined below). The Company will hold a shareholder meeting to obtain approval to remove the Ownership Limitation as promptly as practicable but no later than February 27, 2026. Certain stockholders of the Company delivered support agreements requiring such stockholders to vote in favor of removing the Ownership Limitation and, as a result, permit all of the outstanding shares of Preferred Stock to be convertible to Common Stock at the Purchaser’s option at any time.
In connection with the Preferred Stock Issuances, upon the recommendation of the Nominating and Corporate Governance Committee of the Company, the Board of Directors appointed (by filling a vacancy) each of Philip Key Bartow III and Jeffrey Rubin to serve as Class I directors and Derek Medlin to serve as a Class III Director, effective as of the closing of the Preferred Stock Issuance, and Daniel Easley to serve as a Class III director, effective immediately following the receipt of the Requisite Stockholder Approval.
Limited Waiver and First Amendment to Loan and Security Agreement
Effective on November 3, 2025, the Company entered into the Limited Waiver and First Amendment (“Limited Waiver and First Amendment”) to its Amended and Restated Loan and Security Agreement, dated as of June 12, 2025 (as amended, amended and restated, supplemented, revised, or otherwise modified from time to time, including pursuant to that certain Limited Waiver dated September 15, 2025 (the “First Limited Waiver”), that certain Limited Waiver dated September 29, 2025 (the “Second Limited Waiver), that certain Limited Waiver dated October 13, 2025 (the “Third Limited Waiver”), that certain Limited Waiver dated October 20, 2025 (the “Fourth Limited Waiver”), that certain Limited Waiver dated October 27, 2025 (the “Fifth Limited Waiver”), and that certain Limited Waiver dated as of October 29, 2025 (the “Sixth Limited Waiver”), the “Loan Agreement”), by and among Katapult SPV-1 LLC, Katapult Group, Inc., the Company (each a “Credit Party” and, together, the “Credit Parties”), Midtown Madison Management LLC, as administrative payment and collateral agent and lender, and the lenders party thereto (the “Lenders”).
The Limited Waiver and First Amendment, among other things, permanently waives any default arising from Credit Parties’ failure to maintain Minimum Trialing Three-Month Originations as of the last business day of (x) the calendar month ended August 31, 2025, (y) the calendar month ended September 30, 2025, and (z) the calendar month ended October 31, 2025 as required by the Loan Agreement and amends the Loan Agreement to, among other things:
| · | Reflect the repayment in full in cash of the Company’s senior secured term loan with the proceeds of the sale of the Series A Convertible Preferred Stock Shares to the Purchaser; |
| · | Adjust thresholds under the Minimum Three-Month Originations financial covenant for certain periods ending on and after November 30, 2025; |
| · | Increase the threshold under the Minimum Liquidity financial covenant for periods beginning on or after the effectiveness of the Limited Waiver and First Amendment; and |
| · | Reduce the advance rate under our revolving loan from 99% to 90%. |
The foregoing description of the Limited Waiver and First Amendment to the Loan Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Limited Waiver and First Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Private Placements
Investment Agreements
On November 3, 2025, the Company entered into (a) a Series A investment agreement (the “Series A Investment Agreement”) with the Purchaser, pursuant to which the Company issued and sold to the Purchaser an aggregate of 35,000 shares of Series A Convertible Preferred Stock at a purchase price of $1,000 per share, resulting in total gross proceeds to the Company of $35.0 million, and (b) a Series B investment agreement (the “Series B Investment Agreement”, and together with the Series A Investment Agreement, the “Investment Agreements”) with the Purchaser, pursuant to which the Company issued and sold to the Purchaser an aggregate of 30,000 shares of Series B Convertible Preferred Stock at a purchase price of $1,000 per share, resulting in total gross proceeds to the Company of $30.0 million. The Company received aggregate gross proceeds from the Preferred Stock Issuance of $65.0 million. The transaction simultaneously signed and closed on November 3, 2025 (the “Initial Issue Date”).
The number of shares of Common Stock deliverable upon conversion, redemption or repurchase of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock will be limited as required by applicable Nasdaq listing rules, until the Company has obtained the Requisite Stockholder Approval. However, assuming the Purchaser were permitted to fully convert these shares to Common Stock on the date hereof, the Purchaser would beneficially own 5,474,800 shares of Common Shares in the Company, representing 54.5% of the issued and outstanding Common Stock.
The net proceeds of the Series A Convertible Preferred Stock will be used to, among other things, repay in full the term loans outstanding as of November 3, 2025 under the Loan Agreement.
The net proceeds of the Series B Convertible Preferred Stock will be used to, among other things, partially repay the revolving loan outstanding as of November 3, 2025 under the Loan Agreement and for other general corporate purposes as approved by the Board of Directors.
Ranking
The Series A Convertible Preferred Stock will rank senior to the Common Stock with respect to dividends and distributions on liquidation, winding-up and dissolution as described in the Certificate of Designations, which was filed by the Company with the Secretary of State of the State of Delaware and became effective on the Initial Issue Date (the “Series A Certificate of Designations”). The Series B Convertible Preferred Stock will rank senior to the Series A Convertible Preferred Stock and the Common Stock with respect to dividends and distributions on liquidation, winding-up and dissolution as described in the Certificate of Designations, which was filed by the Company with the Secretary of State of the State of Delaware and became effective on the Initial Issue Date (the “Series B Certificate of Designations”, and together with the Series A Certificate of Designations, the “Certificate of Designations”).
Dividends
Holders of shares of Preferred Stock will be entitled to a regular dividend (each, a “Dividend”), which will be payable (1) weekly, for the period beginning on, and including, November 3, 2025 and ending on, but excluding, the date the Requisite Stockholder Approval is obtained, and (2) quarterly, beginning on, and including, the date the Requisite Stockholder Approval is obtained. The Dividends accrue at an annual rate of (a) 18% per annum for the period beginning on, and including, the Initial Issue Date and ending on, but excluding, the later of (i) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (ii) the date of the Company’s 2026 annual meeting of stockholders and (b) 12% per annum beginning on, and including, the later of (i) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (ii) the date of the Company’s 2026 annual meeting of stockholders. If the Requisite Stockholder Approval is not obtained on or before the earlier of (a) the date of the Company’s first annual or special meeting of stockholders following the Initial Issue Date and (b) February 27, 2026, then the Dividend rate will be increased by one percent (1%) during the period from, and including, such deadline to, but excluding, the date when the Requisite Stockholder Approval is first obtained, if at all. For any week or quarter, as the case may be, in which the Company elects not to pay a Dividend in cash with respect to a share of Preferred Stock, such Dividend will become part of the liquidation preference of such share, as set forth in the Certificate of Designations. In addition, no dividend or other distribution on the Common Stock will be declared or paid on the Common Stock unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid on the Preferred Stock. Holders of Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Common Stock on an as-converted basis, and no dividends may be paid to holders of Common Stock unless full participating dividends are concurrently paid to holders of Preferred Stock.
Liquidation Preference
Upon a liquidation, dissolution or winding up of the Company, subject to the rights of any of the Company’s creditors or holders of shares of Series B Convertible Preferred Stock, each holder of Series A Convertible Preferred Stock will be entitled to receive, with respect to each share of then-outstanding Series A Convertible Preferred Stock, out of the assets of the Company available for distribution to its stockholders an amount in cash equal to (i) $1,000 per share of Series A Convertible Preferred Stock, plus (ii) accrued but unpaid dividends that have accumulated on such shares.
Upon a liquidation, dissolution or winding up of the Company, subject to the rights of any of the Company’s creditors, each holder of Series B Convertible Preferred Stock will be entitled to receive, with respect to each share of then-outstanding Series B Convertible Preferred Stock, out of the assets of the Company available for distribution to its stockholders an amount in cash equal to (i) $1,000 per share of Series B Convertible Preferred Stock, plus (ii) accrued but unpaid dividends that have accumulated on such shares.
Conversion Rights and Mandatory Conversion
Each holder of Preferred Stock will have the right, at its option, to convert its Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Common Stock. The initial conversion rate of the Series A Convertible Preferred Stock is set at 81.16883 shares of Common Stock, based on an implied initial conversion price of $12.32 per share of Common Stock. The initial conversion rate of the Series B Convertible Preferred Stock is set at 87.79631 shares of Common Stock, based on an implied initial conversion price of $11.39 per share of Common Stock. The conversion rate is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events. The conversion rate is also subject to adjustment for certain dilutive offerings occurring during the first nine months following the Initial Issue Date, with any such adjustment prior to the receipt of the Requisite Stockholder Approval being limited by a cap based on the closing price for the Common Stock on October 31, 2025 of $11.39.
Subject to certain conditions described below, the Company may, at its option, after the second anniversary of the Initial Issue Date require conversion of all (but not less than all) of the outstanding shares of Preferred Stock to Common Stock if, for at least 20 trading days during the 30 consecutive trading days immediately preceding the date the Company notifies holders of the Preferred Stock of the election to convert, the closing sale price of the Common Stock is at least 115% of the conversion price. The Company will not exercise its right to mandatorily convert all outstanding shares of Preferred Stock unless (i) certain liquidity conditions with regard to the shares of Common Stock to be issued upon such conversion are satisfied, and (ii) either (1) the Requisite Stockholder Approval has been obtained or (2) the Company has previously held one or more meetings of its stockholders for purposes of obtaining the Requisite Stockholder Approval.
Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained as contemplated by Nasdaq listing rules (the “Requisite Stockholder Approval”), no holder of Preferred Stock may convert shares of Preferred Stock through either an optional or a mandatory conversion into shares of Common Stock if and to the extent that such conversion would result in the holder beneficially owning in excess of 19.99% of the aggregate number of votes entitled to be cast generally at a meeting of the Company’s stockholders held for the election of directors by all outstanding shares of Common Stock as of immediately prior to the closing of the Preferred Stock Issuances (regardless of class) (such limitation, the “Ownership Limitation”).
Voting and Consent Rights
Holders of the Series A Convertible Preferred Stock generally are entitled to vote with the holders of the shares Common Stock on all matters submitted for a vote of holders of shares of Common Stock (voting together with the holders of shares of Common Stock as one class) on an as-converted basis (assuming the conversion price is never adjusted below $11.39). Except as set forth in the immediately succeeding sentence, holders of Series B Convertible Preferred Stock have no voting rights. Certain matters will require the approval of the holders of a majority of the outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, voting as separate classes, including (1) amendments, modifications or repeal of any provision of the Company’s certificate of incorporation to create, or to increase the authorized numbers of shares of any class or series of senior or parity equity securities or any security convertible into, or exchangeable or exercisable for, shares of senior or parity equity securities, (2) amendments, modifications or repeal of any provision of the Company’s certificate of incorporation that would adversely affect the rights, preferences or voting powers of the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock, as the case may be, (3) to increase or decrease the number of authorized shares of Series A Convertible Preferred Stock or Series B Convertible Preferred Stock, as the case may be, or issue additional shares of Series A Convertible Preferred Stock or Series B Convertible Preferred Stock, as the case may be, and (4) certain business combinations and binding or statutory share exchanges or reclassification involving the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock, as the case may be, unless such events do not adversely affect the rights, preferences or voting powers of the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock, as the case may be.
Repurchase Rights
If the Company undergoes a Change of Control (as defined in the Certificate of Designations), each holder of Preferred Stock may require the Company to repurchase all or a portion of its then-outstanding shares of Preferred Stock at a price equal to (1) if the Change of Control occurs prior to the first anniversary of the Initial Issue Date, 100%, or (2) if the Change of Control occurs after the first anniversary of the Initial Issue Date, 150%, of the then-current liquidation preference per share of Preferred Stock plus accumulated and unpaid dividends. The Company may elect to pay the repurchase price in cash, shares or Common Stock (or other securities) or any combination thereof, except that the Company may not elect to deliver shares of Common Stock (or other securities) if certain liquidity conditions with regard to such shares would not be satisfied or the Ownership Limitation would not be satisfied.
Transfer Restrictions
Until the earlier of (x) twelve (12) months following the closing of the Preferred Stock Issuance, and (y) the occurrence of a transaction resulting in a Fundamental Change of Control (as defined in the Certificate of Designations), the Purchaser is restricted from transferring the Preferred Stock and the shares of Common Stock underlying the Preferred Stock, subject to certain specified exceptions set forth in the Investment Agreements. Subject to certain conditions, these restrictions do not prohibit any lien on any share of Preferred Stock or of any share of Common Stock issued in conversion thereof, or any exercise of remedies with respect to any such liens pursuant to one or more credit facilities of the Purchaser or any back leverage financing.
The foregoing descriptions of the Series A Investment Agreement, the Series A Certificate of Designations, the Series B Investment Agreement and the Series B Certificate of Designations do not purport to be complete, and are subject to and qualified in their entirety by reference to the full text of the Series A Investment Agreement, the Series A Certificate of Designations, the Series B Investment Agreement and the Series B Certificate of Designations, which are attached as Exhibits 10.2, 3.1, 10.3 and 3.2, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.
Registration Rights Agreement
On the Initial Issue Date, the Company entered into a Series A registration rights agreement (the “Series A Registration Rights Agreement) and a Series B registration rights agreement (the “Series B Registration Rights Agreement”, and together with the Series A Registration Rights Agreement, the “Registration Rights Agreements”) with the Purchaser, pursuant to which the Company granted certain demand, “piggy-back” and shelf registration rights with respect to shares of Common Stock to be received by the Purchaser upon conversion of its Preferred Stock. The Company agreed to pay certain expenses of the Purchaser incurred in connection with the exercise of their rights under the Registration Rights Agreements and indemnify them for certain securities law matters in connection with any registration statement(s) filed pursuant thereto. Under the terms of the Registration Rights Agreements, the Company has agreed to file a registration statement covering the resale of the shares of Common Stock issuable upon conversion of the Preferred Stock within 45 days following the closing of the Preferred Stock Issuances.
The foregoing descriptions of the Series A Registration Rights Agreement and the Series B Registration Rights Agreement do not purport to be complete, and are subject to and qualified in their entirety by reference to the full text of the Series A Registration Rights Agreement and the Series B Registration Rights Agreement, which are attached as Exhibits 10.4 and 10.5, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.
Director Nomination Agreement
On the Initial Issue Date, the Company entered into a director nomination agreement (the “Director Nomination Agreement”) with the Purchaser. Pursuant to the Director Nomination Agreement, the Purchaser is permitted to nominate up to three persons for nomination for election to the Board of Directors, two of whom shall be a Class I Director and one of whom shall be a Class III director, provided that that (1) prior to the receipt of the Requisite Stockholder Approval, the Purchaser only has the right to nominate two such nominees, and (2) two of the Purchaser’s nominees must qualify as independent under all applicable listing standards, not be affiliated with the Purchaser, or have any agreement, arrangement or understanding with the Purchaser regarding such person’s service as a director of the Company. The Purchaser’s right to nominate three persons for nomination for election to the Board of Directors terminates upon such time as the Purchaser owns less than one third (1/3) the total voting power on a fully diluted basis of the voting equity securities of the Company.
The foregoing description of the Director Nomination Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Director Nomination Agreement, which is attached as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated herein by reference.
Support Agreements
On the Initial Issue Date, the Purchaser entered into support agreements (the “Support Agreements”) with each of the Company’s officers and directors (the “Stockholders”), pursuant to which and subject to the conditions contained therein, each Stockholder has agreed, among other things, to vote all of such Stockholder’s shares (1) in favor of the removal of the Ownership Limitation, (2) in favor of any other matter which the Board of Directors has determined is necessary or appropriate in connection with the Requisite Stockholder Approval and (3) against any proposal, action or agreement that does or would oppose, impede, frustrate, prevent or nullify the Requisite Stockholder Approval, any provision of the Support Agreements or any matter that is proposed in furtherance thereof.
The foregoing description of the Support Agreements do not purport to be complete and are subject to and qualified in its entirety by reference to the full text of the form of Support Agreement, which is attached as Exhibit 10.7 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 3.03. | Material Modification to Rights of Security Holders. |
As described in Item 1.01 above, pursuant to the Investment Agreements, the Company issued and sold to the Purchaser an aggregate of 65,000 shares of Preferred Stock. A summary of the rights, preferences and privileges of the Preferred Stock is set forth in Item 1.01. Each share of Series A Convertible Preferred Stock issued to the Purchaser pursuant to the Series A Investment Agreement has the powers, designations, preferences, and other rights of the Series A Convertible Preferred Stock as are set forth in the Series A Certificate of Designations, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference. Each share of Series B Convertible Preferred Stock issued to the Purchaser pursuant to the Series B Investment Agreement has the powers, designations, preferences, and other rights of the Series B Convertible Preferred Stock as are set forth in the Series B Certificate of Designations, a copy of which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in Item 1.01 above is incorporated into this Item 3.03 by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
As described in Item 1.01 above, pursuant to the Investment Agreements, the Company issued and sold to the Purchaser shares of Preferred Stock. The offer and sale of the shares of Preferred Stock through the Investment Agreements were made in reliance an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof. The shares of Common Stock issuable upon conversion of shares of the Preferred Stock will be issued in reliance upon the exemption from registration in Section 3(a)(9) of the Securities Act. The information in Item 1.01 above is incorporated into this Item 3.02 by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors.
On November 3, 2025, each of Brian Hirsch, Chris Masto and Jane J. Thompson resigned as members of the Board of Directors, effective as of the closing of the Preferred Stock Issuances. The decisions of Messrs. Hirsch and Masto and Ms. Thompson to resign from the Board of Directors was not the result of any disagreement relating to the Company’s operations, policies or practices. The Company thanks each of them for their commitment and service.
On November 3, 2025, upon the recommendation of the Nominating and Corporate Governance Committee of the Company, the Board of Directors determined that it was advisable and in the best interests of the Company and its stockholders to accept the Resignations and appointed (by filling of a vacancy) each of (1) Philip Key Bartow III and Jeffrey Rubin to serve as Class I directors, with an initial term expiring at the Company’s 2027 annual meeting of stockholders, and Derek Medlin, President of the Company, to serve as a Class III director, with an initial term expiring at the Company’s 2028 annual meeting of stockholders, effective as of the closing of the Preferred Stock Issuance, and (2) Daniel Easley to serve as a Class III director, with an initial term expiring at the Company’s 2028 annual meeting of stockholders, effective immediately following the receipt of the Requisite Stockholder Approval.
Concurrent with their appointment as Class I Directors, the Board of Directors appointed each of Messrs. Bartow and Rubin to its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Mr. Bartow, age 46, has served as Portfolio Manager and Head of Specialty Finance and the Technology Lending Strategy at Sound Point Capital. Mr. Bartow has 22 years of experience in investment management, capital markets and investment banking with a focus on specialty finance, financial technology, consumer finance, structured finance, and securitized products. Among the areas Mr. Bartow focuses on are special situations investing, structured finance, consumer credit, small business receivables originated and serviced by payments processing companies, other FinTech opportunities such as acquisition financing and marketing spend financing within the e-commerce and new media markets and GPU finance; and opportunistic investing in private asset backed securities (ABS). Mr. Bartow was a Portfolio Manager at RiverNorth Capital Management, where he launched a new strategy and led all ABS investments for the firm. Mr. Bartow was a Principal at Spring Hill Capital Partners, where he focused on the research and trading of consumer ABS, consumer whole loan pools, CMBS credit and CLO debt and equity. Mr. Bartow began his career in the Securitized Products Group at Lehman Brothers, where he focused on trading asset-backed securities and loans. Mr. Bartow earned a B.A. in Economics from Williams College and an M.B.A. from Columbia Business School with a focus on Finance and Value Investing.
Mr. Rubin, age 58, has served as CEO and President of The JR Group, which provides consulting services to the electronic payment processing industry since 2009. Since 2023 CEO of Excel Payments, a provider of electronic payment services to businesses throughout the United States. Since 2008 Chief Executive Officer of Summit Processing Group LLC and Partner at Finance ERC LLC since 2023, both of which provide specialized financial products to businesses throughout the United States. He has been a Director of BRT Apartments (NYSE:BRT), a Real Estate Investment Trust which owns and manages Multi-Family Properties, since 2004 and has served as Independent Lead Director since 2023.
Mr. Easley, age 52, recently returned to IQVentures after leading a line of business for NICE (Nasdaq: NICE), an AI-powered cloud platform for customer engagement. Mr. Easley previously served as Managing Partner of IQVentures during its formative years of 2015-2021. Prior to IQVentures, Mr. Easley co-founded and served as President of Fugent, an integrated customer relationship management platform for 15 years. Mr. Easley began his career with PricewaterhouseCoopers LLP and is currently a Non-Practicing Certified Public Accountant. He graduated from The Ohio State University with a B.S. Business Administration and Accounting.
Mr. Medlin’s full biographical background is provided in the “Executive Officers” section of the Company’s 2025 Proxy Statement, and such disclosure regarding Mr. Medlin is incorporated herein by reference.
The Board of Directors has determined that each of Messrs. Bartow and Rubin is independent under applicable Nasdaq listing rules. No family relationships exist between any of Messrs. Bartow, Rubin, Easley or Medlin and any of the Company’s directors or other executive officers. There are no transactions to which the Company is or was a participant and in which any of Messrs. Bartow, Rubin, Easley or Medlin had or will have a direct or indirect material interest subject to disclosure under Item 404(a) of Regulation S-K. Each of Messrs. Bartow, Rubin and Easley were appointed to the Board of Directors pursuant to the Investment Agreements. There are no other arrangements or understandings between Mr. Medlin and any other person pursuant to which Mr. Medlin was appointed to the Board of Directors.
As described in Item 1.01 above, pursuant to the Director Nomination Agreement, the Purchaser is permitted to nominate up to three persons for nomination for election to the Board of Directors, two of whom will be a Class I Director and one of whom will be a Class III director. The Purchaser’s right to designate two directors for nomination will terminate upon such time that the Purchaser owns less than one third (1/3) the total voting power on a fully diluted basis of the voting equity securities of the Company.
In accordance with the Company’s non-employee director compensation program, (1) each of Messrs. Bartow, Rubin and Easley will each receive an annual base retainer of $50,000 for his service on the Board of Directors, and (2) each of Messrs. Bartow and Rubin will receive an annual base retainer of $10,000, $7,500 and $5,000 for his service on the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, respectively. Each of Messrs. Bartow and Rubin was granted, and Mr. Easley will be granted on the effective date of his appointment to the Board of Directors, restricted stock units (“RSUs”) under the Company’s 2021 Incentive Plan having a grant date fair value of $150,000, prorated based on the number of days until the next annual meeting of the Company, and such RSUs will vest on the date of such annual meeting, subject to each of Messrs. Bartow, Rubin or Easley’s continued service as a member of the Board of Directors through such vesting date.
The Company expects to enter into the Company’s standard director indemnification agreement with each of Messrs. Bartow, Rubin and Easley.
The information in Item 1.01 above is incorporated into this Item 5.02 by reference.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The information set forth in Item 1.01 and Item 3.03 above relating to the issuance and sale of the Series A Convertible Preferred Stock, the Series A Certificate of Designations, the Series B Convertible Preferred Stock and the Series B Certificate of Designation is incorporated into this Item 5.03 herein by reference. The Series A Certificate of Designations establishes the powers, designations, preferences, and other rights of the Series A Convertible Preferred Stock and became effective upon filing with the Secretary of State of the State of Delaware on November 3, 2025. The Series B Certificate of Designations establishes the powers, designations, preferences, and other rights of the Series B Convertible Preferred Stock and became effective upon filing with the Secretary of State of the State of Delaware on November 3, 2025.
Important Information for Investors and Stockholders
The issuance of equity securities in connection with the Preferred Stock Issuances will be submitted to the Company’s stockholders for their consideration, and the Company will file with the Securities and Exchange Commission (the “SEC”) a proxy statement to be used to solicit stockholder approval of the proposed transaction, as well as other relevant documents concerning the Preferred Stock Issuances. THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain a free copy of the proxy statement, as well as other filings containing information about the Company, at the SEC’s Internet site (http://www.sec.gov). Copies of the proxy statement and the SEC filings that will be incorporated by reference in the proxy statement will also be provided to the Company’s stockholders, without charge, by directing a request to: Katapult Holdings, Inc., 5360 Legacy Drive, Building 2, Plano, Texas 75024-3105, Attention: Corporate Secretary, or emailing ir@katapultholdings.com.
Participants in the Solicitation
The Company and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in favor of the transaction. Information concerning persons who may be deemed participants in the solicitation of the Company’s stockholders under the rules of the SEC will be set forth in the proxy statement when it is filed with the SEC.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this report, including statements regarding our opportunity, our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “assume” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding our ability to complete the Preferred Stock Issuances, our ability to obtain stockholder approval for the issuance of equity securities in connection with the Preferred Stock Issuances and our ability to satisfy the other conditions to closing in the Preferred Stock Issuances. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, included in the section titled “Risk Factors” in the Company’s periodic reports filed with the SEC including the Quarterly Report on For 10-Q for the quarter ended June 30, 2025, filed with the SEC on August 13, 2025, the Annual Report on Form 10K for the fiscal year ended December 31, 2024, filed with the SEC on March 28, 2025 and similar disclosures in subsequent periods and current reports filed with the SEC, which are available on the SEC website at www.sec.gov. Other sections of this Current Report on Form 8-K may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by applicable law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future, and you should not rely upon these forward-looking statements after the date of this Quarterly Report on Form 10-Q.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| 3.1 | Certificate of Designations of Series A Convertible Preferred Stock of Katapult Holdings, Inc. |
| 3.2 | Certificate of Designations of Series B Convertible Preferred Stock of Katapult Holdings, Inc. |
| 10.2* | Series A Investment Agreement, dated November 3, 2025, between Katapult Holdings, Inc. and HHCF Series 21 Sub, LLC. |
| 10.3* | Series B Investment Agreement, dated November 3, 2025, between Katapult Holdings, Inc. and HHCF Series 21 Sub, LLC. |
| 10.4 | Series A Registration Rights Agreement, dated November 3, 2025, between Katapult Holdings, Inc. and HHCF Series 21 Sub, LLC. |
| 10.5 | Series B Registration Rights Agreement, dated November 3, 2025, between Katapult Holdings, Inc. and HHCF Series 21 Sub, LLC. |
| 10.6 | Director Nomination Agreement, dated November 3, 2025, between Katapult Holdings, Inc. and HHCF Series 21 Sub, LLC. |
| 10.7 | Form of Support Agreements. |
* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally a copy of any omitted schedule upon request by the SEC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Katapult Holdings, Inc | ||||
| Date: | November 3, 2025 | By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |||
| Title: | Chief Executive Officer | |||
Exhibit 3.1
Execution Version
Katapult Holdings, Inc.
Certificate of Designations
Series A Convertible Preferred Stock
November 3, 2025
Table of Contents
| Page | ||
| Section 1. | Definitions | 1 |
| Section 2. | Rules of Construction | 13 |
| Section 3. | The Convertible Preferred Stock | 13 |
| (a) | Designation; Par Value | 13 |
| (b) | Number of Authorized Shares | 14 |
| (c) | Form, Dating and Denominations | 14 |
| (d) | Execution, Countersignature and Delivery | 14 |
| (e) | Method of Payment; Delay When Payment Date is Not a Business Day | 15 |
| (f) | Register | 15 |
| (g) | Legends | 16 |
| (h) | Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions. | 17 |
| (i) | Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption | 18 |
| (j) | Status of Retired Shares | 18 |
| (k) | Replacement Certificates | 19 |
| (l) | Registered Holders | 19 |
| (m) | Cancellation | 19 |
| (n) | Shares Held by the Company | 19 |
| (o) | Outstanding Shares | 19 |
| (p) | Notations and Exchanges | 20 |
| Section 4. | Ranking | 21 |
| Section 5. | Dividends | 21 |
| (a) | Generally | 21 |
| (b) | Participating Dividends | 22 |
| Section 6. | Rights Upon Liquidation, Dissolution or Winding Up | 23 |
| (a) | Generally | 23 |
| (b) | Certain Business Combination Transactions Deemed Not to Be a Liquidation | 24 |
| Section 7. | Right of the Company to Redeem the Convertible Preferred Stock | 24 |
| (a) | No Right to Redeem Before the Redemption Trigger Date | 24 |
| (b) | Right to Redeem the Convertible Preferred Stock on or After Redemption Trigger Date | 24 |
| (c) | Redemption Prohibited in Certain Circumstances | 24 |
| (d) | Redemption Date | 24 |
| (e) | Redemption Price | 24 |
| (f) | Redemption Notice | 25 |
| (g) | Payment of the Redemption Price | 25 |
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| Section 8. | Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control | 25 |
| (a) | Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control | 25 |
| (b) | Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions | 25 |
| (c) | Change of Control Repurchase Date | 26 |
| (d) | Change of Control Repurchase Price | 26 |
| (e) | Change of Control Notice | 27 |
| (f) | Procedures to Exercise the Change of Control Repurchase Right | 27 |
| (g) | Payment of the Change of Control Repurchase Price | 28 |
| Section 9. | Voting Rights | 28 |
| (a) | Voting and Consent Rights with Respect to Specified Matters | 28 |
| (b) | Right to Vote with Holders of Common Stock on an As-Converted Basis | 31 |
| (c) | Procedures for Voting and Consents | 31 |
| Section 10. | Conversion | 32 |
| (a) | Generally | 32 |
| (b) | Conversion at the Option of the Holders | 32 |
| (c) | Mandatory Conversion at the Company’s Election. | 33 |
| (d) | Conversion Procedures | 34 |
| (e) | Settlement upon Conversion | 35 |
| (f) | Conversion Rate Adjustments | 35 |
| (g) | Voluntary Conversion Rate Increases | 37 |
| (h) | Restriction on Conversions and Certain Degressive Issuances | 38 |
| (i) | Effect of Common Stock Change Event | 39 |
| Section 11. | Certain Provisions Relating to the Issuance of Common Stock | 41 |
| (a) | Equitable Adjustments to Prices | 41 |
| (b) | Reservation of Shares of Common Stock | 41 |
| (c) | Status of Shares of Common Stock | 41 |
| (d) | Taxes Upon Issuance of Common Stock | 41 |
| Section 12. | No Preemptive Rights | 41 |
| Section 13. | Tax Treatment | 42 |
| Section 14. | Calculations | 42 |
| (a) | Responsibility; Schedule of Calculations | 42 |
| (b) | Calculations Aggregated for Each Holder | 42 |
| Section 15. | Notices | 42 |
| Section 16. | Legally Available Funds | 42 |
| Section 17. | No Other Rights | 42 |
| Exhibits | ||
| Exhibit A: | Form of Preferred Stock Certificate | A-1 |
| Exhibit B: | Form of Restricted Stock Legend | B-1 |
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Certificate of Designations
Series A Convertible Preferred Stock
On November 3, 2025, (the “Effective Date”) the Board of Directors of Katapult Holdings, Inc., a Delaware corporation (the “Company”), adopted the following resolution designating and creating, out of the authorized and unissued shares of preferred stock of the Company, Thirty Five Thousand (35,000) authorized shares of a series of preferred stock of the Company titled the “Series A Convertible Preferred Stock”:
RESOLVED that, pursuant to the Certificate of Incorporation, the Bylaws and applicable law, a series of preferred stock of the Company titled the “Series A Convertible Preferred Stock,” and having a par value of $0.0001 per share and an initial number of authorized shares equal to Thirty Five Thousand (35,000), is hereby designated and created out of the authorized and unissued shares of preferred stock of the Company, which series has the rights, designations, preferences, voting powers and other provisions set forth below:
Definitions.
“Affiliate” has the meaning set forth in Rule 144.
“Board of Directors” means the Company’s board of directors or a committee of such board duly authorized to act on behalf of such board.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Capital Stock” of any Person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
“Certificate” means any Physical Certificate or Electronic Certificate.
“Certificate of Designations” means this Certificate of Designations, as amended or supplemented from time to time.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company, as amended by that certain Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated July 27, 2023, and as further amended or modified from time to time prior to the date hereof.
“Change of Control” means any of the following events:
(a) a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than Hawthorn, its affiliates or any group of which Hawthorn or its affiliates is a part, the Company or their respective Wholly Owned Subsidiaries, files any report with the SEC
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indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of shares of the Company’s common equity representing more than fifty percent (50%) of the voting power of all of the Company’s then-outstanding common equity; or
(b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property; provided, however, that any merger, consolidation, share exchange or combination of the Company pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) all classes of the Company’s common equity immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50%) of all classes of common equity of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction will be deemed not to be a Change of Control pursuant to this clause (b).
For the purposes of this definition, (x) any transaction or event described in both clause (a) and in clause (b)(i) or (ii) above (without regard to the proviso in clause (b)) will be deemed to occur solely pursuant to clause (b) above (subject to such proviso); and (y) whether a Person is a “beneficial owner” and whether shares are “beneficially owned” will be determined in accordance with Rule 13d-3 under the Exchange Act.
“Change of Control Notice” has the meaning set forth in Section 8(e).
“Change of Control Repurchase Date” means the date fixed, pursuant to Section 8(c), for the repurchase of any Convertible Preferred Stock by the Company pursuant to a Repurchase Upon Change of Control.
“Change of Control Repurchase Notice” means a notice (including a notice substantially in the form of the “Change of Control Repurchase Notice” set forth in Exhibit A) containing the information, or otherwise complying with the requirements, set forth in Section 8(f)(i) and Section 8(f)(ii).
“Change of Control Repurchase Price” means the price payable by the Company to repurchase any share of Convertible Preferred Stock upon its Repurchase Upon Change of Control, calculated pursuant to Section 8(d).
A “Change of Control Repurchase Price Default” will be deemed to occur upon any failure to pay the Change of Control Repurchase Price for a Change of Control in full when due as provided in this Certificate of Designations. A Change of Control Repurchase Price Default that has occurred will be deemed to continue until such time when the Change of Control Repurchase Price is paid in full, at which time such Change of Control Repurchase Price Default will be deemed to be cured and cease to be continuing.
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“Change of Control Repurchase Right” has the meaning set forth in Section 8(a).
“Close of Business” means 5:00 p.m., New York City time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, $0.0001 par value per share, of the Company, subject to Section 10(i).
“Common Stock Change Event” has the meaning set forth in Section 10(i)(i).
“Common Stock Liquidity Conditions” will be satisfied with respect to a Mandatory Conversion, repurchase in connection with a Change of Control or Redemption if:
(a) (i) either (1) each share of Common Stock to be issued upon such Mandatory Conversion of any share of Convertible Preferred Stock or that may be issued as part of the Change of Control Repurchase Price for any share of Convertible Preferred Stock subject to repurchase in connection with such Change of Control or upon conversion of any share of Convertible Preferred Stock that is subject to such Redemption would be eligible to be offered, sold or otherwise transferred by the Holder of such share of Convertible Preferred Stock pursuant to Rule 144 under the Securities Act (or any successor rule thereto), without any requirements as to volume, manner of sale, availability of current public information (whether or not then satisfied) or notice; or (2) the offer and sale of such share of Common Stock by such Holder are registered pursuant to an effective registration statement under the Securities Act and such registration statement is reasonably expected by the Company to remain effective and usable, by the Holder to sell such share of Common Stock, continuously during the period from, and including, the date the related Mandatory Conversion Notice, Change of Control Repurchase Notice or Redemption Notice, as applicable, is sent to, and including, the thirtieth day after the date such share of Common Stock is issued; and (ii) the offer, sale or other transfer of such share of Common Stock by such Holder would not be subject to any registration or notice requirement under any U.S. State securities or “blue sky” laws;
(b) each share of Common Stock referred to in clause (a) above (i) will, when issued (or, in the case of clause (a)(i)(2), when sold or otherwise transferred pursuant to the registration statement referred to in such clause) (1) be admitted for book-entry settlement through the Depositary with an “unrestricted” CUSIP number; and (2) not be represented by any certificate that bears a legend referring to transfer restrictions under the Securities Act or other securities laws; and (ii) will, when issued, be listed and admitted for trading, without suspension or material limitation on trading, on any of The New York Stock Exchange or Nasdaq, including The NASDAQ Global Market, The NASDAQ Capital Market or The NASDAQ Global Select Market (or any of their respective successors);
(c) (i) the Company has not received any written threat or notice of delisting or suspension by the applicable exchange referred to in clause (b)(iii) above with a reasonable prospect of delisting, after giving effect to all applicable notice and appeal periods; and (ii) no such
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delisting or suspension is reasonably likely to occur or is pending based on the Company falling below the minimum listing maintenance requirements of such exchange;
(d) no trading or other policy of the Company would reasonably be expected to prohibit or restrict in any manner the sale or transfer of any share of Common Stock referred to in clause (a) above by such Holder at any time during the period from, and including, the date the related Mandatory Conversion Notice, Change of Control Repurchase Notice or Redemption Notice, as applicable, is sent to, and including, the thirtieth day after the date such share of Common Stock is issued; and
(e) the conversion of all shares of Convertible Preferred Stock pursuant to such Mandatory Conversion or that are subject to such repurchase or Redemption, as applicable, would not be limited or otherwise restricted by Section 10(h).
“Common Stock Participating Dividend” has the meaning set forth in Section 5(b)(i).
“Company” means Katapult Holdings, Inc., a Delaware corporation.
“Conversion Consideration” means, with respect to the conversion of any Convertible Preferred Stock, the type and amount of consideration payable to settle such conversion, determined in accordance with Section 10.
“Conversion Date” means an Optional Conversion Date or a Mandatory Conversion Date.
“Conversion Notice” means a notice substantially in the form of the “Conversion Notice” set forth in Exhibit A.
“Conversion Price” means, as of any time, an amount equal to (a) the Initial Liquidation Preference per share of Convertible Preferred Stock divided by (b) the Conversion Rate in effect at such time.
“Conversion Rate” initially means the Convertible Share Amount per one thousand dollars ($1,000.00) of Liquidation Preference of the Convertible Preferred Stock; provided, however, that the Conversion Rate is subject to adjustment pursuant to Sections 10(f) and 10(g). Each reference in this Certificate of Designations or the Convertible Preferred Stock to the Conversion Rate as of a particular date without setting forth a particular time on such date will be deemed to be a reference to the Conversion Rate immediately before the Close of Business on such date.
“Conversion Share” means any share of Common Stock issued or issuable upon conversion of any Convertible Preferred Stock.
“Conversion Share Cap” means the number of shares of Common Stock equal to (i) 19.99% of the total number of shares of Common Stock outstanding as of the Initial Issue Date, divided by (ii) 65,000 (such quotient subject to proportionate adjustment for share dividends, share splits or share combinations with respect to the Common Stock).
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“Convertible Preferred Stock” has the meaning set forth in Section 3(a).
“Convertible Share Amount” means the greater of (a) 81.16883 shares of Common Stock, and (b) a number of shares of Common Stock equal to the quotient of (i) $1,000 divided by (ii) the arithmetic average of the Last Reported Sale Prices for the thirty (30) Trading Days immediately preceding the Initial Issue Date.
“Degressive Issuance” has the meaning set forth in Section 10(f)(i)(2).
“Degressive Issuance Sunset Date” means the date that is nine (9) calendar months after the Initial Issue Date.
“Depositary” means The Depository Trust Company or its successor.
“Depositary Participant” means any member of, or participant in, the Depositary.
“Dividend” means any Regular Dividend or Participating Dividend.
“Dividend Junior Stock” means any class or series of the Company’s stock whose terms do not expressly provide that such class or series will rank senior to, or equally with, the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively). Dividend Junior Stock includes the Common Stock.
“Dividend Parity Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank equally with the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Dividend Payment Date” means each Regular Dividend Payment Date with respect to a Regular Dividend and each date on which any declared Participating Dividend is scheduled to be paid on the Convertible Preferred Stock.
“Dividend Senior Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank senior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively). Dividend Senior Stock includes the Series B Convertible Preferred Stock.
“Effective Price” has the following meaning with respect to the issuance or sale of any shares of Common Stock or any Equity-Linked Securities:
(a) in the case of the issuance or sale of shares of Common Stock, the value of the consideration received by the Company for such shares, expressed as an amount per share of Common Stock; and
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(b) in the case of the issuance or sale of any Equity-Linked Securities, an amount equal to a fraction whose:
(i) numerator is equal to sum, without duplication, of (x) the value of the aggregate consideration received by the Company for the issuance or sale of such Equity-Linked Securities; and (y) the value of the minimum aggregate additional consideration, if any, payable to purchase or otherwise acquire shares of Common Stock pursuant to such Equity-Linked Securities; and
(ii) denominator is equal to the maximum number of shares of Common Stock underlying such Equity-Linked Securities;
provided, however, that:
(w) for purposes of clauses (a) and (b)(i) above, all underwriting commissions, placement agency commissions or similar commissions paid to any broker-dealer by the Company or any of its Affiliates in connection with such issuance or sale (excluding any other fees or expenses incurred by the Company or any of its Affiliates) will be added to the aggregate consideration referred to in such clause;
(x) for purposes of clause (b) above, if such minimum aggregate consideration, or such maximum number of shares of Common Stock, is not determinable at the time such Equity-Linked Securities are issued or sold, then (1) the initial consideration payable under such Equity-Linked Securities, or the initial number of shares of Common Stock underlying such Equity-Linked Securities, as applicable, will be used; and (2) at each time thereafter when such amount of consideration or number of shares becomes determinable or is otherwise adjusted (including pursuant to “anti-dilution” or similar provisions), there will be deemed to occur, for purposes of Section 10(f)(i)(2) and without affecting any prior adjustments theretofore made to the Conversion Rate, an issuance of additional Equity-Linked Securities;
(y) for purposes of clause (b) above, the surrender, extinguishment, maturity or other expiration of any such Equity-Linked Securities will be deemed not to constitute consideration payable to purchase or otherwise acquire shares of Common Stock pursuant to such Equity-Linked Securities; and
(z) the “value” of any such consideration will be the fair value thereof, as of the date such shares or Equity-Linked Securities, as applicable, are issued or sold, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof).
“Electronic Certificate” means any electronic book-entry maintained by the Transfer Agent that represents any share(s) of Convertible Preferred Stock.
“Equity-Linked Securities” means any rights, options or warrants to purchase or otherwise acquire (whether immediately, during specified times, upon the satisfaction of any conditions or otherwise) any shares of Common Stock.
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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempt Issuance” means (a) the Company’s issuance of any securities as full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of all or substantially all of the securities or assets of a corporation or other entity; (b) the Company’s issuance or grant of shares of Common Stock or options to purchase shares Common Stock to employees, directors or consultants of the Company or any of its Subsidiaries, pursuant to plans that have been approved by a majority of the independent members of the Board of Directors or that exist as of the Initial Issue Date; (c) the Company’s issuance of securities upon the exercise, exchange or conversion of any securities that are exercisable or exchangeable for, or convertible into, shares of Common Stock and are outstanding as of the Initial Issue Date, provided that such exercise, exchange or conversion is effected pursuant to the terms of such securities as in effect on the Initial Issue Date; (d) the Company’s issuance of securities pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by a majority of the disinterested members of the Board of Directors; (e) the Company’s issuance of the Convertible Preferred Stock and any shares of Common Stock upon conversion of the Convertible Preferred Stock; and (f) the Company’s issuance of the Series B Convertible Preferred Stock and any shares of Common Stock upon conversion of the Series B Convertible Preferred Stock. For purposes of this definition, “consultant” means a consultant that may participate in an “employee benefit plan” in accordance with the definition of such term in Rule 405 under the Securities Act.
“Hawthorn” means Hawthorn Horizon Credit Fund, LLC, a Delaware limited liability company.
“Holder” means a person in whose name any Convertible Preferred Stock is registered in the Register.
“Initial Issue Date” means November 3, 2025.
“Initial Liquidation Preference” means one thousand dollars ($1,000.00) per share of Convertible Preferred Stock.
“Investment Agreement” means the Series A Investment Agreement, dated as of November 3, 2025, by and among the Company and HHCF Series 21 Sub, LLC.
“Junior Stock” means any Dividend Junior Stock or Liquidation Junior Stock.
“Last Reported Sale Price” of the Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of the Common Stock on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is then listed. If the Common Stock is not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted
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bid price per share of Common Stock on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per share of Common Stock on such Trading Day from each of at least three nationally recognized independent investment banking firms the Company selects.
“Liquidation Junior Stock” means any class or series of the Company’s stock whose terms do not expressly provide that such class or series will rank senior to, or equally with, the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up. Liquidation Junior Stock includes the Common Stock.
“Liquidation Parity Stock” means any class or series of the Company’s stock (other than the Convertible Preferred Stock) whose terms expressly provide that such class or series will rank equally with the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.
“Liquidation Preference” means, with respect to the Convertible Preferred Stock, an amount initially equal to the Initial Liquidation Preference per share of Convertible Preferred Stock; provided, however, that the Liquidation Preference is subject to adjustment for compounding pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2).
“Liquidation Senior Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank senior to the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up. Liquidation Senior Stock includes the Series B Convertible Preferred Stock.
“Mandatory Conversion” has the meaning set forth in Section 10(c)(i).
“Mandatory Conversion Date” means a Conversion Date designated with respect to any Convertible Preferred Stock pursuant to Section 10(c)(i) and Section 10(c)(iii).
“Mandatory Conversion Notice” has the meaning set forth in Section 10(c)(iv).
“Mandatory Conversion Notice Date” means, with respect to a Mandatory Conversion, the date on which the Company sends the Mandatory Conversion Notice for such Mandatory Conversion pursuant to Section 10(c)(iv).
“Mandatory Conversion Right” has the meaning set forth in Section 10(c)(i).
“Market Disruption Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the Common Stock is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the
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Common Stock.
“Nasdaq” means The Nasdaq Stock Market LLC (or such other Nasdaq market on which the Common Stock then trades).
“Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Chief Accounting Officer, the Secretary or any Vice-President of the Company.
“Open of Business” means 9:00 a.m., New York City time.
“Optional Conversion” means the conversion of any Convertible Preferred Stock other than a Mandatory Conversion.
“Optional Conversion Date” means, with respect to the Optional Conversion of any Convertible Preferred Stock, the first Business Day on which the requirements set forth in Section 10(d)(ii) for such conversion are satisfied.
“Ownership Limitation” has the meaning set forth in Section 10(h)(i).
“Participating Dividend” has the meaning set forth in Section 5(b)(i).
“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. Any division or series of a limited liability company, limited partnership or trust will constitute a separate “person” under this Certificate of Designations.
“Physical Certificate” means any certificate (other than an Electronic Certificate) representing any share(s) of Convertible Preferred Stock, which certificate is substantially in the form set forth in Exhibit A, registered in the name of the Holder of such share(s) and duly executed by the Company and countersigned by the Transfer Agent.
“Preferred Stock Director” each director that the Holders have the right to elect to the Board of Directors pursuant to that certain Director Nomination Agreement, dated as of the Initial Issue Date by and among the Company and HHCF Series 21 Sub, LLC.
“Record Date” means, with respect to any dividend or distribution on, or issuance to holders of, Convertible Preferred Stock or Common Stock, the date fixed (whether by law, contract or the Board of Directors or otherwise) to determine the Holders or the holders of Common Stock, as applicable, that are entitled to such dividend, distribution or issuance.
“Redemption” means the repurchase of any Convertible Preferred Stock by the Company pursuant to Section 7.
“Redemption Date” means the date fixed, pursuant to Section 7(d), for the settlement of
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the repurchase of the Convertible Preferred Stock by the Company pursuant to a Redemption.
“Redemption Notice” has the meaning set forth in Section 7(f).
“Redemption Notice Date” means, with respect to a Redemption of the Convertible Preferred Stock, the date on which the Company sends the related Redemption Notice pursuant to Section 7(f).
“Redemption Price” means the consideration payable by the Company to repurchase any Convertible Preferred Stock upon its Redemption, calculated pursuant to Section 7(e).
“Redemption Trigger Date” means November 3, 2027.
“Reference Property” has the meaning set forth in Section 10(i)(i).
“Reference Property Unit” has the meaning set forth in Section 10(i)(i).
“Register” has the meaning set forth in Section 3(f).
“Regular Dividend Payment Date” means with respect to any share of Convertible Preferred Stock, (i) prior to the date that the Requisite Stockholder Approval is obtained, the first Wednesday (or, if such day is not a Business Day, the immediately succeeding Business Day) after the Initial Issue Date and each Wednesday occurring thereafter (or, if such day is not a Business Day, the immediately succeeding Business Day), and (ii) after the date that the Requisite Stockholder Approval is obtained, each January 1, April 1, July 1 and October 1 (or, if such day is not a Business Day, the immediately succeeding Business Day) of each year.
“Regular Dividend Period” means each period from, and including, a Regular Dividend Payment Date (or, in the case of the first Regular Dividend Period, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date.
“Regular Dividend Rate” means (i) for the period beginning on, and including, the Initial Issue Date and ending on, but excluding, the later of (a) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (b) the date of the Company’s 2026 annual meeting of stockholders, eighteen percent (18%) per annum, and (ii) beginning on, and including, the later of (a) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (b) the date of the Company’s 2026 annual meeting of stockholders, twelve percent (12%) per annum; provided, however, that, in each case, the Regular Dividend Rate is subject to adjustment pursuant to Section 10(h)(iii).
“Regular Dividends” has the meaning set forth in Section 5(a)(i)(1).
“Repurchase Upon Change of Control” means the repurchase of any Convertible Preferred Stock by the Company pursuant to Section 8.
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“Requisite Stockholder Approval” means the stockholder approval contemplated by the Nasdaq listing rules with respect to the issuance of shares of Common Stock upon conversion of the Convertible Preferred Stock and the Series B Convertible Preferred Stock in excess of the limitations imposed by such rules; provided, however, that the Requisite Stockholder Approval will be deemed to be obtained if, due to any amendment or binding change in the interpretation of the applicable listing standards of the Nasdaq, such stockholder approval is no longer required for the Company to settle all conversions of the Convertible Preferred Stock and Series B Convertible Preferred Stock in shares of Common Stock without regard to Section 10(h); provided further, that the Requisite Stockholder Approval shall be required even if the price per share is greater than (i) the closing price (as reflected on Nasdaq.com) immediately preceding the signing of the Investment Agreement; or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Investment Agreement.
“Requisite Stockholder Approval Deadline Date” means the earlier of (a) the date of the Company’s first annual or special meeting of stockholders following the Initial Issue Date; and (b) February 27, 2026.
“Restricted Stock Legend” means a legend substantially in the form set forth in Exhibit B.
“Rule 144” means Rule 144 under the Securities Act (or any successor rule thereto), as the same may be amended from time to time.
“Scheduled Trading Day” means any day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, then “Scheduled Trading Day” means a Business Day.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Security” means any Convertible Preferred Stock or Conversion Share.
“Series B Certificate of Designations” means that certain Certificate of Designations of the Company establishing the Series B Convertible Preferred Stock.
“Series B Convertible Preferred Stock” means a series of stock of the Company titled the “Series B Convertible Preferred Stock” designated pursuant to that certain Series B Certificate of Designations.
“Subsidiary” means, with respect to any Person, (a) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of the Capital Stock entitled (without regard to the occurrence of any
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contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (b) any partnership or limited liability company where (x) more than fifty percent (50%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (y) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Successor Person” has the meaning set forth in Section 10(i)(iii).
“Trading Day” means any day on which (a) trading in the Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded; and (b) there is no Market Disruption Event. If the Common Stock is not so listed or traded, then “Trading Day” means a Business Day.
“Transfer Agent” means the Company (and, for the avoidance of doubt, (i) any requirement herein for the Transfer Agent to countersign a document or instrument shall be deemed satisfied if the Company has signed such document or instrument and (ii) in such role, the Company is not acting as the agent of any Holder).
“Transfer-Restricted Security” means any Security that constitutes a “restricted security” (as defined in Rule 144); provided, however, that such Security will cease to be a Transfer-Restricted Security upon the earliest to occur of the following events:
(a) such Security is sold or otherwise transferred to a Person (other than the Company or an Affiliate of the Company) pursuant to a registration statement that was effective under the Securities Act at the time of such sale or transfer;
(b) such Security is sold or otherwise transferred to a Person (other than the Company or an Affiliate of the Company) pursuant to an available exemption (including Rule 144) from the registration and prospectus-delivery requirements of, or in a transaction not subject to, the Securities Act and, immediately after such sale or transfer, such Security ceases to constitute a “restricted security” (as defined in Rule 144); and
(c) (i) such Security is eligible for resale, by a Person that is not an Affiliate of the Company and that has not been an Affiliate of the Company during the immediately preceding three (3) months, pursuant to Rule 144 without any limitations thereunder as to volume, manner of sale, availability of current public information or notice; and (ii) the Company has received such certificates or other documentation or evidence as the Company may reasonably require to determine that the Holder, holder or beneficial owner of such Security is not, and that has not been
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during the immediately preceding three (3) months, an Affiliate of the Company.
“Voting Parity Stock” means, with respect to any matter as to which Holders are entitled to vote pursuant to Section 9(a), each class or series of outstanding stock of the Company that constitutes both Dividend Parity Stock and Liquidation Parity Stock, if any, upon which similar voting rights are conferred and are exercisable with respect to such matter.
“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person.
Rules of Construction. For purposes of this Certificate of Designations:
(a) “or” is not exclusive;
(b) “including” means “including without limitation”;
(c) “will” expresses a command;
(d) the “average” of a set of numerical values refers to the arithmetic average of such numerical values;
(e) a merger involving, or a transfer of assets by, a limited liability company, limited partnership or trust will be deemed to include any division of or by, or an allocation of assets to a series of, such limited liability company, limited partnership or trust, or any unwinding of any such division or allocation;
(f) words in the singular include the plural and in the plural include the singular, unless the context requires otherwise;
(g) “herein,” “hereof” and other words of similar import refer to this Certificate of Designations as a whole and not to any particular Section or other subdivision of this Certificate of Designations, unless the context requires otherwise;
(h) references to currency mean the lawful currency of the United States of America, unless the context requires otherwise; and
(i) the exhibits, schedules and other attachments to this Certificate of Designations are deemed to form part of this Certificate of Designations.
The Convertible Preferred Stock.
Designation; Par Value. A series of stock of the Company titled the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”) is hereby designated and created out of the authorized and unissued shares of preferred stock of the Company. The par value of the Convertible Preferred Stock is $0.0001 per share.
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Number of Authorized Shares. The total authorized number of shares of Convertible Preferred Stock is THIRTY FIVE THOUSAND (35,000); provided, however that, by resolution of the Board of Directors, the total number of authorized shares of Convertible Preferred Stock may hereafter be reduced to a number that is not less than the number of shares of Convertible Preferred Stock then outstanding.
Form, Dating and Denominations.
(i) Form and Date of Certificates Representing Convertible Preferred Stock. Each Certificate representing any Convertible Preferred Stock will bear the legends required by Section 3(g) and may bear notations, legends or endorsements required by law, stock exchange rule or usage or the Depositary.
(ii) Certificates.
(1) Generally. The Convertible Preferred Stock will be originally issued initially in the form of one or more Electronic Certificates. Electronic Certificates may be exchanged for Physical Certificates, and Physical Certificates may be exchanged for Electronic Certificates, upon request by the Holder thereof pursuant to customary procedures.
(2) Electronic Certificates; Interpretation. For purposes of this Certificate of Designations, (A) each Electronic Certificate will be deemed to include the text set forth in Exhibit A; (B) any legend or other notation that is required to be included on a Certificate will be deemed to be included in any Electronic Certificate notwithstanding that such Electronic Certificate may be in a form that does not permit affixing legends thereto; (C) any reference in this Certificate of Designations to the “delivery” of any Electronic Certificate will be deemed to be satisfied upon the registration of the electronic book-entry representing such Electronic Certificate in the name of the applicable Holder; (D) upon satisfaction of any applicable requirements of the Delaware General Corporation Law, the Certificate of Incorporation and the Bylaws of the Company, and any related requirements of the Transfer Agent, in each case for the issuance of Convertible Preferred Stock in the form of one or more Electronic Certificates, such Electronic Certificates will be deemed to be executed by the Company and countersigned by the Transfer Agent.
(iii) No Bearer Certificates; Denominations. The Convertible Preferred Stock will be issued only in registered form and only in whole numbers of shares.
(iv) Registration Numbers. Each Certificate representing any Convertible Preferred Stock will bear a unique registration number that is not affixed to any other Certificate representing another outstanding Convertible Preferred Stock.
Execution, Countersignature and Delivery.
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(i) Due Execution by the Company. At least two (2) duly authorized Officers will sign each Physical Certificate representing any Convertible Preferred Stock on behalf of the Company by manual or facsimile signature. The validity of any Convertible Preferred Stock will not be affected by the failure of any Officer whose signature is on any Physical Certificate representing such Convertible Preferred Stock to hold, at the time such certificate is countersigned by the Transfer Agent, the same or any other office at the Company.
(ii) Countersignature by Transfer Agent. No Physical Certificate representing any Convertible Preferred Stock will be valid until such Physical Certificate is countersigned by the Transfer Agent. Each Physical Certificate will be deemed to be duly countersigned only when an authorized signatory of the Transfer Agent (or a duly appointed agent thereof) manually signs the countersignature block set forth in such certificate.
Method of Payment; Delay When Payment Date is Not a Business Day.
(i) Method of Payment. The Company will pay all cash amounts due on any Convertible Preferred Stock by check issued in the name of the Holder thereof; provided, however, that if a Holder of at least 5,000 shares of Convertible Preferred Stock has delivered to the Company, no later than the time set forth in the next sentence, a written request to receive payment by wire transfer to an account of such Holder within the United States, then the Company will pay all such cash amounts by wire transfer of immediately available funds to such account. To be timely, such written request must be delivered no later than the Close of Business on the following date: (x) with respect to the payment of any declared cash Participating Dividend due on a Dividend Payment Date for the Convertible Preferred Stock, the related Record Date; and (y) with respect to any other payment, the date that is three (3) calendar days immediately before the date such payment is due.
(ii) Delay of Payment when Payment Date is Not a Business Day. If the due date for a payment on any Convertible Preferred Stock as provided in this Certificate of Designations is not a Business Day, then, notwithstanding anything to the contrary in this Certificate of Designations, such payment may be made on the immediately following Business Day and no interest, dividend or other amount will accrue or accumulate on such payment as a result of the related delay. Solely for purposes of the immediately preceding sentence, a day on which the applicable place of payment is authorized or required by law or executive order to close or be closed will be deemed not to be a “Business Day.”
Register. The Company will keep a record (the “Register”) of the names and addresses of the Holders, the number of shares of Convertible Preferred Stock held by each Holder and the transfer, exchange, repurchase, Redemption and conversion of the Convertible Preferred Stock. Absent manifest error, the entries in the Register will be conclusive and the Company and the Transfer Agent may treat each Person whose name is recorded as a Holder in the Register as a Holder for all purposes. The Register will be in written form or in any form capable of being converted into written form reasonably promptly.
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Legends.
(i) Restricted Stock Legend.
(1) Each Certificate representing any share of Convertible Preferred Stock that is a Transfer-Restricted Security will bear the Restricted Stock Legend.
(2) If any share of Convertible Preferred Stock is issued in exchange for, in substitution of, or to effect a partial conversion of, any other share(s) of Convertible Preferred Stock (such other share(s) being referred to as the “old share(s)” for purposes of this Section 3(g)(i)(2)), including pursuant to Section 3(i) or 3(k), then the Certificate representing such share will bear the Restricted Stock Legend if the certificate representing such old share(s) bore the Restricted Stock Legend at the time of such exchange or substitution, or on the related Conversion Date with respect to such conversion, as applicable; provided, however, that the Certificate representing such share need not bear the Restricted Stock Legend if such share does not constitute a Transfer-Restricted Security immediately after such exchange or substitution, or as of such Conversion Date, as applicable.
(ii) Other Legends. The Certificate representing any Convertible Preferred Stock shall bear a legend substantially in the form set forth below and may bear any other legend or text, not inconsistent with this Certificate of Designations, as may be required by applicable law or by any securities exchange or automated quotation system on which such Convertible Preferred Stock is traded or quoted or as may be otherwise reasonably determined by the Company to be appropriate.
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.”
(iii) Legends on Conversion Shares.
(1) Each Conversion Share will bear a legend substantially to the same effect as the Restricted Stock Legend if the Convertible Preferred Stock upon the conversion of which such Conversion Share was issued was (or would have been had it not been converted) a Transfer-Restricted Security at the time such Conversion Share was issued; provided, however, that such Conversion Share need not bear such a legend if the Company determines, in its reasonable discretion, that such Conversion Share need not bear such a legend.
(2) Notwithstanding anything to the contrary in Section 3(g)(iii)(1), a Conversion Share need not bear a legend pursuant to Section 3(g)(iii)(1) if such Conversion Share is issued in an uncertificated form that does not permit affixing legends thereto, provided the Company takes measures (including the assignment thereto of a “restricted” CUSIP number) that it reasonably deems appropriate to enforce the transfer restrictions referred to in such legend.
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Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions..
(i) Provisions Applicable to All Transfers and Exchanges.
(1) Generally. Subject to this Section 3(h), Convertible Preferred Stock represented by any Certificate may be transferred or exchanged from time to time, subject to Section 4.1 of the Investment Agreement and subject to compliance with applicable Federal and state securities laws, and the Company will cause each such transfer or exchange to be recorded in the Register.
(2) No Services Charge; Transfer Taxes. The Company will not impose any service charge on any Holder for any transfer, exchange or conversion of any Convertible Preferred Stock, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge that may be imposed in connection with any transfer, exchange or conversion of Convertible Preferred Stock, other than exchanges pursuant to Section 3(i) or Section 3(p) not involving any transfer.
(3) No Transfers or Exchanges of Fractional Shares. Notwithstanding anything to the contrary in this Certificate of Designations, all transfers or exchanges of Convertible Preferred Stock must be in an amount representing a whole number of shares of Convertible Preferred Stock, and no fractional share of Convertible Preferred Stock may be transferred or exchanged.
(4) Legends. Each Certificate representing any share of Convertible Preferred Stock that is issued upon transfer of, or in exchange for, another share of Convertible Preferred Stock will bear each legend, if any, required by Section 3(g).
(5) Settlement of Transfers and Exchanges. Upon satisfaction of the requirements of this Certificate of Designations to effect a transfer or exchange of any Convertible Preferred Stock, the Company will cause such transfer or exchange to be effected as soon as reasonably practicable but in no event later than the second (2nd) Business Day after the date of such satisfaction.
(ii) Transfers of Shares Subject to Redemption, Repurchase or Conversion. Notwithstanding anything to the contrary in this Certificate of Designations, the Company will not be required to register the transfer of or exchange any share of Convertible Preferred Stock:
(1) that has been surrendered for conversion;
(2) that has been called for Redemption pursuant to a Redemption Notice, except to the extent that the Company fails to pay the related Redemption Price when due; or
(3) as to which a Change of Control Repurchase Notice has been duly delivered, and not withdrawn, pursuant to Section 8(f), except to the extent that the Company fails to pay the related Change of Control Repurchase Price when due.
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Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption.
(i) Partial Conversions of Certificates and Partial Repurchases of Certificates Pursuant to a Repurchase Upon Change of Control. If only a portion of a Holder’s Convertible Preferred Stock represented by a Certificate (such Certificate being referred to as the “old Certificate” for purposes of this Section 3(i)(i)) is to be converted pursuant to Section 10 or repurchased pursuant to a Repurchase Upon Change of Control, then, as soon as reasonably practicable after such Certificate is surrendered for such conversion or repurchase, as applicable, the Company will cause such Certificate to be exchanged for (1) one or more Certificates that each represent a whole number of shares of Convertible Preferred Stock and, in the aggregate, represent a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are not to be so converted or repurchased, as applicable, and deliver such Certificate(s) to such Holder; and (2) a Certificate representing a whole number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are to be so converted or repurchased, as applicable, which Certificate will be converted or repurchased, as applicable, pursuant to the terms of this Certificate of Designations; provided, however, that the Certificate referred to in this clause (2) need not be issued at any time after which such shares subject to such conversion or repurchase, as applicable, are deemed to cease to be outstanding pursuant to Section 3(o).
(ii) Cancellation of Convertible Preferred Stock that Is Converted and Convertible Preferred Stock that Is Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption. If a Holder’s Convertible Preferred Stock represented by a Certificate (or any portion thereof that has not theretofore been exchanged pursuant to Section 3(i)(i)) (such Certificate being referred to as the “old Certificate” for purposes of this Section 3(i)(ii)) is to be converted pursuant to Section 10 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, promptly after the later of the time such Convertible Preferred Stock is deemed to cease to be outstanding pursuant to Section 3(o) and the time such Certificate is surrendered for such conversion or repurchase, as applicable, (A) such Certificate will be cancelled pursuant to Section 3(m); and (B) in the case of a partial conversion or repurchase, the Company will issue, execute and deliver to such Holder, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(d), one or more Certificates that (x) each represent a whole number of shares of Convertible Preferred Stock and, in the aggregate, represent a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are not to be so converted or repurchased, as applicable; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 3(g).
Status of Retired Shares. Upon any share of Convertible Preferred Stock ceasing to be outstanding, such share will be deemed to be retired and to resume the status of an authorized and unissued share of preferred stock of the Company, and such share cannot thereafter be reissued as Convertible Preferred Stock.
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Replacement Certificates. If a Holder of any Convertible Preferred Stock claims that the Certificate(s) representing such Convertible Preferred Stock have been mutilated, lost, destroyed or wrongfully taken, then the Company will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(c), a replacement Certificate representing such Convertible Preferred Stock upon surrender to the Company or the Transfer Agent of such mutilated Certificate, or upon delivery to the Company or the Transfer Agent of evidence of such loss, destruction or wrongful taking reasonably satisfactory to the Transfer Agent and the Company. In the case of a lost, destroyed or wrongfully taken Certificate representing any Convertible Preferred Stock, the Company and the Transfer Agent may require the Holder thereof to provide such security or indemnity that is reasonably satisfactory to the Company and the Transfer Agent to protect the Company and the Transfer Agent from any loss that any of them may suffer if such Certificate is replaced.
Every replacement Convertible Preferred Stock issued pursuant to this Section 3(k) will, upon such replacement, be deemed to be outstanding Convertible Preferred Stock, entitled to all of the benefits of this Certificate of Designations equally and ratably with all other Convertible Preferred Stock then outstanding.
Registered Holders. Only the Holder of any Convertible Preferred Stock will have rights under this Certificate of Designations as the owner of such Convertible Preferred Stock.
Cancellation. The Company may at any time deliver Convertible Preferred Stock to the Transfer Agent for cancellation. The Company will cause the Transfer Agent to promptly cancel all shares of Convertible Preferred Stock so surrendered to it in accordance with its customary procedures.
Shares Held by the Company. Without limiting the generality of Section 3(o), in determining whether the Holders of the required number of outstanding shares of Convertible Preferred Stock (and, if applicable Voting Parity Stock) have concurred in any direction, waiver or consent, shares of Convertible Preferred Stock owned by the Company will be deemed not to be outstanding.
Outstanding Shares.
(i) Generally. The shares of Convertible Preferred Stock that are outstanding at any time will be deemed to be those shares of Convertible Preferred Stock that, at such time, have been duly executed by the Company and countersigned by the Transfer Agent, excluding those shares of Convertible Preferred Stock that have theretofore been (1) cancelled by the Transfer Agent or delivered to the Transfer Agent for cancellation in accordance with Section 3(m); (2) paid in full upon their conversion or upon their repurchase pursuant to a Repurchase Upon Change of Control or a Redemption in accordance with this Certificate of Designations; or (3) deemed to cease to be outstanding to the extent provided in, and subject to, clause (ii), (iii), (iv) or (v) of this Section 3(o).
(ii) Replaced Shares. If any Certificate representing any share of Convertible Preferred Stock is replaced pursuant to Section 3(k), then such share will cease to be outstanding at the time of such replacement, unless the Transfer Agent and the Company
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receive proof reasonably satisfactory to them that such share is held by a “bona fide purchaser” under applicable law.
(iii) Shares to Be Repurchased Pursuant to a Redemption. If, on a Redemption Date, the Company has segregated, solely for the benefit of the applicable Holders, consideration in kind and amount that is sufficient to pay the aggregate Redemption Price due on such date, then (unless there occurs a default in the payment of the Redemption Price) (1) the Convertible Preferred Stock to be redeemed on such date will be deemed, as of such date, to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Redemption Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Redemption Price as provided in Section 7.
(iv) Shares to Be Repurchased Pursuant to a Repurchase Upon Change of Control. If, on a Change of Control Repurchase Date, the Company has segregated, solely for the benefit of the applicable Holders, consideration in kind and amount that is sufficient to pay the aggregate Change of Control Repurchase Price due on such date, then (unless there occurs a default in the payment of the Change of Control Repurchase Price) with respect to shares of Convertible Preferred Stock for which a valid Change of Control Repurchase Notice has been delivered and not withdrawn (1) such Convertible Preferred Stock to be repurchased on such date will be deemed, as of such date, to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Change of Control Repurchase Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Change of Control Repurchase Price as provided in Section 8 and, if applicable, Section 16. For the avoidance of doubt, any shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has not been delivered shall continue to be outstanding and entitled to all of the rights, preferences and privileges of the Convertible Preferred Stock.
(v) Shares to Be Converted. If any Convertible Preferred Stock is to be converted, then, at the Close of Business on the Conversion Date for such conversion (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 10 upon such conversion): (1) such Convertible Preferred Stock will (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 10 upon such conversion) be deemed to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Conversion Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive such Conversion Consideration as provided in Section 10 and, if applicable, Section 16.
Notations and Exchanges. Without limiting any rights of Holders pursuant to Section 9, if any amendment, supplement or waiver to the Certificate of Incorporation or this Certificate of Designations changes the terms of any Convertible Preferred Stock, then the Company may, in its discretion, require the Holder of the Certificate representing such Convertible
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Preferred Stock to deliver such Certificate to the Transfer Agent so that the Transfer Agent may place an appropriate notation prepared by the Company on such Certificate and return such Certificate to such Holder. Alternatively, at its discretion, the Company may, in exchange for such Convertible Preferred Stock, issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(c), a new Certificate representing such Convertible Preferred Stock that reflects the changed terms. The failure to make any appropriate notation or issue a new Certificate representing any Convertible Preferred Stock pursuant to this Section 3(p) will not impair or affect the validity of such amendment, supplement or waiver.
Ranking. The Convertible Preferred Stock will rank (a) senior to (i) Dividend Junior Stock with respect to the payment of dividends; and (ii) Liquidation Junior Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up; (b) equally with (i) Dividend Parity Stock with respect to the payment of dividends; and (ii) Liquidation Parity Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up; and (c) junior to (i) Dividend Senior Stock with respect to the payment of dividends; and (ii) Liquidation Senior Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.
Dividends.
Generally.
(i) Regular Dividends.
(1) Accumulation and Payment of Regular Dividends. The Convertible Preferred Stock will accumulate cumulative dividends at a rate per annum equal to the Regular Dividend Rate on the Liquidation Preference thereof (calculated in accordance with Section 5(a)(i)(2)), regardless of whether or not declared or funds are legally available for their payment (such dividends that accumulate on the Convertible Preferred Stock pursuant to this sentence, “Regular Dividends”). Subject to the other provisions of this Section 5 (including, for the avoidance of doubt, Section 5(a)(ii)), such Regular Dividends will be payable in arrears on each Regular Dividend Payment Date. Regular Dividends on the Convertible Preferred Stock will accumulate from, and including, the last date to which Regular Dividends have been paid (or, if no Regular Dividends have been paid, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date.
(2) Computation of Accumulated Regular Dividends. Accumulated Regular Dividends will be computed on the basis of a 360-day year comprised of twelve 30-day months. Regular Dividends on each share of Convertible Preferred Stock will accrue on the Liquidation Preference of such share as of immediately before the Close of Business on the preceding Regular Dividend Payment Date (or, if there is no preceding Regular Dividend Payment Date, on the Initial Liquidation Preference of such share).
Method of Payment.
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(1) Generally. The Company may, at its election, either pay Regular Dividends (x) when, as and if declared by the Board of Directors in cash out of funds legally available for their payment by wire transfer of immediately available funds or (y) by compounding of such Regular Dividends as provided in Section 5(a)(ii)(2). The Company shall be deemed to have elected to pay the Regular Dividends for any Regular Dividend Period pursuant to clause (y) of the preceding sentence unless it shall have notified the Holders in writing on or prior to the third (3rd) Business Day immediately prior to the next Regular Dividend Payment Date following the final day of such Regular Dividend Period of its election to pay the Regular Dividends on such Regular Dividend Payment Date pursuant to clause (x) of such sentence.
(2) Compounding of Regular Dividends. As of the Close of Business on any Regular Dividend Payment Date the dollar amount of the Regular Dividends (regardless of whether or not declared) that have accumulated on the Convertible Preferred Stock in respect of the Regular Dividend Period ending on, but excluding, such Regular Dividend Payment Date (expressed as an amount per share of Convertible Preferred Stock) will (without duplication) be added, effective immediately before the Close of Business on the related Regular Dividend Payment Date, to the Liquidation Preference of each share of Convertible Preferred Stock outstanding as of such time; provided, however, that such addition shall not occur nor be required if as of the Close of Business on such Regular Dividend Payment Date, the Company, in its sole and absolute discretion, has paid in cash the full amount of the Regular Dividends (regardless of whether or not declared) that have accumulated on the Convertible Preferred Stock in respect of the Regular Dividend Period ending on, but excluding, such Regular Dividend Payment Date.
(3) Construction. Any Regular Dividends the amount of which is added to the Liquidation Preference thereof pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2) will be deemed to be “declared” and “paid” on the Convertible Preferred Stock for all purposes of this Certificate of Designations.
Participating Dividends.
(i) Generally. Subject to Section 5(b)(ii), no dividend or other distribution on the Common Stock (whether in cash, securities or other property, or any combination of the foregoing) will be declared or paid on the Common Stock unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid, respectively, on the Convertible Preferred Stock (such a dividend or distribution on the Convertible Preferred Stock, a “Participating Dividend,” and such corresponding dividend or distribution on the Common Stock, the “Common Stock Participating Dividend”), such that (1) the Record Date and the payment date for such Participating Dividend occur on the same dates as the Record Date and payment date, respectively, for such Common Stock Participating Dividend; and (2) the kind and amount of consideration payable per share of Convertible Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable in the Common Stock
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Participating Dividend in respect of a number of shares of Common Stock equal to the number of shares of Common Stock that would be issuable (determined in accordance with Section 10 but without regard to Section 10(e)(ii) and Section 10(h)) in respect of one (1) share of Convertible Preferred Stock that is converted pursuant to an Optional Conversion with a Conversion Date occurring on such Record Date (subject to the same arrangements, if any, in such Common Stock Participating Dividend not to issue or deliver a fractional portion of any security or other property, but with such arrangement applying separately to each Holder and computed based on the total number of shares of Convertible Preferred Stock held by such Holder on such Record Date).
(ii) Common Stock Change Events and Stock Splits, Dividends and Combinations. Section 5(b)(i) will not apply to, and no Participating Dividend will be required to be declared or paid in respect of, a Common Stock Change Event, or an event for which an adjustment to the Conversion Rate is required pursuant to Section 10(f)(i)(1), as to which Section 10(i) or Section 10(f)(i)(1), respectively, will apply.
(iii) Treatment of Participating Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion. If the Redemption Date, Change of Control Repurchase Date or Conversion Date of any share of Convertible Preferred Stock is after a Record Date for a declared Participating Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then the Holder of such share at the Close of Business on such Record Date will be entitled, notwithstanding the related Redemption, Repurchase Upon Change of Control or conversion, as applicable, to receive, on or, at the Company’s election, before such Dividend Payment Date, such declared Participating Dividend on such share.
Rights Upon Liquidation, Dissolution or Winding Up.
Generally. If the Company liquidates, dissolves or winds up, whether voluntarily or involuntarily, then, subject to the rights of any of the Company’s creditors or holders of any outstanding Liquidation Senior Stock, each share of Convertible Preferred Stock will entitle the Holder thereof to receive payment for the greater of the amounts set forth in clause (i) and (ii) below out of the Company’s assets or funds legally available for distribution to the Company’s stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, any Liquidation Junior Stock:
(i) the sum of:
(1) the Liquidation Preference per share of Convertible Preferred Stock; and
(2) all unpaid Regular Dividends that will have accumulated on such share to, but excluding, the date of such payment; and
(ii) the amount such Holder would have received in respect of the number of shares of Common Stock that would be issuable upon conversion of such share of Convertible Preferred Stock assuming the Conversion Date of such conversion occurs on the date of such payment.
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Upon payment of such amount in full on the outstanding Convertible Preferred Stock, Holders of the Convertible Preferred Stock will have no rights to the Company’s remaining assets or funds, if any. If such assets or funds are insufficient to fully pay such amount on all outstanding shares of Convertible Preferred Stock and the corresponding amounts payable in respect of all outstanding shares of Liquidation Parity Stock, if any, then, subject to the rights of any of the Company’s creditors or holders of any outstanding Liquidation Senior Stock, such assets or funds will be distributed ratably on the outstanding shares of Convertible Preferred Stock and Liquidation Parity Stock in proportion to the full respective distributions to which such shares would otherwise be entitled.
Certain Business Combination Transactions Deemed Not to Be a Liquidation. For purposes of Section 6(a), the Company’s consolidation or combination with, or merger with or into, or the sale, lease or other transfer of all or substantially all of the Company’s assets (other than a sale, lease or other transfer in connection with the Company’s liquidation, dissolution or winding up) to, another Person will not, in itself, constitute the Company’s liquidation, dissolution or winding up, even if, in connection therewith, the Convertible Preferred Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing.
Right of the Company to Redeem the Convertible Preferred Stock.
No Right to Redeem Before the Redemption Trigger Date. The Company shall not redeem the Convertible Preferred Stock before the Redemption Trigger Date.
Right to Redeem the Convertible Preferred Stock on or After Redemption Trigger Date. Subject to the terms of this Section 7, the Company has the right, at its election, to redeem all, but not less than all, of the Convertible Preferred Stock, at any time, on a Redemption Date on or after Redemption Trigger Date, for a cash purchase price equal to the Redemption Price.
Redemption Prohibited in Certain Circumstances. The Company will not call for Redemption, or otherwise send a Redemption Notice in respect of the Redemption of, any Convertible Preferred Stock pursuant to this Section 7 unless (i) the Company has sufficient funds legally available, and is permitted under the terms of its indebtedness for borrowed money, to fully pay the Redemption Price in respect of all shares of Convertible Preferred Stock called for Redemption; and (ii) the Common Stock Liquidity Conditions are satisfied with respect to such Redemption.
Redemption Date. The Redemption Date for any Redemption will be a Business Day of the Company’s choosing that is no more than sixty (60), nor less than thirty (30), calendar days after the Redemption Notice Date for such Redemption.
Redemption Price. The Redemption Price for any share of Convertible Preferred Stock to be repurchased pursuant to a Redemption is an amount in cash equal to the Liquidation Preference of such share at the Close of Business on the Redemption Date for such Redemption plus accumulated and unpaid Regular Dividends on such share to, but excluding, such Redemption Date (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).
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Redemption Notice. To call any share of Convertible Preferred Stock for Redemption, the Company must send to the Holder of such share a notice of such Redemption (a “Redemption Notice”). Such Redemption Notice must state:
(i) that such share has been called for Redemption, briefly describing the Company’s Redemption right under this Certificate of Designations;
(ii) the Redemption Date for such Redemption;
(iii) the Redemption Price per share of Convertible Preferred Stock;
(iv) that, provided that the Requisite Stockholder Approval has been obtained, Convertible Preferred Stock called for Redemption may be converted at any time before the Close of Business on the Business Day immediately before the Redemption Date (or, if the Company fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Company pays such Redemption Price in full); provided that if the Requisite Stockholder Approval has not been obtained, the Convertible Preferred Stock called for Redemption may be converted at any time before the Close of Business on the Business Day immediately before the Redemption Date up to the Ownership Limitation; and
(v) the Conversion Rate in effect on the Redemption Notice Date for such Redemption.
Payment of the Redemption Price. The Company will cause the Redemption Price for each share of Convertible Preferred Stock subject to Redemption to be paid to the Holder thereof on or before the applicable Redemption Date.
Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control.
Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control. Subject to the other terms of this Section 8, if a Change of Control occurs, then each Holder will have the right (the “Change of Control Repurchase Right”) to require the Company to repurchase all, or any whole number of shares that is less than all, of such Holder’s Convertible Preferred Stock on the Change of Control Repurchase Date for such Change of Control for a purchase price equal to the Change of Control Repurchase Price.
Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions. Notwithstanding anything to the contrary in this Section 8, but subject to Section 16, (i) the Company will not be obligated to pay the Change of Control Repurchase Price of any shares of Convertible Preferred Stock to the extent, and only to the extent, the Company does not have sufficient funds legally available to pay the same; and (ii) if the Company does not have sufficient funds legally available to pay the Change of Control Repurchase Price of all shares of Convertible Preferred Stock that are otherwise to be repurchased pursuant to a Repurchase Upon Change of Control and does not elect to pay the Change of Control Repurchase
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Price in shares of Common Stock (or other securities) pursuant to Section 8(d), then (1) the Company will pay the maximum amount of such Change of Control Repurchase Price that can be paid out of funds legally available for payment, which payment will be made pro rata to each Holder based on the total number of shares of Convertible Preferred Stock of such Holder that were otherwise to be repurchased pursuant to such Repurchase Upon Change of Control; and (2) the Company will cause all such shares as to which the Change of Control Repurchase Price was not paid to be returned to the Holder(s) thereof, and such shares will be deemed to remain outstanding. The Company will not voluntarily take any action, or voluntarily engage in any transaction, that would result in a Change of Control unless the Company has (and will have through the date of payment) sufficient funds legally available to fully pay the maximum aggregate Change of Control Repurchase Price that would be payable in respect of such Change of Control on all shares of Convertible Preferred Stock then outstanding, assuming that the Company elects, if it is then permitted to do so, to pay such Change of Control Repurchase Price by delivering shares of Common Stock (or other securities) pursuant to Section 8(d).
Change of Control Repurchase Date. The Change of Control Repurchase Date for any Change of Control will be a Business Day of the Company’s choosing that is no more than twenty (20), nor less than ten (10), Business Days after the date the Company sends the related Change of Control Notice pursuant to Section 8(e).
Change of Control Repurchase Price. The Change of Control Repurchase Price for any share of Convertible Preferred Stock to be repurchased upon a Repurchase Upon Change of Control following a Change of Control is an amount equal to (i) if the Change of Control occurs prior to the first anniversary of the Initial Issue Date, one hundred percent (100%) or (ii) if the Change of Control occurs on or after the first anniversary of the Initial Issue Date, one hundred and fifty percent (150%), in each case of the sum of (1) the Liquidation Preference of such share at the Close of Business on such Change of Control Repurchase Date and (2) accumulated and unpaid Regular Dividends on such share to, but excluding, such Change of Control Repurchase Date (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference); provided that the Change of Control Repurchase Price may be paid, at the Company’s election, in (x) cash, (y) shares of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) valued based on the arithmetic average of the Last Reported Sale Prices (determined, in the case of other securities, by replacing references therein to Common Stock with such securities) of the Common Stock (or such other securities) over the five consecutive Trading Day period ending on, and including, the second Trading Day immediately preceding the Change of Control Repurchase Date (with the number of shares of Common Stock rounded up to the nearest whole share of Common Stock) or (z) a combination thereof; provided further that the Company may not elect to deliver shares of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) in partial or full satisfaction of the Change of Control Repurchase Price if the Common Stock Liquidity Conditions are not satisfied (determined, in the case of other securities, by replacing references therein to Common Stock with such securities), and the Company’s right to elect to deliver shares of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) shall be subject to the limitation set forth in Section 10(h) as if the same were a conversion of the Convertible Preferred Stock.
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Change of Control Notice. On or before the Business Day after the effective date of a Change of Control, the Company will send to each Holder a notice of such Change of Control (a “Change of Control Notice”). Such Change of Control Notice must state:
(i) briefly, the events causing such Change of Control;
(ii) the effective date of such Change of Control;
(iii) the procedures that a Holder must follow to require the Company to repurchase its Convertible Preferred Stock pursuant to this Section 8, including the deadline for exercising the Change of Control Repurchase Right and the procedures for submitting and withdrawing a Change of Control Repurchase Notice;
(iv) the Change of Control Repurchase Date for such Change of Control;
(v) the Change of Control Repurchase Price per share of Convertible Preferred Stock and the proportion of the Change of Control Repurchase Price to be paid in cash and the proportion to be paid in shares of Common Stock (or other securities);
(vi) the Conversion Rate in effect on the date of such Change of Control Notice and a description and quantification of any adjustments to the Conversion Rate that may result from such Change of Control;
(vii) that shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has been duly tendered and not duly withdrawn must be delivered to the Company for the Holder thereof to be entitled to receive the Change of Control Repurchase Price; and
(viii) that shares of Convertible Preferred Stock that are subject to a Change of Control Repurchase Notice that has been duly tendered may be converted only if such Change of Control Repurchase Notice is withdrawn in accordance with this Certificate of Designations.
Procedures to Exercise the Change of Control Repurchase Right.
(i) Delivery of Change of Control Repurchase Notice and Shares of Convertible Preferred Stock to Be Repurchased. To exercise its Change of Control Repurchase Right for any share(s) of Convertible Preferred Stock following a Change of Control, the Holder thereof must deliver to the Company:
(1) before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or such later time as may be required by law), a duly completed, written Change of Control Repurchase Notice with respect to such share(s); and
(2) such share(s), duly endorsed for transfer, to the extent such share(s) are represented by one or more Physical Certificates.
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(ii) Contents of Change of Control Repurchase Notices. Each Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock must state:
(1) if such share(s) are represented by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be repurchased, which must be a whole number; and
(3) that such Holder is exercising its Change of Control Repurchase Right with respect to such share(s).
(iii) Withdrawal of Change of Control Repurchase Notice. A Holder that has delivered a Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock may withdraw such Change of Control Repurchase Notice by delivering a written notice of withdrawal to the Company at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date. Such withdrawal notice must state:
(1) if such share(s) are represented by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be withdrawn, which must be a whole number; and
(3) the number of shares of Convertible Preferred Stock, if any, that remain subject to such Change of Control Repurchase Notice, which must be a whole number.
If any Holder delivers to the Company any such withdrawal notice withdrawing any share(s) of Convertible Preferred Stock from any Change of Control Repurchase Notice previously delivered to the Company, and such share(s) have been surrendered to the Company, then such share(s) will be returned to the Holder thereof.
Payment of the Change of Control Repurchase Price. Subject to Section 8(b), the Company will cause the Change of Control Repurchase Price for each share of Convertible Preferred Stock to be repurchased pursuant to a Repurchase Upon Change of Control to be paid to the Holder thereof on or before the later of (i) the applicable Change of Control Repurchase Date; and (ii) the date such share is tendered to the Transfer Agent or the Company.
Voting Rights. The Convertible Preferred Stock will have no voting rights except as set forth in this Section 9 or as provided in the Certificate of Incorporation or required by the Delaware General Corporation Law.
Voting and Consent Rights with Respect to Specified Matters.
(i) Generally. Subject to the other provisions of this Section 9(a), while any
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Convertible Preferred Stock is outstanding, each following event will require, and cannot be effected without, the affirmative vote or consent of Holders, and holders of each class or series of Voting Parity Stock, if any, with similar voting or consent rights with respect to such event, representing at least a majority of the combined outstanding voting power of the Convertible Preferred Stock and such Voting Parity Stock, if any:
(1) any amendment or modification of the Certificate of Incorporation to authorize or create, or to increase the authorized number of shares of, any class or series of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock;
(2) any amendment, modification or repeal of any provision of the Certificate of Incorporation or this Certificate of Designations that adversely affects the rights, preferences or voting powers of the Convertible Preferred Stock (other than an amendment, modification or repeal permitted by Section 9(a)(iii));
(3) increase or decrease the number of authorized shares of Convertible Preferred Stock (except as permitted herein) or issue additional shares of Convertible Preferred Stock; or
(4) the Company’s consolidation or combination with, or merger with or into, another Person, or any binding or statutory share exchange or reclassification involving the Convertible Preferred Stock, in each case unless:
(A) the Convertible Preferred Stock either (x) remains outstanding after such consolidation, combination, merger, share exchange or reclassification; or (y) is converted or reclassified into, or is exchanged for, or represents solely the right to receive, preference securities of the continuing, resulting or surviving Person of such consolidation, combination, merger, share exchange or reclassification, or the parent thereof;
(B) the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, have rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the Holders or the holders thereof, as applicable, than the rights, preferences and voting powers, taken as a whole, of the Convertible Preferred Stock immediately before the consummation of such consolidation, combination, merger, share exchange or reclassification; and
(C) the issuer of the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, is a corporation duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that, if not the Company, will succeed to the Company under this Certificate of Designations and the Convertible Preferred Stock;
provided, however, that (x) a consolidation, combination, merger, share exchange or
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reclassification that satisfies the requirements of clauses (A), (B) and (C) of Section 9(a)(i)(3) will not require any vote or consent pursuant to Section 9(a)(i)(1) or 9(a)(i)(2); and (y) each of the following will be deemed not to adversely affect the rights, preferences or voting powers of the Convertible Preferred Stock (or cause any of the rights, preferences or voting powers of any such preference securities to be “materially less favorable” for purposes of Section 9(a)(i)(4)(B)) and will not require any vote or consent pursuant to Section 9(a)(i)(1), 9(a)(i)(2) or 9(a)(i)(3):
(I) any increase in the number of the authorized but unissued shares of the Company’s undesignated preferred stock;
(II) the creation and issuance, in and of itself, or increase in the authorized or issued number, of any class or series of stock that constitutes both Dividend Junior Stock and Liquidation Junior Stock; and
(III) the application of Section 10(i), including the execution and delivery of any supplemental instruments pursuant to Section 10(i)(iii) solely to give effect to such provision.
(ii) Where Some But Not All Classes or Series of Stock Are Adversely Affected. If any event set forth in Section 9(a)(i)(1), 9(a)(i)(2) or 9(a)(i)(3) would adversely affect the rights, preferences or voting powers of one or more, but not all, classes or series of Voting Parity Stock (which term, solely for purposes of this sentence, includes the Convertible Preferred Stock), then those classes or series whose rights, preferences or voting powers would not be adversely affected will be deemed not to have voting or consent rights with respect to such event. Furthermore, an amendment, modification or repeal described in Section 9(a)(i)(2) above that adversely affects the special rights, preferences or voting powers of the Convertible Preferred Stock cannot be effected without the affirmative vote or consent of Holders, voting separately as a class, of at least a majority of the Convertible Preferred Stock then outstanding.
(iii) Certain Amendments Permitted Without Consent. Notwithstanding anything to the contrary in Section 9(a)(i)(2), the Company may amend, modify or repeal any of the terms of the Convertible Preferred Stock without the vote or consent of any Holder to:
(1) cure any ambiguity or correct any omission, defect or inconsistency in this Certificate of Designations or the Certificates representing the Convertible Preferred Stock, including the filing of a certificate of correction, or a corrected instrument, pursuant to Section 103(f) of the Delaware General Corporation Law in connection therewith; or
(2) make any other change to the Certificate of Incorporation, this Certificate of Designations or the Certificates representing the Convertible Preferred Stock that does not, individually or in the aggregate with all other such changes, adversely affect the rights of any Holder (other than any Holders that have consented to such change), as such, in any material respect.
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Right to Vote with Holders of Common Stock on an As-Converted Basis. Subject to the other provisions of, and without limiting the other voting rights provided in, this Section 9, and except as provided in the Certificate of Incorporation or required by the Delaware General Corporation Law or the rules of any applicable securities exchange on which the Company’s securities may then be listed or admitted for trading, the Holders will have the right to vote together as a single class with the holders of the Common Stock on each matter submitted for a vote or consent by the holders of the Common Stock, and, for these purposes, (i) the Convertible Preferred Stock of each Holder will entitle such Holder to be treated as if such Holder were the holder of record, as of the record or other relevant date for such matter, of a number of shares of Common Stock equal to the number of shares of Common Stock that would be issuable (determined in accordance with Section 10(e), including Section 10(e)(ii) and Section 10(h), except that for purposes of this Section 9(b), the Conversion Rate shall be deemed not to exceed 87.7963 shares of Common Stock, subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Common Stock) upon conversion of such Convertible Preferred Stock assuming such Convertible Preferred Stock were converted pursuant to an Optional Conversion with a Conversion Date occurring on such record or other relevant date; and (ii) the Holders will be entitled to notice of all stockholder meetings or proposed actions by written consent in accordance with the Certificate of Incorporation, the Bylaws of the Company, and the Delaware General Corporation Law as if the Holders were holders of Common Stock. For the avoidance of doubt, the voting rights set forth in this Section 9(b) will be limited or eliminated, as applicable, to the same extent to which the right to convert the Convertible Preferred Stock is limited or eliminated pursuant to Section 10(h).
Procedures for Voting and Consents.
(i) Rules and Procedures Governing Votes and Consents. If any vote or consent of the Holders will be held or solicited, including at a regular annual meeting or a special meeting of stockholders, then (1) the Board of Directors will adopt customary rules and procedures at its discretion to govern such vote or consent, subject to the other provisions of this Section 9; and (2) such rules and procedures may include fixing a record date to determine the Holders (and, if applicable, holders of Voting Parity Stock) that are entitled to vote or provide consent, as applicable, rules governing the solicitation and use of proxies or written consents and customary procedures for the nomination and designation, by Holders (and, if applicable, holders of Voting Parity Stock), of Preferred Stock Directors for election; provided, however, that with respect to any voting rights of the Holders pursuant to Section 9(b), such rules and procedures will be the same rules and procedures that apply to holders of the Common Stock with respect to the applicable matter referred to in Section 9(b).
(ii) Voting Power of the Convertible Preferred Stock and Voting Parity Stock. Each share of Convertible Preferred Stock will be entitled to one vote on each matter on which the Holders of the Convertible Preferred Stock are entitled to vote separately as a class and not together with the holders of any other class or series of stock. The respective voting powers of the Convertible Preferred Stock and all classes or series of Voting Parity Stock entitled to vote on any matter together as a single class will be determined (including for purposes of determining whether a plurality, majority or other applicable portion of votes has been obtained) in proportion to their respective liquidation amounts. Solely for
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purposes of the preceding sentence, the liquidation amount of the Convertible Preferred Stock or any such class or series of Voting Parity Stock will be the maximum amount payable in respect of the Convertible Preferred Stock or such class or series, as applicable, assuming the Company is liquidated on the record date for the applicable vote or consent (or, if there is no record date, on the date of such vote or consent).
(iii) Voting Standard for the Election of Preferred Stock Directors. At any meeting in which the Convertible Preferred Stock (and, if applicable, any class or series of Voting Parity Stock) is entitled to elect any Preferred Stock Director (including to fill any vacancy in the office of any Preferred Stock Director), the presence, in person or by proxy, of Holders of Convertible Preferred Stock (and, if applicable, holders of each such class or series) representing a majority of the outstanding voting power of the Convertible Preferred Stock (and, if applicable, each such class or series) will constitute a quorum. The affirmative vote of a majority of the outstanding voting power of the Convertible Preferred Stock (and, if applicable, each such class or series) so present at such a meeting at which a quorum is present will be sufficient to elect the Preferred Stock Director(s).
(iv) Written Consent in Lieu of Stockholder Meeting. A consent or affirmative vote of the Holders pursuant to Section 9(a) may be given or obtained either in writing without a meeting or in person or by proxy at a regular annual meeting or a special meeting of stockholders.
Conversion.
Generally. Subject to the provisions of this Section 10, the Convertible Preferred Stock may be converted only pursuant to a Mandatory Conversion or an Optional Conversion.
Conversion at the Option of the Holders.
(i) Conversion Right; When Shares May Be Submitted for Optional Conversion. Holders will have the right to submit all, or any whole number of shares that is less than all, of their shares of Convertible Preferred Stock pursuant to an Optional Conversion at any time; provided, however, that, notwithstanding anything to the contrary in this Certificate of Designations,
(1) if a Change of Control Repurchase Notice is validly delivered pursuant to Section 8(f)(i) with respect to any share of Convertible Preferred Stock, then such share may not be submitted for Optional Conversion, except to the extent (A) such share is not subject to such notice; (B) such notice is withdrawn in accordance with Section 8(f)(iii); or (C) the Company fails to pay the Change of Control Repurchase Price for such share in accordance with this Certificate of Designations;
(2) shares of Convertible Preferred Stock that are called for Redemption may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Redemption Date (or, if the Company fails to pay the Redemption Price due on such Redemption Date in full, at any time
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until such time as the Company pays such Redemption Price in full); and
(3) shares of Convertible Preferred Stock that are subject to Mandatory Conversion may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Mandatory Conversion Date.
(ii) Conversions of Fractional Shares Not Permitted. Notwithstanding anything to the contrary in this Certificate of Designations, in no event will any Holder be entitled to convert a number of shares of Convertible Preferred Stock that is not a whole number.
(c) Mandatory Conversion at the Company’s Election.
(i) Mandatory Conversion Right. Subject to the provisions of this Section 10, the Company has the right (the “Mandatory Conversion Right”), exercisable at its election, to designate any Business Day after the second anniversary of the Initial Issue Date as a Conversion Date for the conversion (such a conversion, a “Mandatory Conversion”) of all, but not less than all, of the outstanding shares of Convertible Preferred Stock, but only if the Last Reported Sale Price per share of Common Stock exceeds the product of (i) the Conversion Price in effect as of such date and (ii) 115% on each of at least twenty (20) Trading Days (whether or not consecutive) during the thirty (30) consecutive Trading Days ending on, and including, the Trading Day immediately before the Mandatory Conversion Notice Date for such Mandatory Conversion.
(ii) Mandatory Conversion Prohibited in Certain Circumstances. The Company will not exercise its Mandatory Conversion Right, or otherwise send a Mandatory Conversion Notice, with respect to any Convertible Preferred Stock pursuant to this Section 10(c) unless (1) the Common Stock Liquidity Conditions are satisfied with respect to the Mandatory Conversion and (2) either (x) the Requisite Stockholder Approval is obtained or (y) the Company has previously held one or more meetings of stockholders for the purposes of obtaining the Requisite Stockholder Approval and the Mandatory Conversion Date for such Mandatory Conversion occurs after the second anniversary of the Initial Issue Date. Notwithstanding anything to the contrary in this Section 10(c), the Company’s exercise of its Mandatory Conversion Right, and any related Mandatory Conversion Notice, will not apply to any share of Convertible Preferred Stock as to which a Change of Control Repurchase Notice has been duly delivered, and not withdrawn, pursuant to Section 8(f).
(iii) Mandatory Conversion Date. The Mandatory Conversion Date for any Mandatory Conversion will be a Business Day of the Company’s choosing that is no more than fifteen (15), nor less than ten (10), Business Days after the Mandatory Conversion Notice Date for such Mandatory Conversion.
(iv) Mandatory Conversion Notice. To exercise its Mandatory Conversion Right with respect to any shares of Convertible Preferred Stock, the Company must send to each Holder of such shares a written notice of such exercise (a “Mandatory Conversion Notice”).
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Such Mandatory Conversion Notice must state:
(1) that the Company has exercised its Mandatory Conversion Right to cause the Mandatory Conversion of the shares, briefly describing the Company’s Mandatory Conversion Right under this Certificate of Designations;
(2) the Mandatory Conversion Date for such Mandatory Conversion and the date scheduled for the settlement of such Mandatory Conversion;
(3) that shares of Convertible Preferred Stock subject to Mandatory Conversion may be converted earlier at the option of the Holders thereof pursuant to an Optional Conversion at any time before the Close of Business on the Business Day immediately before the Mandatory Conversion Date; and
(4) the Conversion Price and the Conversion Rate in effect on the Mandatory Conversion Notice Date for such Mandatory Conversion.
Conversion Procedures.
(i) Mandatory Conversion. If the Company duly exercises, in accordance with this Section 10(c), its Mandatory Conversion Right with respect to any share of Convertible Preferred Stock, then (1) the Mandatory Conversion of such share will occur automatically and without the need for any action on the part of the Holder(s) thereof; and (2) the shares of Common Stock due upon such Mandatory Conversion will be registered in the name of, and, if applicable, the cash due upon such Mandatory Conversion will be delivered to, the Holder(s) of such share of Convertible Preferred Stock as of the Close of Business on the related Mandatory Conversion Date.
(ii) Requirements for Holders to Exercise Optional Conversion Right.
(1) Generally. To convert any share of Convertible Preferred Stock pursuant to an Optional Conversion, the Holder of such share must (w) complete, manually sign and deliver to the Company a Conversion Notice; (x) deliver any Physical Certificate representing such Convertible Preferred Stock to the Company (at which time such Optional Conversion will become irrevocable); (y) furnish any endorsements and transfer documents that the Company may require; and (z) if applicable, pay any documentary or other taxes as pursuant to Section 11(d).
(2) Optional Conversion Permitted only During Business Hours. Convertible Preferred Stock may be surrendered for Optional Conversion only after the Open of Business and before the Close of Business on a day that is a Business Day.
(iii) No Adjustments for Accumulated Regular Dividends. Without limiting the operation of Sections 5(a)(ii)(1) and 10(e)(i), the Conversion Rate will not be adjusted to account for any accumulated and unpaid Regular Dividends on any Convertible Preferred Stock being converted.
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(iv) When Holders Become Stockholders of Record of the Shares of Common Stock Issuable Upon Conversion. The Person in whose name any share of Common Stock is issuable upon conversion of any Convertible Preferred Stock will be deemed to become the holder of record of such share as of the Close of Business on the Conversion Date for such conversion.
Settlement upon Conversion.
(i) Generally. Subject to Section 10(e)(ii), Section 10(h) and Section 14(b), the consideration due upon settlement of the conversion of each share of Convertible Preferred Stock will consist of a number of shares of Common Stock equal to the product of (A) the Conversion Rate in effect immediately before the Close of Business on the Conversion Date for such conversion; and (B) the quotient obtained by dividing (I) the sum of (x) the Liquidation Preference of such share of Convertible Preferred Stock immediately before the Close of Business on such Conversion Date; and (y) an amount equal to accumulated and unpaid Regular Dividends on such share of Convertible Preferred Stock to, but excluding, such Conversion Date (but only to the extent such accumulated and unpaid Regular Dividends are not included in the Liquidation Preference referred to in the preceding clause (x)), by (II) the Initial Liquidation Preference per share of Convertible Preferred Stock.
(ii) Payment of Cash in Lieu of any Fractional Share of Common Stock. Subject to Section 14(b), if any fractional share of Common Stock is otherwise due upon conversion of any Convertible Preferred Stock, the Company may, at its option, (i) issue an additional fraction of a share of Common Stock such that the total number of shares of Common Stock issuable pursuant to such conversion equals the next highest whole number of shares of Common Stock or (ii) to the extent it is legally able to do so, either arrange for the disposition of fractional interests by those entitled thereto or pay in cash the fair value thereof, which value will be based on the Last Reported Sale Price per share of Common Stock on the Conversion Date for such conversion (or, if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(iii) Delivery of Conversion Consideration. The Company will pay or deliver, as applicable, the Conversion Consideration due upon conversion of any Convertible Preferred Stock on or before the second (2nd) Business Day immediately after the Conversion Date for such conversion.
Conversion Rate Adjustments.
(i) Events Requiring an Adjustment to the Conversion Rate. The Conversion Rate will be adjusted from time to time as follows:
(1) Stock Dividends, Splits and Combinations. If the Company issues solely shares of Common Stock as a dividend or distribution on all or substantially all shares of the Common Stock, or if the Company effects a stock split or a stock combination of the Common Stock (in each case excluding an issuance solely pursuant to a Common Stock Change Event, as to which Section 10(i) will apply),
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then the Conversion Rate will be adjusted based on the following formula:
where:
CR0 = the Conversion Rate in effect immediately before the Close of Business on the Record Date for such dividend or distribution, or immediately before the Close of Business on the effective date of such stock split or stock combination, as applicable;
CR1 = the Conversion Rate in effect immediately after the Close of Business on such Record Date or effective date, as applicable;
OS0 = the number of shares of Common Stock outstanding immediately before the Close of Business on such Record Date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and
OS1 = the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, stock split or stock combination.
If any dividend, distribution, stock split or stock combination of the type described in this Section 10(f)(i)(1) is declared or announced, but not so paid or made, then the Conversion Rate will be readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution or to effect such stock split or stock combination, to the Conversion Rate that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced.
(2) Degressive Issuances. Subject to Section 10(h), if, at any time during the period from, and including, the Initial Issue Date to, and including, the Degressive Issuance Sunset Date, the Company or any of its Subsidiaries issues or otherwise sells any shares of Common Stock, or any Equity-Linked Securities, in each case at an Effective Price per share of Common Stock that is less than the Conversion Price in effect (before giving effect to the adjustment required by this Section 10(f)(i)(2)) as of the date of the issuance or sale of such shares or Equity-Linked Securities (such an issuance or sale, a “Degressive Issuance”), then, effective as of the Close of Business on such date, the Conversion Rate will be increased to an amount equal to (x) the Initial Liquidation Preference per share of Convertible Preferred Stock, divided by (y) such Effective Price per share of Common Stock; provided, however, that (A) the Conversion Rate will not be adjusted pursuant to this Section 10(f)(i)(2) solely as a result of an Exempt Issuance; (B) the issuance of shares of Common Stock pursuant to any such Equity-
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Linked Securities will not constitute an additional issuance or sale of shares of Common Stock for purposes of this Section 10(f)(i)(2) (it being understood, for the avoidance of doubt, that the issuance or sale of such Equity-Linked Securities, or any re-pricing or amendment thereof, will be subject to this Section 10(f)(i)(2)); and (C) in no event will the Conversion Rate be decreased pursuant to this Section 10(f)(i)(2).
For purposes of this Section 10(f)(i)(2), any re-pricing or amendment of any Equity-Linked Securities (including, for the avoidance of doubt, any Equity-Linked Securities existing as of the Initial Issue Date) will be deemed to be the issuance of additional Equity-Linked Securities, without affecting any prior adjustments theretofore made to the Conversion Rate.
(ii) No Other Required Adjustments. Without limiting the operation of Sections 5(a)(ii)(1) and 10(e)(i), the Company will not be required to adjust the Conversion Rate except pursuant to Section 10(f)(i).
(iii) Determination of the Number of Outstanding Shares of Common Stock. For purposes of Section 10(f)(i), the number of shares of Common Stock outstanding at any time will (1) include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock; and (2) exclude shares of Common Stock held in the Company’s treasury (unless the Company pays any dividend or makes any distribution on shares of Common Stock held in its treasury).
(iv) Calculations. All calculations with respect to the Conversion Rate and adjustments thereto will be made to the nearest 1/10,000th unit (with 5/100,000ths rounded upward).
(v) Notice of Conversion Rate Adjustments. Upon the effectiveness of any adjustment to the Conversion Rate pursuant to Section 10(f)(i), the Company will promptly send notice to the Holders containing (1) a brief description of the transaction or other event on account of which such adjustment was made; (2) the Conversion Rate in effect immediately after such adjustment; and (3) the effective time of such adjustment.
Voluntary Conversion Rate Increases.
(i) Generally. To the extent permitted by law and applicable stock exchange rules, the Company, from time to time, may (but is not required to) increase the Conversion Rate by any amount if (1) the Board of Directors determines that such increase is advisable to avoid or diminish any income tax imposed on holders of Common Stock or rights to purchase Common Stock as a result of any dividend or distribution of shares (or rights to acquire shares) of Common Stock or any similar event; (2) such increase is in effect for a period of at least twenty (20) Business Days; and (3) such increase is irrevocable during such period.
(ii) Notice of Voluntary Increase. If the Board of Directors determines to increase the Conversion Rate pursuant to Section 10(g)(i), then, no later than the first
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Business Day of the related twenty (20) Business Day period referred to in Section 10(g)(i), the Company will send notice to each Holder of such increase to the Conversion Rate, the amount thereof and the period during which such increase will be in effect.
Restriction on Conversions and Certain Degressive Issuances.
(i) Limitation on Conversion Right. Notwithstanding anything to the contrary in this Certificate of Designations, unless and until the Requisite Stockholder Approval is obtained, no shares of Common Stock will be issued or delivered upon conversion of any Convertible Preferred Stock of any Holder, and no Convertible Preferred Stock of any Holder will be convertible, in each case to the extent, and only to the extent, that (x) such issuance, delivery, conversion or convertibility would result in such Holder or a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) beneficially owning in excess of nineteen and ninety-nine-one-hundredths percent (19.99%) of the outstanding shares of Common Stock as of the date of the Investment Agreement or (y) the number of shares of Common Stock deliverable per share of Convertible Preferred Stock in such conversion would exceed the Conversion Share Cap (the restrictions set forth in this sentence, the “Ownership Limitation”). For these purposes, beneficial ownership and calculations of percentage ownership will be determined in accordance with Rule 13d-3 under the Exchange Act; provided that, for the avoidance of doubt, shares of Series B Convertible Preferred Stock held by any Holder shall not count towards the Ownership Limitation for any such Holder.
If any Conversion Consideration otherwise due upon the conversion of any Convertible Preferred Stock is not delivered as a result of the Ownership Limitation, then the Company’s obligation to deliver such Conversion Consideration will not be extinguished, and the Company will deliver such Conversion Consideration as soon as reasonably practicable after the Holder of such Convertible Preferred Stock provides written evidence satisfactory to the Company that such delivery will not contravene the Ownership Limitation.
(ii) Limitation of Adjustments for Certain Degressive Issuances. Notwithstanding anything to the contrary in this Certificate of Designations, unless and until the Requisite Stockholder Approval is obtained, no adjustment will be made to the Conversion Rate pursuant to Section 10(f)(i)(2) to the extent, but only to the extent, such adjustment would cause the Conversion Price to be less than $11.39 per share of Common Stock (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Common Stock). Unless and until the Requisite Stockholder Approval is obtained, the Company will not, without the prior written consent of Holders of a majority of the Convertible Preferred Stock then outstanding, effect any Degressive Issuance if the adjustment on account of such Degressive Issuance pursuant to Section 10(f)(i)(2) would be limited by the preceding sentence. If the Requisite Stockholder Approval is obtained at any time after any adjustment to the Conversion Rate is limited pursuant to the first sentence of this Section 10(h)(ii), then, effective as of the time such Requisite Stockholder Approval is obtained, the Conversion Rate will be adjusted to the Conversion Rate that would then be in effect assuming that the first sentence of this Section 10(h)(ii) had not applied to any prior adjustment to the Conversion Rate.
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(iii) Covenant to Seek the Requisite Stockholder Approval; Adjustment to Regular Dividend Rate. The Company will use its reasonable best efforts to obtain the Requisite Stockholder Approval, including by seeking such approval, if not previously obtained, at each future special meeting and regular annual meeting of its stockholders following the Initial Issue Date and endorsing its approval in the related proxy materials (including a preliminary proxy statement that the Company shall cause to be filed with the SEC within 10 calendar days after the Initial Issue Date); provided, however, that each party acknowledges that such stockholder meeting may be postponed or adjourned in accordance with the Company’s bylaws or as otherwise required by applicable law if (x) there is an insufficient number of shares of Common Stock present or represented by proxy at such stockholder meeting to conduct business at such stockholder meeting, (y) the Company is required to postpone or adjourn such stockholder meeting by applicable law or a request from the SEC or its staff, or (z) the Company determines in good faith that it is necessary or appropriate to postpone or adjourn such stockholder meeting in order to give the stockholders sufficient time to evaluate any supplemental information or disclosure that the Company has sent or otherwise made available to them. If the Requisite Stockholder Approval is not obtained on or before the Requisite Stockholder Approval Deadline Date, then the Regular Dividend Rate will be increased by one percent (1%) during the period from, and including, the Requisite Stockholder Approval Deadline Date to, but excluding, the date when the Requisite Stockholder Approval is first obtained, if at all.
Effect of Common Stock Change Event.
(i) Generally. If there occurs any:
(1) recapitalization, reclassification or change of the Common Stock, other than (x) changes solely resulting from a subdivision or combination of the Common Stock, (y) a change only in par value or from par value to no par value or no par value to par value or (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities;
(2) consolidation, merger, combination or binding or statutory share exchange involving the Company;
(3) sale, lease or other transfer of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person; or
(4) other similar event,
and, as a result, the Common Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing (such an event, a “Common Stock Change Event,” and such other securities, cash or property, the “Reference Property,” and the amount and kind of Reference Property that a holder of one (1) share of Common Stock would be entitled to receive on account of such Common Stock Change Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property),
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a “Reference Property Unit”), then, notwithstanding anything to the contrary in this Certificate of Designations,
(A) from and after the effective time of such Common Stock Change Event, (I) the consideration due upon conversion of any Convertible Preferred Stock will be determined in the same manner as if each reference to any number of shares of Common Stock in this Section 10 or in Section 11, or in any related definitions, were instead a reference to the same number of Reference Property Units; (II) for purposes of Section 10(c), each reference to any number of shares of Common Stock in such Section (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units; and (III) for purposes of the definition of “Change of Control,” the terms “Common Stock” and “common equity” will be deemed to mean the common equity (including depositary receipts representing common equity), if any, forming part of such Reference Property; and
(B) for these purposes, the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities will be the fair value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof).
If the Reference Property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per share of Common Stock, by the holders of Common Stock. The Company will notify the Holders of such weighted average as soon as practicable after such determination is made.
(ii) Compliance Covenant. The Company will not become a party to any Common Stock Change Event unless its terms are consistent with this Section 10(i).
(iii) Execution of Supplemental Instruments. On or before the date the Common Stock Change Event becomes effective, the Company and, if applicable, the resulting, surviving or transferee Person (if not the Company) of such Common Stock Change Event (the “Successor Person”) will execute and deliver such supplemental instruments, if any, as the Company reasonably determines are necessary or desirable to (1) provide for subsequent adjustments to the Conversion Rate pursuant to Section 10(f)(i) in a manner consistent with this Section 10(i); and (2) give effect to such other provisions, if any, as the Company reasonably determines are appropriate to preserve the economic interests of the Holders and to give effect to Section 10(i)(i). If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such other Person will also execute such supplemental instrument(s) and such supplemental instrument(s) will contain such additional provisions, if any, that the Company reasonably determines are appropriate to preserve the economic interests of Holders.
(iv) Notice of Common Stock Change Event. The Company will provide notice
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of each Common Stock Change Event to Holders no later than the effective date of the Common Stock Change Event.
Certain Provisions Relating to the Issuance of Common Stock.
Equitable Adjustments to Prices. Whenever this Certificate of Designations requires the Company to calculate the average of the Last Reported Sale Prices, or any function thereof, over a period of multiple days (including to calculate an adjustment to the Conversion Rate), the Company will make appropriate adjustments, if any, to those calculations to account for any adjustment to the Conversion Rate pursuant to Section 10(f)(i) that becomes effective, or any event requiring such an adjustment to the Conversion Rate where the Record Date or effective date, as applicable, of such event occurs, at any time during such period.
Reservation of Shares of Common Stock. The Company will reserve, out of its authorized, unreserved and not outstanding shares of Common Stock, for delivery upon conversion of the Convertible Preferred Stock, a number of shares of Common Stock that would be sufficient to settle the conversion of all shares of Convertible Preferred Stock then outstanding, if any. To the extent the Company delivers shares of Common Stock held in the Company’s treasury in settlement of any obligation under this Certificate of Designations to deliver shares of Common Stock, each reference in this Certificate of Designations to the issuance of shares of Common Stock in connection therewith will be deemed to include such delivery.
Status of Shares of Common Stock. Each share of Common Stock delivered upon conversion of on the Convertible Preferred Stock of any Holder will be a newly issued or treasury share and will be duly and validly issued, fully paid, non-assessable, free from preemptive rights and free of any lien or adverse claim (except to the extent of any lien or adverse claim created by the action or inaction of such Holder or the Person to whom such share of Common Stock will be delivered). If the Common Stock is then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Company will use commercially reasonable efforts to cause each such share of Common Stock, when so delivered, to be admitted for listing on such exchange or quotation on such system. In addition, if such Convertible Preferred Stock is then represented by a Global Certificate, then each such share of Common Stock will be so delivered through the facilities of the applicable Depositary (and identified by an “unrestricted” CUSIP number (and, if applicable, ISIN number) if the Convertible Preferred Stock represented by such Global Certificate is represented by an “unrestricted” CUSIP or ISIN number).
Taxes Upon Issuance of Common Stock. The Company will pay any documentary, stamp or similar issue or transfer tax or duty due on the issue of any shares of Common Stock upon conversion of the Convertible Preferred Stock of any Holder, except any tax or duty that is due because such Holder requests those shares to be registered in a name other than such Holder’s name.
No Preemptive Rights. Without limiting the rights of Preferred Stockholders set forth in this Certificate of Designations (including in connection with the issuance of Common Stock or Reference Property upon conversion of the Convertible Preferred Stock), the Convertible Preferred Stock will not have any preemptive rights to subscribe for or purchase any of the Company’s securities.
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Tax Treatment. Notwithstanding anything to the contrary in this Certificate of Designations, for U.S. federal and other applicable state and local income tax purposes, it is intended that the Convertible Preferred Stock will not be treated as “preferred stock” within the meaning of Section 305(b)(4) of Code and Treasury Regulations Section 1.305-5(a). The Company will, and will cause its Subsidiaries and agents to, report consistently with, and take no positions or actions inconsistent with, the foregoing treatment (including by way of withholding) unless otherwise required by a determination within the meaning of Section 1313(a) of the Code.
Calculations.
Responsibility; Schedule of Calculations. Except as otherwise provided in this Certificate of Designations, the Company will be responsible for making all calculations called for under this Certificate of Designations or the Convertible Preferred Stock, including determinations of the Conversion Rate, the Last Reported Sale Prices, the Conversion Share Cap, the Liquidation Preference and accumulated Regular Dividends on the Convertible Preferred Stock. The Company will make all calculations in good faith, and, absent manifest error, its calculations will be final and binding on all Holders. The Company will provide a schedule of such calculations to any Holder upon written request.
Calculations Aggregated for Each Holder. The composition of the Conversion Consideration due upon conversion of the Convertible Preferred Stock of any Holder will be computed based on the total number of shares of Convertible Preferred Stock of such Holder being converted with the same Conversion Date. For these purposes, any cash amounts due to such Holder in respect thereof will be rounded to the nearest cent.
Notices. The Company will send all notices or communications to Holders pursuant to this Certificate of Designations in writing by first class mail, certified or registered, return receipt requested, by email (deemed to have been delivered upon sending of such email, so long as notice shall be sent by first class mail on the next Business Day thereafter) or by overnight air courier guaranteeing next day delivery, to the Holders’ respective addresses shown on the Register.
Legally Available Funds. Without limiting the rights of the Preferred Stockholders (including pursuant to Section 6), if the Company does not have sufficient funds legally available to fully pay any cash amount otherwise due on the Convertible Preferred Stock, then the Company will pay the deficiency promptly after funds thereafter become legally available therefor.
No Other Rights. The Convertible Preferred Stock will have no rights, preferences or voting powers except as provided in this Certificate of Designations or the Certificate of Incorporation or as required by applicable law.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be duly executed as of the date first written above.
| Katapult Holdings, Inc. | |||
| By: | /s/ Orlando Zayas | ||
| Name: | Orlando Zayas | ||
| Title: | CEO | ||
EXHIBIT A
FORM OF CONVERTIBLE PREFERRED STOCK
[Insert Restricted Stock Legend, if applicable]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.
Katapult Holdings, Inc.
Series A Convertible Preferred Stock
Certificate No. [___]
Katapult Holdings, Inc., a Delaware corporation (the “Company”), certifies that [____] is the registered owner of [___] shares of the Company’s Series A Convertible Preferred Stock (the “Convertible Preferred Stock”) represented by this certificate (this “Certificate”). The special rights, preferences and voting powers of the Convertible Preferred Stock are set forth in the Certificate of Designations of the Company establishing the Convertible Preferred Stock (the “Certificate of Designations”). Capitalized terms used in this Certificate without definition have the respective meanings ascribed to them in the Certificate of Designations.
Additional terms of this Certificate are set forth on the other side of this Certificate.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
A-1
IN WITNESS WHEREOF, Katapult Holdings, Inc. has caused this instrument to be duly executed as of the date set forth below.
| Katapult Holdings, Inc. | |||||
| Date: | By: | ||||
| Name: | |||||
| Title: | |||||
| Date: | By: | ||||
| Name: | |||||
| Title: | |||||
A-2
KATAPULT HOLDINGS, INC.
Series A Convertible Preferred Stock
This Certificate represents duly authorized, issued and outstanding shares of Convertible Preferred Stock. Certain terms of the Convertible Preferred Stock are summarized below. Notwithstanding anything to the contrary in this Certificate, to the extent that any provision of this Certificate conflicts with the provisions of the Certificate of Designations or the Certificate of Incorporation, the provisions of the of the Certificate of Designations or the Certificate of Incorporation, as applicable, will control.
1. Method of Payment. Cash amounts due on the Convertible Preferred Stock represented by this Certificate will be paid in the manner set forth in Section 3(e) of the Certificate of Designations.
2. Persons Deemed Owners. The Person in whose name this Certificate is registered will be treated as the owner of the Convertible Preferred Stock represented by this Certificate for all purposes, subject to Section 3(l) of the Certificate of Designations.
3. Denominations; Transfers and Exchanges. All shares of Convertible Preferred Stock will be in registered form and in denominations equal to any whole number of shares. Subject to the terms of the Certificate of Designations and the Investment Agreement, and subject to compliance with applicable Federal and state securities laws, the Holder of the Convertible Preferred Stock represented by this Certificate may transfer or exchange this Convertible Preferred Stock by presenting this Certificate to the Company and delivering any required documentation or other materials.
4. Dividends. Dividends on the Convertible Preferred Stock will accumulate and will be paid in the manner, and subject to the terms, set forth in Section 5 of the Certificate of Designations.
5. Liquidation Preference. The Liquidation Preference per share of Convertible Preferred Stock is initially equal to the Initial Liquidation Preference per share of Convertible Preferred Stock; provided, however, that the Liquidation Preference is subject to adjustment pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2) of the Certificate of Designations. The rights of Holders upon the Company’s liquidation, dissolution or winding up are set forth in Section 6 of the Certificate of Designations.
6. Right of the Company to Redeem the Convertible Preferred Stock. The Company will have the right to redeem the Convertible Preferred Stock in the manner, and subject to the terms, set forth in Section 7 of the Certificate of Designations.
7. Voting Rights. Holders of the Convertible Preferred Stock have the voting rights set forth in Section 9 of the Certificate of Designations.
8. Conversion. The Convertible Preferred Stock will be convertible into Conversion
A-3
Consideration in the manner, and subject to the terms, set forth in Section 10 of the Certificate of Designations.
9. Abbreviations. Customary abbreviations may be used in the name of a Holder or its assignee, such as TEN COM (tenants in common), TEN ENT (tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
* * *
To request a copy of the Certificate of Designations, which the Company will provide to any Holder at no charge, please send a written request to the following address:
Katapult Holdings, Inc.
5360 Legacy Drive, Building 2
Plano, Texas 75024
A-4
CONVERSION NOTICE
KATAPULT HOLDINGS, INC.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designations, by executing and delivering this Conversion Notice, the undersigned Holder of the Convertible Preferred Stock identified below directs the Company to convert (check one):
| o | all of the shares of Convertible Preferred Stock |
| o | * shares of Convertible Preferred Stock |
identified by Certificate No. .
| Date: | |||||
| (Legal Name of Holder) | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Signature Guaranteed: | |||||
| Participant in a Recognized Signature | |||||
| Guarantee Medallion Program | |||||
| By: | |||||
| Authorized Signatory | |||||
_____________
| * | Must be a whole number. |
A-5
CHANGE OF CONTROL REPURCHASE NOTICE
KATAPULT HOLDINGS, INC.
Series A Convertible Preferred Stock
Subject to the terms of the Certificate of Designations, by executing and delivering this Change of Control Repurchase Notice, the undersigned Holder of the Convertible Preferred Stock identified below is exercising its Change of Control Repurchase Right with respect to (check one):
| o | all of the shares of Convertible Preferred Stock |
| o | 2 shares of Convertible Preferred Stock |
identified by Certificate No. .
The undersigned acknowledges that Certificate identified above, duly endorsed for transfer, must be delivered to the Company before the Change of Control Repurchase Price will be paid.
| Date: | |||||
| (Legal Name of Holder) | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Signature Guaranteed: | |||||
| Participant in a Recognized Signature | |||||
| Guarantee Medallion Program | |||||
| By: | |||||
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| 1 | Must be a whole number. |
A-6
EXHIBIT B
FORM OF RESTRICTED STOCK LEGEND
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
BEFORE THE REGISTRATION OF ANY SALE OR TRANSFER, THE COMPANY RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATES OR OTHER DOCUMENTATION OR EVIDENCE AS THEY MAY REASONABLY REQUIRE IN ORDER FOR THE COMPANY TO DETERMINE THAT THE PROPOSED SALE OR TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
B-1
Exhibit 3.2
Execution Version
Katapult Holdings, Inc.
Certificate of Designations
Series B Convertible Preferred Stock
November 3, 2025
Table of Contents
| Page | ||
| Section 1. | Definitions | 1 |
| Section 2. | Rules of Construction | 13 |
| Section 3. | The Convertible Preferred Stock | 13 |
| (a) | Designation; Par Value | 13 |
| (b) | Number of Authorized Shares | 14 |
| (c) | Form, Dating and Denominations | 14 |
| (d) | Execution, Countersignature and Delivery | 14 |
| (e) | Method of Payment; Delay When Payment Date is Not a Business Day | 15 |
| (f) | Register | 15 |
| (g) | Legends | 16 |
| (h) | Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions. | 17 |
| (i) | Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption | 18 |
| (j) | Status of Retired Shares | 18 |
| (k) | Replacement Certificates | 19 |
| (l) | Registered Holders | 19 |
| (m) | Cancellation | 19 |
| (n) | Shares Held by the Company | 19 |
| (o) | Outstanding Shares | 19 |
| (p) | Notations and Exchanges | 20 |
| Section 4. | Ranking | 21 |
| Section 5. | Dividends | 21 |
| (a) | Generally | 21 |
| (b) | Participating Dividends | 22 |
| Section 6. | Rights Upon Liquidation, Dissolution or Winding Up | 23 |
| (a) | Generally | 23 |
| (b) | Certain Business Combination Transactions Deemed Not to Be a Liquidation | 24 |
| Section 7. | Right of the Company to Redeem the Convertible Preferred Stock | 24 |
| (a) | No Right to Redeem Before the Redemption Trigger Date | 24 |
| (b) | Right to Redeem the Convertible Preferred Stock on or After Redemption Trigger Date | 24 |
| (c) | Redemption Prohibited in Certain Circumstances | 24 |
| (d) | Redemption Date | 24 |
| (e) | Redemption Price | 24 |
| (f) | Redemption Notice | 25 |
| (g) | Payment of the Redemption Price | 25 |
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| Section 8. | Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control | 25 |
| (a) | Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control | 25 |
| (b) | Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions | 25 |
| (c) | Change of Control Repurchase Date | 26 |
| (d) | Change of Control Repurchase Price | 26 |
| (e) | Change of Control Notice | 27 |
| (f) | Procedures to Exercise the Change of Control Repurchase Right | 27 |
| (g) | Payment of the Change of Control Repurchase Price | 28 |
| Section 9. | Voting Rights | 28 |
| (a) | Voting and Consent Rights with Respect to Specified Matters | 29 |
| (b) | Procedures for Voting and Consents | 31 |
| Section 10. | Conversion | 32 |
| (a) | Generally | 32 |
| (b) | Conversion at the Option of the Holders | 32 |
| (c) | Mandatory Conversion at the Company’s Election. | 32 |
| (d) | Conversion Procedures | 33 |
| (e) | Settlement upon Conversion | 34 |
| (f) | Conversion Rate Adjustments | 35 |
| (g) | Voluntary Conversion Rate Increases | 37 |
| (h) | Restriction on Conversions and Certain Degressive Issuances | 37 |
| (i) | Effect of Common Stock Change Event | 39 |
| Section 11. | Certain Provisions Relating to the Issuance of Common Stock | 40 |
| (a) | Equitable Adjustments to Prices | 40 |
| (b) | Reservation of Shares of Common Stock | 40 |
| (c) | Status of Shares of Common Stock | 41 |
| (d) | Taxes Upon Issuance of Common Stock | 41 |
| Section 12. | No Preemptive Rights | 41 |
| Section 13. | Tax Treatment | 41 |
| Section 14. | Calculations | 41 |
| (a) | Responsibility; Schedule of Calculations | 41 |
| (b) | Calculations Aggregated for Each Holder | 42 |
| Section 15. | Notices | 42 |
| Section 16. | Legally Available Funds | 42 |
| Section 17. | No Other Rights | 42 |
| Exhibits | ||
| Exhibit A: | Form of Preferred Stock Certificate | A-1 |
| Exhibit B: | Form of Restricted Stock Legend | B-1 |
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Certificate of Designations
Series B Convertible Preferred Stock
On November 3, 2025, (the “Effective Date”) the Board of Directors of Katapult Holdings, Inc., a Delaware corporation (the “Company”), adopted the following resolution designating and creating, out of the authorized and unissued shares of preferred stock of the Company, Thirty Thousand (30,000) authorized shares of a series of preferred stock of the Company titled the “Series B Convertible Preferred Stock”:
RESOLVED that, pursuant to the Certificate of Incorporation, the Bylaws and applicable law, a series of preferred stock of the Company titled the “Series B Convertible Preferred Stock,” and having a par value of $0.0001 per share and an initial number of authorized shares equal to Thirty Thousand (30,000), is hereby designated and created out of the authorized and unissued shares of preferred stock of the Company, which series has the rights, designations, preferences, voting powers and other provisions set forth below:
Section 1. Definitions.
“Affiliate” has the meaning set forth in Rule 144.
“Board of Directors” means the Company’s board of directors or a committee of such board duly authorized to act on behalf of such board.
“Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Capital Stock” of any Person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
“Certificate” means any Physical Certificate or Electronic Certificate.
“Certificate of Designations” means this Certificate of Designations, as amended or supplemented from time to time.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company, as amended by that certain Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated July 27, 2023, and as further amended or modified from time to time prior to the date hereof.
“Change of Control” means any of the following events:
(a) a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than Hawthorn, its affiliates or any group of which Hawthorn or its affiliates is a part, the Company or their respective Wholly Owned Subsidiaries, files any report with the SEC
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indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of shares of the Company’s common equity representing more than fifty percent (50%) of the voting power of all of the Company’s then-outstanding common equity; or
(b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property; provided, however, that any merger, consolidation, share exchange or combination of the Company pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) all classes of the Company’s common equity immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50%) of all classes of common equity of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction will be deemed not to be a Change of Control pursuant to this clause (b).
For the purposes of this definition, (x) any transaction or event described in both clause (a) and in clause (b)(i) or (ii) above (without regard to the proviso in clause (b)) will be deemed to occur solely pursuant to clause (b) above (subject to such proviso); and (y) whether a Person is a “beneficial owner” and whether shares are “beneficially owned” will be determined in accordance with Rule 13d-3 under the Exchange Act.
“Change of Control Notice” has the meaning set forth in Section 8(e).
“Change of Control Repurchase Date” means the date fixed, pursuant to Section 8(c), for the repurchase of any Convertible Preferred Stock by the Company pursuant to a Repurchase Upon Change of Control.
“Change of Control Repurchase Notice” means a notice (including a notice substantially in the form of the “Change of Control Repurchase Notice” set forth in Exhibit A) containing the information, or otherwise complying with the requirements, set forth in Section 8(f)(i) and Section 8(f)(ii).
“Change of Control Repurchase Price” means the price payable by the Company to repurchase any share of Convertible Preferred Stock upon its Repurchase Upon Change of Control, calculated pursuant to Section 8(d).
A “Change of Control Repurchase Price Default” will be deemed to occur upon any failure to pay the Change of Control Repurchase Price for a Change of Control in full when due as provided in this Certificate of Designations. A Change of Control Repurchase Price Default that has occurred will be deemed to continue until such time when the Change of Control Repurchase Price is paid in full, at which time such Change of Control Repurchase Price Default will be deemed to be cured and cease to be continuing.
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“Change of Control Repurchase Right” has the meaning set forth in Section 8(a).
“Close of Business” means 5:00 p.m., New York City time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, $0.0001 par value per share, of the Company, subject to Section 10(i).
“Common Stock Change Event” has the meaning set forth in Section 10(i)(i).
“Common Stock Liquidity Conditions” will be satisfied with respect to a Mandatory Conversion, repurchase in connection with a Change of Control or Redemption if:
(a) (i) either (1) each share of Common Stock to be issued upon such Mandatory Conversion of any share of Convertible Preferred Stock or that may be issued as part of the Change of Control Repurchase Price for any share of Convertible Preferred Stock subject to repurchase in connection with such Change of Control or upon conversion of any share of Convertible Preferred Stock that is subject to such Redemption would be eligible to be offered, sold or otherwise transferred by the Holder of such share of Convertible Preferred Stock pursuant to Rule 144 under the Securities Act (or any successor rule thereto), without any requirements as to volume, manner of sale, availability of current public information (whether or not then satisfied) or notice; or (2) the offer and sale of such share of Common Stock by such Holder are registered pursuant to an effective registration statement under the Securities Act and such registration statement is reasonably expected by the Company to remain effective and usable, by the Holder to sell such share of Common Stock, continuously during the period from, and including, the date the related Mandatory Conversion Notice, Change of Control Repurchase Notice or Redemption Notice, as applicable, is sent to, and including, the thirtieth day after the date such share of Common Stock is issued; and (ii) the offer, sale or other transfer of such share of Common Stock by such Holder would not be subject to any registration or notice requirement under any U.S. State securities or “blue sky” laws;
(b) each share of Common Stock referred to in clause (a) above (i) will, when issued (or, in the case of clause (a)(i)(2), when sold or otherwise transferred pursuant to the registration statement referred to in such clause) (1) be admitted for book-entry settlement through the Depositary with an “unrestricted” CUSIP number; and (2) not be represented by any certificate that bears a legend referring to transfer restrictions under the Securities Act or other securities laws; and (ii) will, when issued, be listed and admitted for trading, without suspension or material limitation on trading, on any of The New York Stock Exchange or Nasdaq, including The NASDAQ Global Market, The NASDAQ Capital Market or The NASDAQ Global Select Market (or any of their respective successors);
(c) (i) the Company has not received any written threat or notice of delisting or suspension by the applicable exchange referred to in clause (b)(iii) above with a reasonable prospect of delisting, after giving effect to all applicable notice and appeal periods; and (ii) no such
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delisting or suspension is reasonably likely to occur or is pending based on the Company falling below the minimum listing maintenance requirements of such exchange;
(d) no trading or other policy of the Company would reasonably be expected to prohibit or restrict in any manner the sale or transfer of any share of Common Stock referred to in clause (a) above by such Holder at any time during the period from, and including, the date the related Mandatory Conversion Notice, Change of Control Repurchase Notice or Redemption Notice, as applicable, is sent to, and including, the thirtieth day after the date such share of Common Stock is issued; and
(e) the conversion of all shares of Convertible Preferred Stock pursuant to such Mandatory Conversion or that are subject to such repurchase or Redemption, as applicable, would not be limited or otherwise restricted by Section 10(h).
“Common Stock Participating Dividend” has the meaning set forth in Section 5(b)(i).
“Company” means Katapult Holdings, Inc., a Delaware corporation.
“Conversion Consideration” means, with respect to the conversion of any Convertible Preferred Stock, the type and amount of consideration payable to settle such conversion, determined in accordance with Section 10.
“Conversion Date” means an Optional Conversion Date or a Mandatory Conversion Date.
“Conversion Notice” means a notice substantially in the form of the “Conversion Notice” set forth in Exhibit A.
“Conversion Price” means, as of any time, an amount equal to (a) the Initial Liquidation Preference per share of Convertible Preferred Stock divided by (b) the Conversion Rate in effect at such time.
“Conversion Rate” initially means the Convertible Share Amount per one thousand dollars ($1,000.00) of Liquidation Preference of the Convertible Preferred Stock; provided, however, that the Conversion Rate is subject to adjustment pursuant to Sections 10(f) and 10(g). Each reference in this Certificate of Designations or the Convertible Preferred Stock to the Conversion Rate as of a particular date without setting forth a particular time on such date will be deemed to be a reference to the Conversion Rate immediately before the Close of Business on such date.
“Conversion Share” means any share of Common Stock issued or issuable upon conversion of any Convertible Preferred Stock.
“Conversion Share Cap” means the number of shares of Common Stock equal to (i) 19.99% of the total number of shares of Common Stock outstanding as of the Initial Issue Date, divided by (ii) 65,000 (such quotient subject to proportionate adjustment for share dividends, share splits or share combinations with respect to the Common Stock).
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“Convertible Preferred Stock” has the meaning set forth in Section 3(a).
“Convertible Share Amount” means a number of shares of Common Stock equal to the quotient of (i) $1,000 divided by (ii) the Last Reported Sale Price per share of Common Stock on the Trading Day immediately preceding the Initial Issue Date.
“Degressive Issuance” has the meaning set forth in Section 10(f)(i)(2).
“Degressive Issuance Sunset Date” means the date that is nine (9) calendar months after the Initial Issue Date.
“Depositary” means The Depository Trust Company or its successor.
“Depositary Participant” means any member of, or participant in, the Depositary.
“Dividend” means any Regular Dividend or Participating Dividend.
“Dividend Junior Stock” means any class or series of the Company’s stock whose terms do not expressly provide that such class or series will rank senior to, or equally with, the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively). Dividend Junior Stock includes the Common Stock and Series A Convertible Preferred Stock.
“Dividend Parity Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank equally with the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Dividend Payment Date” means each Regular Dividend Payment Date with respect to a Regular Dividend and each date on which any declared Participating Dividend is scheduled to be paid on the Convertible Preferred Stock.
“Dividend Senior Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank senior to the Convertible Preferred Stock with respect to the payment of dividends (without regard to whether or not dividends accumulate cumulatively).
“Effective Price” has the following meaning with respect to the issuance or sale of any shares of Common Stock or any Equity-Linked Securities:
(a) in the case of the issuance or sale of shares of Common Stock, the value of the consideration received by the Company for such shares, expressed as an amount per share of Common Stock; and
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(b) in the case of the issuance or sale of any Equity-Linked Securities, an amount equal to a fraction whose:
(i) numerator is equal to sum, without duplication, of (x) the value of the aggregate consideration received by the Company for the issuance or sale of such Equity-Linked Securities; and (y) the value of the minimum aggregate additional consideration, if any, payable to purchase or otherwise acquire shares of Common Stock pursuant to such Equity-Linked Securities; and
(ii) denominator is equal to the maximum number of shares of Common Stock underlying such Equity-Linked Securities;
provided, however, that:
(w) for purposes of clauses (a) and (b)(i) above, all underwriting commissions, placement agency commissions or similar commissions paid to any broker-dealer by the Company or any of its Affiliates in connection with such issuance or sale (excluding any other fees or expenses incurred by the Company or any of its Affiliates) will be added to the aggregate consideration referred to in such clause;
(x) for purposes of clause (b) above, if such minimum aggregate consideration, or such maximum number of shares of Common Stock, is not determinable at the time such Equity-Linked Securities are issued or sold, then (1) the initial consideration payable under such Equity-Linked Securities, or the initial number of shares of Common Stock underlying such Equity-Linked Securities, as applicable, will be used; and (2) at each time thereafter when such amount of consideration or number of shares becomes determinable or is otherwise adjusted (including pursuant to “anti-dilution” or similar provisions), there will be deemed to occur, for purposes of Section 10(f)(i)(2) and without affecting any prior adjustments theretofore made to the Conversion Rate, an issuance of additional Equity-Linked Securities;
(y) for purposes of clause (b) above, the surrender, extinguishment, maturity or other expiration of any such Equity-Linked Securities will be deemed not to constitute consideration payable to purchase or otherwise acquire shares of Common Stock pursuant to such Equity-Linked Securities; and
(z) the “value” of any such consideration will be the fair value thereof, as of the date such shares or Equity-Linked Securities, as applicable, are issued or sold, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof).
“Electronic Certificate” means any electronic book-entry maintained by the Transfer Agent that represents any share(s) of Convertible Preferred Stock.
“Equity-Linked Securities” means any rights, options or warrants to purchase or otherwise acquire (whether immediately, during specified times, upon the satisfaction of any conditions or otherwise) any shares of Common Stock.
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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempt Issuance” means (a) the Company’s issuance of any securities as full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of all or substantially all of the securities or assets of a corporation or other entity; (b) the Company’s issuance or grant of shares of Common Stock or options to purchase shares Common Stock to employees, directors or consultants of the Company or any of its Subsidiaries, pursuant to plans that have been approved by a majority of the independent members of the Board of Directors or that exist as of the Initial Issue Date; (c) the Company’s issuance of securities upon the exercise, exchange or conversion of any securities that are exercisable or exchangeable for, or convertible into, shares of Common Stock and are outstanding as of the Initial Issue Date, provided that such exercise, exchange or conversion is effected pursuant to the terms of such securities as in effect on the Initial Issue Date; (d) the Company’s issuance of securities pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by a majority of the disinterested members of the Board of Directors; (e) the Company’s issuance of the Convertible Preferred Stock and any shares of Common Stock upon conversion of the Convertible Preferred Stock; and (f) the Company’s issuance of the Series A Convertible Preferred Stock and any shares of Common Stock upon conversion of the Series A Convertible Preferred Stock. For purposes of this definition, “consultant” means a consultant that may participate in an “employee benefit plan” in accordance with the definition of such term in Rule 405 under the Securities Act.
“Hawthorn” means Hawthorn Horizon Credit Fund, LLC, a Delaware limited liability company.
“Holder” means a person in whose name any Convertible Preferred Stock is registered in the Register.
“Initial Issue Date” means November 3, 2025.
“Initial Liquidation Preference” means one thousand dollars ($1,000.00) per share of Convertible Preferred Stock.
“Investment Agreement” means the Series B Investment Agreement, dated as of November 3, 2025, by and among the Company and HHCF Series 21 Sub, LLC.
“Junior Stock” means any Dividend Junior Stock or Liquidation Junior Stock.
“Last Reported Sale Price” of the Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of the Common Stock on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is then listed. If the Common Stock is not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted
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bid price per share of Common Stock on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per share of Common Stock on such Trading Day from each of at least three nationally recognized independent investment banking firms the Company selects.
“Liquidation Junior Stock” means any class or series of the Company’s stock whose terms do not expressly provide that such class or series will rank senior to, or equally with, the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up. Liquidation Junior Stock includes the Common Stock and Series A Convertible Preferred Stock.
“Liquidation Parity Stock” means any class or series of the Company’s stock (other than the Convertible Preferred Stock) whose terms expressly provide that such class or series will rank equally with the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.
“Liquidation Preference” means, with respect to the Convertible Preferred Stock, an amount initially equal to the Initial Liquidation Preference per share of Convertible Preferred Stock; provided, however, that the Liquidation Preference is subject to adjustment for compounding pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2).
“Liquidation Senior Stock” means any class or series of the Company’s stock whose terms expressly provide that such class or series will rank senior to the Convertible Preferred Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.
“Mandatory Conversion” has the meaning set forth in Section 10(c)(i).
“Mandatory Conversion Date” means a Conversion Date designated with respect to any Convertible Preferred Stock pursuant to Section 10(c)(i) and Section 10(c)(iii).
“Mandatory Conversion Notice” has the meaning set forth in Section 10(c)(iv).
“Mandatory Conversion Notice Date” means, with respect to a Mandatory Conversion, the date on which the Company sends the Mandatory Conversion Notice for such Mandatory Conversion pursuant to Section 10(c)(iv).
“Mandatory Conversion Right” has the meaning set forth in Section 10(c)(i).
“Market Disruption Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the Common Stock is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or
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otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.
“Nasdaq” means The Nasdaq Stock Market LLC (or such other Nasdaq market on which the Common Stock then trades).
“Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Chief Accounting Officer, the Secretary or any Vice-President of the Company.
“Open of Business” means 9:00 a.m., New York City time.
“Optional Conversion” means the conversion of any Convertible Preferred Stock other than a Mandatory Conversion.
“Optional Conversion Date” means, with respect to the Optional Conversion of any Convertible Preferred Stock, the first Business Day on which the requirements set forth in Section 10(d)(ii) for such conversion are satisfied.
“Ownership Limitation” has the meaning set forth in Section 10(h)(i).
“Participating Dividend” has the meaning set forth in Section 5(b)(i).
“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. Any division or series of a limited liability company, limited partnership or trust will constitute a separate “person” under this Certificate of Designations.
“Physical Certificate” means any certificate (other than an Electronic Certificate) representing any share(s) of Convertible Preferred Stock, which certificate is substantially in the form set forth in Exhibit A, registered in the name of the Holder of such share(s) and duly executed by the Company and countersigned by the Transfer Agent.
“Preferred Stock Director” each director that the Holders have the right to elect to the Board of Directors pursuant to that certain Director Nomination Agreement, dated as of the Initial Issue Date by and among the Company and HHCF Series 21 Sub, LLC.
“Record Date” means, with respect to any dividend or distribution on, or issuance to holders of, Convertible Preferred Stock or Common Stock, the date fixed (whether by law, contract or the Board of Directors or otherwise) to determine the Holders or the holders of Common Stock, as applicable, that are entitled to such dividend, distribution or issuance.
“Redemption” means the repurchase of any Convertible Preferred Stock by the Company pursuant to Section 7.
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“Redemption Date” means the date fixed, pursuant to Section 7(d), for the settlement of the repurchase of the Convertible Preferred Stock by the Company pursuant to a Redemption.
“Redemption Notice” has the meaning set forth in Section 7(f).
“Redemption Notice Date” means, with respect to a Redemption of the Convertible Preferred Stock, the date on which the Company sends the related Redemption Notice pursuant to Section 7(f).
“Redemption Price” means the consideration payable by the Company to repurchase any Convertible Preferred Stock upon its Redemption, calculated pursuant to Section 7(e).
“Redemption Trigger Date” means November 3, 2027.
“Reference Property” has the meaning set forth in Section 10(i)(i).
“Reference Property Unit” has the meaning set forth in Section 10(i)(i).
“Register” has the meaning set forth in Section 3(f).
“Regular Dividend Payment Date” means with respect to any share of Convertible Preferred Stock, (i) prior to the date that the Requisite Stockholder Approval is obtained, the first Wednesday (or, if such day is not a Business Day, the immediately succeeding Business Day) after the Initial Issue Date and each Wednesday occurring thereafter (or, if such day is not a Business Day, the immediately succeeding Business Day), and (ii) after the date that the Requisite Stockholder Approval is obtained, each January 1, April 1, July 1 and October 1 (or, if such day is not a Business Day, the immediately succeeding Business Day) of each year.
“Regular Dividend Period” means each period from, and including, a Regular Dividend Payment Date (or, in the case of the first Regular Dividend Period, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date.
“Regular Dividend Rate” means (i) for the period beginning on, and including, the Initial Issue Date and ending on, but excluding, the later of (a) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (b) the date of the Company’s 2026 annual meeting of stockholders, eighteen percent (18%) per annum, and (ii) beginning on, and including, the later of (a) the date of the meeting at which the Company’s stockholders vote for the Requisite Stockholder Approval is approved and (b) the date of the Company’s 2026 annual meeting of stockholders, twelve percent (12%) per annum; provided, however, that, in each case, the Regular Dividend Rate is subject to adjustment pursuant to Section 10(h)(iii).
“Regular Dividends” has the meaning set forth in Section 5(a)(i)(1).
“Repurchase Upon Change of Control” means the repurchase of any Convertible Preferred Stock by the Company pursuant to Section 8.
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“Requisite Stockholder Approval” means the stockholder approval contemplated by the Nasdaq listing rules with respect to the issuance of shares of Common Stock upon conversion of the Convertible Preferred Stock and the Series A Convertible Preferred Stock in excess of the limitations imposed by such rules; provided, however, that the Requisite Stockholder Approval will be deemed to be obtained if, due to any amendment or binding change in the interpretation of the applicable listing standards of the Nasdaq, such stockholder approval is no longer required for the Company to settle all conversions of the Convertible Preferred Stock and Series A Convertible Preferred Stock in shares of Common Stock without regard to Section 10(h); provided further, that the Requisite Stockholder Approval shall be required even if the price per share is greater than (i) the closing price (as reflected on Nasdaq.com) immediately preceding the signing of the Investment Agreement; or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Investment Agreement.
“Requisite Stockholder Approval Deadline Date” means the earlier of (a) the date of the Company’s first annual or special meeting of stockholders following the Initial Issue Date; and (b) February 27, 2026.
“Restricted Stock Legend” means a legend substantially in the form set forth in Exhibit B.
“Rule 144” means Rule 144 under the Securities Act (or any successor rule thereto), as the same may be amended from time to time.
“Scheduled Trading Day” means any day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, then “Scheduled Trading Day” means a Business Day.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Security” means any Convertible Preferred Stock or Conversion Share.
“Series A Certificate of Designations” means that certain Certificate of Designations of the Company establishing the Series A Convertible Preferred Stock.
“Series A Convertible Preferred Stock” means a series of stock of the Company titled the “Series A Convertible Preferred Stock” designated pursuant to that certain Series A Certificate of Designations.
“Subsidiary” means, with respect to any Person, (a) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of
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the total voting power of the Capital Stock entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (b) any partnership or limited liability company where (x) more than fifty percent (50%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (y) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Successor Person” has the meaning set forth in Section 10(i)(iii).
“Trading Day” means any day on which (a) trading in the Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded; and (b) there is no Market Disruption Event. If the Common Stock is not so listed or traded, then “Trading Day” means a Business Day.
“Transfer Agent” means the Company (and, for the avoidance of doubt, (i) any requirement herein for the Transfer Agent to countersign a document or instrument shall be deemed satisfied if the Company has signed such document or instrument and (ii) in such role, the Company is not acting as the agent of any Holder).
“Transfer-Restricted Security” means any Security that constitutes a “restricted security” (as defined in Rule 144); provided, however, that such Security will cease to be a Transfer-Restricted Security upon the earliest to occur of the following events:
(a) such Security is sold or otherwise transferred to a Person (other than the Company or an Affiliate of the Company) pursuant to a registration statement that was effective under the Securities Act at the time of such sale or transfer;
(b) such Security is sold or otherwise transferred to a Person (other than the Company or an Affiliate of the Company) pursuant to an available exemption (including Rule 144) from the registration and prospectus-delivery requirements of, or in a transaction not subject to, the Securities Act and, immediately after such sale or transfer, such Security ceases to constitute a “restricted security” (as defined in Rule 144); and
(c) (i) such Security is eligible for resale, by a Person that is not an Affiliate of the Company and that has not been an Affiliate of the Company during the immediately preceding three (3) months, pursuant to Rule 144 without any limitations thereunder as to volume, manner of sale, availability of current public information or notice; and (ii) the Company has received such certificates or other documentation or evidence as the Company may reasonably require to
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determine that the Holder, holder or beneficial owner of such Security is not, and that has not been during the immediately preceding three (3) months, an Affiliate of the Company.
“Voting Parity Stock” means, with respect to any matter as to which Holders are entitled to vote pursuant to Section 9(a), each class or series of outstanding stock of the Company that constitutes both Dividend Parity Stock and Liquidation Parity Stock, if any, upon which similar voting rights are conferred and are exercisable with respect to such matter.
“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person.
Section 2. Rules of Construction. For purposes of this Certificate of Designations:
(a) “or” is not exclusive;
(b) “including” means “including without limitation”;
(c) “will” expresses a command;
(d) the “average” of a set of numerical values refers to the arithmetic average of such numerical values;
(e) a merger involving, or a transfer of assets by, a limited liability company, limited partnership or trust will be deemed to include any division of or by, or an allocation of assets to a series of, such limited liability company, limited partnership or trust, or any unwinding of any such division or allocation;
(f) words in the singular include the plural and in the plural include the singular, unless the context requires otherwise;
(g) “herein,” “hereof” and other words of similar import refer to this Certificate of Designations as a whole and not to any particular Section or other subdivision of this Certificate of Designations, unless the context requires otherwise;
(h) references to currency mean the lawful currency of the United States of America, unless the context requires otherwise; and
(i) the exhibits, schedules and other attachments to this Certificate of Designations are deemed to form part of this Certificate of Designations.
Section 3. The Convertible Preferred Stock.
(a) Designation; Par Value. A series of stock of the Company titled the “Series B Convertible Preferred Stock” (the “Convertible Preferred Stock”) is hereby designated and created out of the authorized and unissued shares of preferred stock of the Company. The par value
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of the Convertible Preferred Stock is $0.0001 per share.
(b) Number of Authorized Shares. The total authorized number of shares of Convertible Preferred Stock is THIRTY THOUSAND (30,000); provided, however that, by resolution of the Board of Directors, the total number of authorized shares of Convertible Preferred Stock may hereafter be reduced to a number that is not less than the number of shares of Convertible Preferred Stock then outstanding.
(c) Form, Dating and Denominations.
(i) Form and Date of Certificates Representing Convertible Preferred Stock. Each Certificate representing any Convertible Preferred Stock will bear the legends required by Section 3(g) and may bear notations, legends or endorsements required by law, stock exchange rule or usage or the Depositary.
(ii) Certificates.
(1) Generally. The Convertible Preferred Stock will be originally issued initially in the form of one or more Electronic Certificates. Electronic Certificates may be exchanged for Physical Certificates, and Physical Certificates may be exchanged for Electronic Certificates, upon request by the Holder thereof pursuant to customary procedures.
(2) Electronic Certificates; Interpretation. For purposes of this Certificate of Designations, (A) each Electronic Certificate will be deemed to include the text set forth in Exhibit A; (B) any legend or other notation that is required to be included on a Certificate will be deemed to be included in any Electronic Certificate notwithstanding that such Electronic Certificate may be in a form that does not permit affixing legends thereto; (C) any reference in this Certificate of Designations to the “delivery” of any Electronic Certificate will be deemed to be satisfied upon the registration of the electronic book-entry representing such Electronic Certificate in the name of the applicable Holder; (D) upon satisfaction of any applicable requirements of the Delaware General Corporation Law, the Certificate of Incorporation and the Bylaws of the Company, and any related requirements of the Transfer Agent, in each case for the issuance of Convertible Preferred Stock in the form of one or more Electronic Certificates, such Electronic Certificates will be deemed to be executed by the Company and countersigned by the Transfer Agent.
(iii) No Bearer Certificates; Denominations. The Convertible Preferred Stock will be issued only in registered form and only in whole numbers of shares.
(iv) Registration Numbers. Each Certificate representing any Convertible Preferred Stock will bear a unique registration number that is not affixed to any other Certificate representing another outstanding Convertible Preferred Stock.
(d) Execution, Countersignature and Delivery.
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(i) Due Execution by the Company. At least two (2) duly authorized Officers will sign each Physical Certificate representing any Convertible Preferred Stock on behalf of the Company by manual or facsimile signature. The validity of any Convertible Preferred Stock will not be affected by the failure of any Officer whose signature is on any Physical Certificate representing such Convertible Preferred Stock to hold, at the time such certificate is countersigned by the Transfer Agent, the same or any other office at the Company.
(ii) Countersignature by Transfer Agent. No Physical Certificate representing any Convertible Preferred Stock will be valid until such Physical Certificate is countersigned by the Transfer Agent. Each Physical Certificate will be deemed to be duly countersigned only when an authorized signatory of the Transfer Agent (or a duly appointed agent thereof) manually signs the countersignature block set forth in such certificate.
(e) Method of Payment; Delay When Payment Date is Not a Business Day.
(i) Method of Payment. The Company will pay all cash amounts due on any Convertible Preferred Stock by check issued in the name of the Holder thereof; provided, however, that if a Holder of at least 5,000 shares of Convertible Preferred Stock has delivered to the Company, no later than the time set forth in the next sentence, a written request to receive payment by wire transfer to an account of such Holder within the United States, then the Company will pay all such cash amounts by wire transfer of immediately available funds to such account. To be timely, such written request must be delivered no later than the Close of Business on the following date: (x) with respect to the payment of any declared cash Participating Dividend due on a Dividend Payment Date for the Convertible Preferred Stock, the related Record Date; and (y) with respect to any other payment, the date that is three (3) calendar days immediately before the date such payment is due.
(ii) Delay of Payment when Payment Date is Not a Business Day. If the due date for a payment on any Convertible Preferred Stock as provided in this Certificate of Designations is not a Business Day, then, notwithstanding anything to the contrary in this Certificate of Designations, such payment may be made on the immediately following Business Day and no interest, dividend or other amount will accrue or accumulate on such payment as a result of the related delay. Solely for purposes of the immediately preceding sentence, a day on which the applicable place of payment is authorized or required by law or executive order to close or be closed will be deemed not to be a “Business Day.”
(f) Register. The Company will keep a record (the “Register”) of the names and addresses of the Holders, the number of shares of Convertible Preferred Stock held by each Holder and the transfer, exchange, repurchase, Redemption and conversion of the Convertible Preferred Stock. Absent manifest error, the entries in the Register will be conclusive and the Company and the Transfer Agent may treat each Person whose name is recorded as a Holder in the Register as a Holder for all purposes. The Register will be in written form or in any form capable of being converted into written form reasonably promptly.
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(g) Legends.
(i) Restricted Stock Legend.
(1) Each Certificate representing any share of Convertible Preferred Stock that is a Transfer-Restricted Security will bear the Restricted Stock Legend.
(2) If any share of Convertible Preferred Stock is issued in exchange for, in substitution of, or to effect a partial conversion of, any other share(s) of Convertible Preferred Stock (such other share(s) being referred to as the “old share(s)” for purposes of this Section 3(g)(i)(2)), including pursuant to Section 3(i) or 3(k), then the Certificate representing such share will bear the Restricted Stock Legend if the certificate representing such old share(s) bore the Restricted Stock Legend at the time of such exchange or substitution, or on the related Conversion Date with respect to such conversion, as applicable; provided, however, that the Certificate representing such share need not bear the Restricted Stock Legend if such share does not constitute a Transfer-Restricted Security immediately after such exchange or substitution, or as of such Conversion Date, as applicable.
(ii) Other Legends. The Certificate representing any Convertible Preferred Stock shall bear a legend substantially in the form set forth below and may bear any other legend or text, not inconsistent with this Certificate of Designations, as may be required by applicable law or by any securities exchange or automated quotation system on which such Convertible Preferred Stock is traded or quoted or as may be otherwise reasonably determined by the Company to be appropriate.
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.”
(iii) Legends on Conversion Shares.
(1) Each Conversion Share will bear a legend substantially to the same effect as the Restricted Stock Legend if the Convertible Preferred Stock upon the conversion of which such Conversion Share was issued was (or would have been had it not been converted) a Transfer-Restricted Security at the time such Conversion Share was issued; provided, however, that such Conversion Share need not bear such a legend if the Company determines, in its reasonable discretion, that such Conversion Share need not bear such a legend.
(2) Notwithstanding anything to the contrary in Section 3(g)(iii)(1), a Conversion Share need not bear a legend pursuant to Section 3(g)(iii)(1) if such Conversion Share is issued in an uncertificated form that does not permit affixing legends thereto, provided the Company takes measures (including the assignment thereto of a “restricted” CUSIP number) that it reasonably deems appropriate to
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enforce the transfer restrictions referred to in such legend.
(h) Transfers and Exchanges; Transfer Taxes; Certain Transfer Restrictions..
(i) Provisions Applicable to All Transfers and Exchanges.
(1) Generally. Subject to this Section 3(h), Convertible Preferred Stock represented by any Certificate may be transferred or exchanged from time to time, subject to Section 4.1 of the Investment Agreement and subject to compliance with applicable Federal and state securities laws, and the Company will cause each such transfer or exchange to be recorded in the Register.
(2) No Services Charge; Transfer Taxes. The Company will not impose any service charge on any Holder for any transfer, exchange or conversion of any Convertible Preferred Stock, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge that may be imposed in connection with any transfer, exchange or conversion of Convertible Preferred Stock, other than exchanges pursuant to Section 3(i) or Section 3(p) not involving any transfer.
(3) No Transfers or Exchanges of Fractional Shares. Notwithstanding anything to the contrary in this Certificate of Designations, all transfers or exchanges of Convertible Preferred Stock must be in an amount representing a whole number of shares of Convertible Preferred Stock, and no fractional share of Convertible Preferred Stock may be transferred or exchanged.
(4) Legends. Each Certificate representing any share of Convertible Preferred Stock that is issued upon transfer of, or in exchange for, another share of Convertible Preferred Stock will bear each legend, if any, required by Section 3(g).
(5) Settlement of Transfers and Exchanges. Upon satisfaction of the requirements of this Certificate of Designations to effect a transfer or exchange of any Convertible Preferred Stock, the Company will cause such transfer or exchange to be effected as soon as reasonably practicable but in no event later than the second (2nd) Business Day after the date of such satisfaction.
(ii) Transfers of Shares Subject to Redemption, Repurchase or Conversion. Notwithstanding anything to the contrary in this Certificate of Designations, the Company will not be required to register the transfer of or exchange any share of Convertible Preferred Stock:
(1) that has been surrendered for conversion;
(2) that has been called for Redemption pursuant to a Redemption Notice, except to the extent that the Company fails to pay the related Redemption Price when due; or
(3) as to which a Change of Control Repurchase Notice has been duly
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delivered, and not withdrawn, pursuant to Section 8(f), except to the extent that the Company fails to pay the related Change of Control Repurchase Price when due.
(i) Exchange and Cancellation of Convertible Preferred Stock to Be Converted or to Be Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption.
(i) Partial Conversions of Certificates and Partial Repurchases of Certificates Pursuant to a Repurchase Upon Change of Control. If only a portion of a Holder’s Convertible Preferred Stock represented by a Certificate (such Certificate being referred to as the “old Certificate” for purposes of this Section 3(i)(i)) is to be converted pursuant to Section 10 or repurchased pursuant to a Repurchase Upon Change of Control, then, as soon as reasonably practicable after such Certificate is surrendered for such conversion or repurchase, as applicable, the Company will cause such Certificate to be exchanged for (1) one or more Certificates that each represent a whole number of shares of Convertible Preferred Stock and, in the aggregate, represent a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are not to be so converted or repurchased, as applicable, and deliver such Certificate(s) to such Holder; and (2) a Certificate representing a whole number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are to be so converted or repurchased, as applicable, which Certificate will be converted or repurchased, as applicable, pursuant to the terms of this Certificate of Designations; provided, however, that the Certificate referred to in this clause (2) need not be issued at any time after which such shares subject to such conversion or repurchase, as applicable, are deemed to cease to be outstanding pursuant to Section 3(o).
(ii) Cancellation of Convertible Preferred Stock that Is Converted and Convertible Preferred Stock that Is Repurchased Pursuant to a Repurchase Upon Change of Control or a Redemption. If a Holder’s Convertible Preferred Stock represented by a Certificate (or any portion thereof that has not theretofore been exchanged pursuant to Section 3(i)(i)) (such Certificate being referred to as the “old Certificate” for purposes of this Section 3(i)(ii)) is to be converted pursuant to Section 10 or repurchased pursuant to a Repurchase Upon Change of Control or a Redemption, then, promptly after the later of the time such Convertible Preferred Stock is deemed to cease to be outstanding pursuant to Section 3(o) and the time such Certificate is surrendered for such conversion or repurchase, as applicable, (A) such Certificate will be cancelled pursuant to Section 3(m); and (B) in the case of a partial conversion or repurchase, the Company will issue, execute and deliver to such Holder, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(d), one or more Certificates that (x) each represent a whole number of shares of Convertible Preferred Stock and, in the aggregate, represent a total number of shares of Convertible Preferred Stock equal to the number of shares of Convertible Preferred Stock represented by such old Certificate that are not to be so converted or repurchased, as applicable; (y) are registered in the name of such Holder; and (z) bear each legend, if any, required by Section 3(g).
(j) Status of Retired Shares. Upon any share of Convertible Preferred Stock ceasing to be outstanding, such share will be deemed to be retired and to resume the status of an authorized
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and unissued share of preferred stock of the Company, and such share cannot thereafter be reissued as Convertible Preferred Stock.
(k) Replacement Certificates. If a Holder of any Convertible Preferred Stock claims that the Certificate(s) representing such Convertible Preferred Stock have been mutilated, lost, destroyed or wrongfully taken, then the Company will issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(c), a replacement Certificate representing such Convertible Preferred Stock upon surrender to the Company or the Transfer Agent of such mutilated Certificate, or upon delivery to the Company or the Transfer Agent of evidence of such loss, destruction or wrongful taking reasonably satisfactory to the Transfer Agent and the Company. In the case of a lost, destroyed or wrongfully taken Certificate representing any Convertible Preferred Stock, the Company and the Transfer Agent may require the Holder thereof to provide such security or indemnity that is reasonably satisfactory to the Company and the Transfer Agent to protect the Company and the Transfer Agent from any loss that any of them may suffer if such Certificate is replaced.
Every replacement Convertible Preferred Stock issued pursuant to this Section 3(k) will, upon such replacement, be deemed to be outstanding Convertible Preferred Stock, entitled to all of the benefits of this Certificate of Designations equally and ratably with all other Convertible Preferred Stock then outstanding.
(l) Registered Holders. Only the Holder of any Convertible Preferred Stock will have rights under this Certificate of Designations as the owner of such Convertible Preferred Stock.
(m) Cancellation. The Company may at any time deliver Convertible Preferred Stock to the Transfer Agent for cancellation. The Company will cause the Transfer Agent to promptly cancel all shares of Convertible Preferred Stock so surrendered to it in accordance with its customary procedures.
(n) Shares Held by the Company. Without limiting the generality of Section 3(o), in determining whether the Holders of the required number of outstanding shares of Convertible Preferred Stock (and, if applicable Voting Parity Stock) have concurred in any direction, waiver or consent, shares of Convertible Preferred Stock owned by the Company will be deemed not to be outstanding.
(o) Outstanding Shares.
(i) Generally. The shares of Convertible Preferred Stock that are outstanding at any time will be deemed to be those shares of Convertible Preferred Stock that, at such time, have been duly executed by the Company and countersigned by the Transfer Agent, excluding those shares of Convertible Preferred Stock that have theretofore been (1) cancelled by the Transfer Agent or delivered to the Transfer Agent for cancellation in accordance with Section 3(m); (2) paid in full upon their conversion or upon their repurchase pursuant to a Repurchase Upon Change of Control or a Redemption in accordance with this Certificate of Designations; or (3) deemed to cease to be outstanding to the extent provided in, and subject to, clause (ii), (iii), (iv) or (v) of this Section 3(o).
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(ii) Replaced Shares. If any Certificate representing any share of Convertible Preferred Stock is replaced pursuant to Section 3(k), then such share will cease to be outstanding at the time of such replacement, unless the Transfer Agent and the Company receive proof reasonably satisfactory to them that such share is held by a “bona fide purchaser” under applicable law.
(iii) Shares to Be Repurchased Pursuant to a Redemption. If, on a Redemption Date, the Company has segregated, solely for the benefit of the applicable Holders, consideration in kind and amount that is sufficient to pay the aggregate Redemption Price due on such date, then (unless there occurs a default in the payment of the Redemption Price) (1) the Convertible Preferred Stock to be redeemed on such date will be deemed, as of such date, to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Redemption Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Redemption Price as provided in Section 7.
(iv) Shares to Be Repurchased Pursuant to a Repurchase Upon Change of Control. If, on a Change of Control Repurchase Date, the Company has segregated, solely for the benefit of the applicable Holders, consideration in kind and amount that is sufficient to pay the aggregate Change of Control Repurchase Price due on such date, then (unless there occurs a default in the payment of the Change of Control Repurchase Price) with respect to shares of Convertible Preferred Stock for which a valid Change of Control Repurchase Notice has been delivered and not withdrawn (1) such Convertible Preferred Stock to be repurchased on such date will be deemed, as of such date, to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Change of Control Repurchase Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive the Change of Control Repurchase Price as provided in Section 8 and, if applicable, Section 16. For the avoidance of doubt, any shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has not been delivered shall continue to be outstanding and entitled to all of the rights, preferences and privileges of the Convertible Preferred Stock.
(v) Shares to Be Converted. If any Convertible Preferred Stock is to be converted, then, at the Close of Business on the Conversion Date for such conversion (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 10 upon such conversion): (1) such Convertible Preferred Stock will (unless there occurs a default in the delivery of the Conversion Consideration due pursuant to Section 10 upon such conversion) be deemed to cease to be outstanding; (2) Regular Dividends will cease to accumulate on such Convertible Preferred Stock from and after such Conversion Date; and (3) the rights of the Holders of such Convertible Preferred Stock, as such, will terminate with respect to such Convertible Preferred Stock, other than the right to receive such Conversion Consideration as provided in Section 10 and, if applicable, Section 16.
(p) Notations and Exchanges. Without limiting any rights of Holders pursuant to
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Section 9, if any amendment, supplement or waiver to the Certificate of Incorporation or this Certificate of Designations changes the terms of any Convertible Preferred Stock, then the Company may, in its discretion, require the Holder of the Certificate representing such Convertible Preferred Stock to deliver such Certificate to the Transfer Agent so that the Transfer Agent may place an appropriate notation prepared by the Company on such Certificate and return such Certificate to such Holder. Alternatively, at its discretion, the Company may, in exchange for such Convertible Preferred Stock, issue, execute and deliver, and cause the Transfer Agent to countersign, in each case in accordance with Section 3(c), a new Certificate representing such Convertible Preferred Stock that reflects the changed terms. The failure to make any appropriate notation or issue a new Certificate representing any Convertible Preferred Stock pursuant to this Section 3(p) will not impair or affect the validity of such amendment, supplement or waiver.
Section 4. Ranking. The Convertible Preferred Stock will rank (a) senior to (i) Dividend Junior Stock with respect to the payment of dividends; and (ii) Liquidation Junior Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up; (b) equally with (i) Dividend Parity Stock with respect to the payment of dividends; and (ii) Liquidation Parity Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up; and (c) junior to (i) Dividend Senior Stock with respect to the payment of dividends; and (ii) Liquidation Senior Stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.
Section 5. Dividends.
(a) Generally.
(i) Regular Dividends.
(1) Accumulation and Payment of Regular Dividends. The Convertible Preferred Stock will accumulate cumulative dividends at a rate per annum equal to the Regular Dividend Rate on the Liquidation Preference thereof (calculated in accordance with Section 5(a)(i)(2)), regardless of whether or not declared or funds are legally available for their payment (such dividends that accumulate on the Convertible Preferred Stock pursuant to this sentence, “Regular Dividends”). Subject to the other provisions of this Section 5 (including, for the avoidance of doubt, Section 5(a)(ii)), such Regular Dividends will be payable in arrears on each Regular Dividend Payment Date. Regular Dividends on the Convertible Preferred Stock will accumulate from, and including, the last date to which Regular Dividends have been paid (or, if no Regular Dividends have been paid, from, and including, the Initial Issue Date) to, but excluding, the next Regular Dividend Payment Date.
(2) Computation of Accumulated Regular Dividends. Accumulated Regular Dividends will be computed on the basis of a 360-day year comprised of twelve 30-day months. Regular Dividends on each share of Convertible Preferred Stock will accrue on the Liquidation Preference of such share as of immediately before the Close of Business on the preceding Regular Dividend Payment Date (or, if there is no preceding Regular Dividend Payment Date, on the Initial Liquidation
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Preference of such share).
(ii) Method of Payment.
(1) Generally. The Company may, at its election, either pay Regular Dividends (x) when, as and if declared by the Board of Directors in cash out of funds legally available for their payment by wire transfer of immediately available funds or (y) by compounding of such Regular Dividends as provided in Section 5(a)(ii)(2). The Company shall be deemed to have elected to pay the Regular Dividends for any Regular Dividend Period pursuant to clause (y) of the preceding sentence unless it shall have notified the Holders in writing on or prior to the third (3rd) Business Day immediately prior to the next Regular Dividend Payment Date following the final day of such Regular Dividend Period of its election to pay the Regular Dividends on such Regular Dividend Payment Date pursuant to clause (x) of such sentence.
(2) Compounding of Regular Dividends. As of the Close of Business on any Regular Dividend Payment Date the dollar amount of the Regular Dividends (regardless of whether or not declared) that have accumulated on the Convertible Preferred Stock in respect of the Regular Dividend Period ending on, but excluding, such Regular Dividend Payment Date (expressed as an amount per share of Convertible Preferred Stock) will (without duplication) be added, effective immediately before the Close of Business on the related Regular Dividend Payment Date, to the Liquidation Preference of each share of Convertible Preferred Stock outstanding as of such time; provided, however, that such addition shall not occur nor be required if as of the Close of Business on such Regular Dividend Payment Date, the Company, in its sole and absolute discretion, has paid in cash the full amount of the Regular Dividends (regardless of whether or not declared) that have accumulated on the Convertible Preferred Stock in respect of the Regular Dividend Period ending on, but excluding, such Regular Dividend Payment Date.
(3) Construction. Any Regular Dividends the amount of which is added to the Liquidation Preference thereof pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2) will be deemed to be “declared” and “paid” on the Convertible Preferred Stock for all purposes of this Certificate of Designations.
(b) Participating Dividends.
(i) Generally. Subject to Section 5(b)(ii), no dividend or other distribution on the Common Stock (whether in cash, securities or other property, or any combination of the foregoing) will be declared or paid on the Common Stock unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid, respectively, on the Convertible Preferred Stock (such a dividend or distribution on the Convertible Preferred Stock, a “Participating Dividend,” and such corresponding dividend or distribution on the Common Stock, the “Common Stock Participating Dividend”), such that (1) the Record Date and the payment date for such Participating Dividend occur on the same dates as the Record Date and payment date, respectively, for
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such Common Stock Participating Dividend; and (2) the kind and amount of consideration payable per share of Convertible Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable in the Common Stock Participating Dividend in respect of a number of shares of Common Stock equal to the number of shares of Common Stock that would be issuable (determined in accordance with Section 10 but without regard to Section 10(e)(ii) and Section 10(h)) in respect of one (1) share of Convertible Preferred Stock that is converted pursuant to an Optional Conversion with a Conversion Date occurring on such Record Date (subject to the same arrangements, if any, in such Common Stock Participating Dividend not to issue or deliver a fractional portion of any security or other property, but with such arrangement applying separately to each Holder and computed based on the total number of shares of Convertible Preferred Stock held by such Holder on such Record Date).
(ii) Common Stock Change Events and Stock Splits, Dividends and Combinations. Section 5(b)(i) will not apply to, and no Participating Dividend will be required to be declared or paid in respect of, a Common Stock Change Event, or an event for which an adjustment to the Conversion Rate is required pursuant to Section 10(f)(i)(1), as to which Section 10(i) or Section 10(f)(i)(1), respectively, will apply.
(iii) Treatment of Participating Dividends Upon Redemption, Repurchase Upon Change of Control or Conversion. If the Redemption Date, Change of Control Repurchase Date or Conversion Date of any share of Convertible Preferred Stock is after a Record Date for a declared Participating Dividend on the Convertible Preferred Stock and on or before the next Dividend Payment Date, then the Holder of such share at the Close of Business on such Record Date will be entitled, notwithstanding the related Redemption, Repurchase Upon Change of Control or conversion, as applicable, to receive, on or, at the Company’s election, before such Dividend Payment Date, such declared Participating Dividend on such share.
Section 6. Rights Upon Liquidation, Dissolution or Winding Up.
(a) Generally. If the Company liquidates, dissolves or winds up, whether voluntarily or involuntarily, then, subject to the rights of any of the Company’s creditors or holders of any outstanding Liquidation Senior Stock, each share of Convertible Preferred Stock will entitle the Holder thereof to receive payment for the greater of the amounts set forth in clause (i) and (ii) below out of the Company’s assets or funds legally available for distribution to the Company’s stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, any Liquidation Junior Stock:
(i) the sum of:
(1) the Liquidation Preference per share of Convertible Preferred Stock; and
(2) all unpaid Regular Dividends that will have accumulated on such share to, but excluding, the date of such payment; and
(ii) the amount such Holder would have received in respect of the number of
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shares of Common Stock that would be issuable upon conversion of such share of Convertible Preferred Stock assuming the Conversion Date of such conversion occurs on the date of such payment.
Upon payment of such amount in full on the outstanding Convertible Preferred Stock, Holders of the Convertible Preferred Stock will have no rights to the Company’s remaining assets or funds, if any. If such assets or funds are insufficient to fully pay such amount on all outstanding shares of Convertible Preferred Stock and the corresponding amounts payable in respect of all outstanding shares of Liquidation Parity Stock, if any, then, subject to the rights of any of the Company’s creditors or holders of any outstanding Liquidation Senior Stock, such assets or funds will be distributed ratably on the outstanding shares of Convertible Preferred Stock and Liquidation Parity Stock in proportion to the full respective distributions to which such shares would otherwise be entitled.
(b) Certain Business Combination Transactions Deemed Not to Be a Liquidation. For purposes of Section 6(a), the Company’s consolidation or combination with, or merger with or into, or the sale, lease or other transfer of all or substantially all of the Company’s assets (other than a sale, lease or other transfer in connection with the Company’s liquidation, dissolution or winding up) to, another Person will not, in itself, constitute the Company’s liquidation, dissolution or winding up, even if, in connection therewith, the Convertible Preferred Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing.
Section 7. Right of the Company to Redeem the Convertible Preferred Stock.
(a) No Right to Redeem Before the Redemption Trigger Date. The Company shall not redeem the Convertible Preferred Stock before the Redemption Trigger Date.
(b) Right to Redeem the Convertible Preferred Stock on or After Redemption Trigger Date. Subject to the terms of this Section 7, the Company has the right, at its election, to redeem all, but not less than all, of the Convertible Preferred Stock, at any time, on a Redemption Date on or after Redemption Trigger Date, for a cash purchase price equal to the Redemption Price.
(c) Redemption Prohibited in Certain Circumstances. The Company will not call for Redemption, or otherwise send a Redemption Notice in respect of the Redemption of, any Convertible Preferred Stock pursuant to this Section 7 unless (i) the Company has sufficient funds legally available, and is permitted under the terms of its indebtedness for borrowed money, to fully pay the Redemption Price in respect of all shares of Convertible Preferred Stock called for Redemption; and (ii) the Common Stock Liquidity Conditions are satisfied with respect to such Redemption.
(d) Redemption Date. The Redemption Date for any Redemption will be a Business Day of the Company’s choosing that is no more than sixty (60), nor less than thirty (30), calendar days after the Redemption Notice Date for such Redemption.
(e) Redemption Price. The Redemption Price for any share of Convertible Preferred Stock to be repurchased pursuant to a Redemption is an amount in cash equal to the Liquidation
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Preference of such share at the Close of Business on the Redemption Date for such Redemption plus accumulated and unpaid Regular Dividends on such share to, but excluding, such Redemption Date (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).
(f) Redemption Notice. To call any share of Convertible Preferred Stock for Redemption, the Company must send to the Holder of such share a notice of such Redemption (a “Redemption Notice”). Such Redemption Notice must state:
(i) that such share has been called for Redemption, briefly describing the Company’s Redemption right under this Certificate of Designations;
(ii) the Redemption Date for such Redemption;
(iii) the Redemption Price per share of Convertible Preferred Stock;
(iv) that, provided that the Requisite Stockholder Approval has been obtained, Convertible Preferred Stock called for Redemption may be converted at any time before the Close of Business on the Business Day immediately before the Redemption Date (or, if the Company fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Company pays such Redemption Price in full); provided that if the Requisite Stockholder Approval has not been obtained, the Convertible Preferred Stock called for Redemption may be converted at any time before the Close of Business on the Business Day immediately before the Redemption Date up to the Ownership Limitation; and
(v) the Conversion Rate in effect on the Redemption Notice Date for such Redemption.
(g) Payment of the Redemption Price. The Company will cause the Redemption Price for each share of Convertible Preferred Stock subject to Redemption to be paid to the Holder thereof on or before the applicable Redemption Date.
Section 8. Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control.
(a) Right of Holders to Require the Company to Repurchase Convertible Preferred Stock upon a Change of Control. Subject to the other terms of this Section 8, if a Change of Control occurs, then each Holder will have the right (the “Change of Control Repurchase Right”) to require the Company to repurchase all, or any whole number of shares that is less than all, of such Holder’s Convertible Preferred Stock on the Change of Control Repurchase Date for such Change of Control for a purchase price equal to the Change of Control Repurchase Price.
(b) Funds Legally Available for Payment of Change of Control Repurchase Price; Covenant Not to Take Certain Actions. Notwithstanding anything to the contrary in this Section 8, but subject to Section 16, (i) the Company will not be obligated to pay the Change of Control Repurchase Price of any shares of Convertible Preferred Stock to the extent, and only to the extent,
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the Company does not have sufficient funds legally available to pay the same; and (ii) if the Company does not have sufficient funds legally available to pay the Change of Control Repurchase Price of all shares of Convertible Preferred Stock that are otherwise to be repurchased pursuant to a Repurchase Upon Change of Control and does not elect to pay the Change of Control Repurchase Price in shares of Common Stock (or other securities) pursuant to Section 8(d), then (1) the Company will pay the maximum amount of such Change of Control Repurchase Price that can be paid out of funds legally available for payment, which payment will be made pro rata to each Holder based on the total number of shares of Convertible Preferred Stock of such Holder that were otherwise to be repurchased pursuant to such Repurchase Upon Change of Control; and (2) the Company will cause all such shares as to which the Change of Control Repurchase Price was not paid to be returned to the Holder(s) thereof, and such shares will be deemed to remain outstanding. The Company will not voluntarily take any action, or voluntarily engage in any transaction, that would result in a Change of Control unless the Company has (and will have through the date of payment) sufficient funds legally available to fully pay the maximum aggregate Change of Control Repurchase Price that would be payable in respect of such Change of Control on all shares of Convertible Preferred Stock then outstanding, assuming that the Company elects, if it is then permitted to do so, to pay such Change of Control Repurchase Price by delivering shares of Common Stock (or other securities) pursuant to Section 8(d).
(c) Change of Control Repurchase Date. The Change of Control Repurchase Date for any Change of Control will be a Business Day of the Company’s choosing that is no more than twenty (20), nor less than ten (10), Business Days after the date the Company sends the related Change of Control Notice pursuant to Section 8(e).
(d) Change of Control Repurchase Price. The Change of Control Repurchase Price for any share of Convertible Preferred Stock to be repurchased upon a Repurchase Upon Change of Control following a Change of Control is an amount equal to (i) if the Change of Control occurs prior to the first anniversary of the Initial Issue Date, one hundred percent (100%) or (ii) if the Change of Control occurs on or after the first anniversary of the Initial Issue Date, one hundred and fifty percent (150%), in each case of the sum of (1) the Liquidation Preference of such share at the Close of Business on such Change of Control Repurchase Date and (2) accumulated and unpaid Regular Dividends on such share to, but excluding, such Change of Control Repurchase Date (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference); provided that the Change of Control Repurchase Price may be paid, at the Company’s election, in (x) cash, (y) shares of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) valued based on the arithmetic average of the Last Reported Sale Prices (determined, in the case of other securities, by replacing references therein to Common Stock with such securities) of the Common Stock (or such other securities) over the five consecutive Trading Day period ending on, and including, the second Trading Day immediately preceding the Change of Control Repurchase Date (with the number of shares of Common Stock rounded up to the nearest whole share of Common Stock) or (z) a combination thereof; provided further that the Company may not elect to deliver shares of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) in partial or full satisfaction of the Change of Control Repurchase Price if the Common Stock Liquidity Conditions are not satisfied (determined, in the case of other securities, by replacing references therein to Common Stock with such securities), and the Company’s right to elect to deliver shares
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of Common Stock (or other securities to be received by a holder of Common Stock in such Change of Control) shall be subject to the limitation set forth in Section 10(h) as if the same were a conversion of the Convertible Preferred Stock.
(e) Change of Control Notice. On or before the Business Day after the effective date of a Change of Control, the Company will send to each Holder a notice of such Change of Control (a “Change of Control Notice”). Such Change of Control Notice must state:
(i) briefly, the events causing such Change of Control;
(ii) the effective date of such Change of Control;
(iii) the procedures that a Holder must follow to require the Company to repurchase its Convertible Preferred Stock pursuant to this Section 8, including the deadline for exercising the Change of Control Repurchase Right and the procedures for submitting and withdrawing a Change of Control Repurchase Notice;
(iv) the Change of Control Repurchase Date for such Change of Control;
(v) the Change of Control Repurchase Price per share of Convertible Preferred Stock and the proportion of the Change of Control Repurchase Price to be paid in cash and the proportion to be paid in shares of Common Stock (or other securities);
(vi) the Conversion Rate in effect on the date of such Change of Control Notice and a description and quantification of any adjustments to the Conversion Rate that may result from such Change of Control;
(vii) that shares of Convertible Preferred Stock for which a Change of Control Repurchase Notice has been duly tendered and not duly withdrawn must be delivered to the Company for the Holder thereof to be entitled to receive the Change of Control Repurchase Price; and
(viii) that shares of Convertible Preferred Stock that are subject to a Change of Control Repurchase Notice that has been duly tendered may be converted only if such Change of Control Repurchase Notice is withdrawn in accordance with this Certificate of Designations.
(f) Procedures to Exercise the Change of Control Repurchase Right.
(i) Delivery of Change of Control Repurchase Notice and Shares of Convertible Preferred Stock to Be Repurchased. To exercise its Change of Control Repurchase Right for any share(s) of Convertible Preferred Stock following a Change of Control, the Holder thereof must deliver to the Company:
(1) before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date (or such later time as may be required by law), a duly completed, written Change of Control Repurchase Notice with respect to such share(s); and
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(2) such share(s), duly endorsed for transfer, to the extent such share(s) are represented by one or more Physical Certificates.
(ii) Contents of Change of Control Repurchase Notices. Each Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock must state:
(1) if such share(s) are represented by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be repurchased, which must be a whole number; and
(3) that such Holder is exercising its Change of Control Repurchase Right with respect to such share(s).
(iii) Withdrawal of Change of Control Repurchase Notice. A Holder that has delivered a Change of Control Repurchase Notice with respect to any share(s) of Convertible Preferred Stock may withdraw such Change of Control Repurchase Notice by delivering a written notice of withdrawal to the Company at any time before the Close of Business on the Business Day immediately before the related Change of Control Repurchase Date. Such withdrawal notice must state:
(1) if such share(s) are represented by one or more Physical Certificates, the certificate number(s) of such Physical Certificate(s);
(2) the number of shares of Convertible Preferred Stock to be withdrawn, which must be a whole number; and
(3) the number of shares of Convertible Preferred Stock, if any, that remain subject to such Change of Control Repurchase Notice, which must be a whole number.
If any Holder delivers to the Company any such withdrawal notice withdrawing any share(s) of Convertible Preferred Stock from any Change of Control Repurchase Notice previously delivered to the Company, and such share(s) have been surrendered to the Company, then such share(s) will be returned to the Holder thereof.
(g) Payment of the Change of Control Repurchase Price. Subject to Section 8(b), the Company will cause the Change of Control Repurchase Price for each share of Convertible Preferred Stock to be repurchased pursuant to a Repurchase Upon Change of Control to be paid to the Holder thereof on or before the later of (i) the applicable Change of Control Repurchase Date; and (ii) the date such share is tendered to the Transfer Agent or the Company.
Section 9. Voting Rights. The Convertible Preferred Stock will have no voting rights except as set forth in this Section 9 or as provided in the Certificate of Incorporation or required by the Delaware General Corporation Law.
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(a) Voting and Consent Rights with Respect to Specified Matters.
(i) Generally. Subject to the other provisions of this Section 9(a), while any Convertible Preferred Stock is outstanding, each following event will require, and cannot be effected without, the affirmative vote or consent of Holders, and holders of each class or series of Voting Parity Stock, if any, with similar voting or consent rights with respect to such event, representing at least a majority of the combined outstanding voting power of the Convertible Preferred Stock and such Voting Parity Stock, if any:
(1) any amendment or modification of the Certificate of Incorporation to authorize or create, or to increase the authorized number of shares of, any class or series of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock;
(2) any amendment, modification or repeal of any provision of the Certificate of Incorporation or this Certificate of Designations that adversely affects the rights, preferences or voting powers of the Convertible Preferred Stock (other than an amendment, modification or repeal permitted by Section 9(a)(iii));
(3) increase or decrease the number of authorized shares of Convertible Preferred Stock (except as permitted herein) or issue additional shares of Convertible Preferred Stock; or
(4) the Company’s consolidation or combination with, or merger with or into, another Person, or any binding or statutory share exchange or reclassification involving the Convertible Preferred Stock, in each case unless:
(A) the Convertible Preferred Stock either (x) remains outstanding after such consolidation, combination, merger, share exchange or reclassification; or (y) is converted or reclassified into, or is exchanged for, or represents solely the right to receive, preference securities of the continuing, resulting or surviving Person of such consolidation, combination, merger, share exchange or reclassification, or the parent thereof;
(B) the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, have rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the Holders or the holders thereof, as applicable, than the rights, preferences and voting powers, taken as a whole, of the Convertible Preferred Stock immediately before the consummation of such consolidation, combination, merger, share exchange or reclassification; and
(C) the issuer of the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, is a corporation duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that, if not the Company, will
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succeed to the Company under this Certificate of Designations and the Convertible Preferred Stock;
provided, however, that (x) a consolidation, combination, merger, share exchange or reclassification that satisfies the requirements of clauses (A), (B) and (C) of Section 9(a)(i)(3) will not require any vote or consent pursuant to Section 9(a)(i)(1) or 9(a)(i)(2); and (y) each of the following will be deemed not to adversely affect the rights, preferences or voting powers of the Convertible Preferred Stock (or cause any of the rights, preferences or voting powers of any such preference securities to be “materially less favorable” for purposes of Section 9(a)(i)(4)(B)) and will not require any vote or consent pursuant to Section 9(a)(i)(1), 9(a)(i)(2) or 9(a)(i)(3):
(I) any increase in the number of the authorized but unissued shares of the Company’s undesignated preferred stock;
(II) the creation and issuance, in and of itself, or increase in the authorized or issued number, of any class or series of stock that constitutes both Dividend Junior Stock and Liquidation Junior Stock; and
(III) the application of Section 10(i), including the execution and delivery of any supplemental instruments pursuant to Section 10(i)(iii) solely to give effect to such provision.
(ii) Where Some But Not All Classes or Series of Stock Are Adversely Affected. If any event set forth in Section 9(a)(i)(1), 9(a)(i)(2) or 9(a)(i)(3) would adversely affect the rights, preferences or voting powers of one or more, but not all, classes or series of Voting Parity Stock (which term, solely for purposes of this sentence, includes the Convertible Preferred Stock), then those classes or series whose rights, preferences or voting powers would not be adversely affected will be deemed not to have voting or consent rights with respect to such event. Furthermore, an amendment, modification or repeal described in Section 9(a)(i)(2) above that adversely affects the special rights, preferences or voting powers of the Convertible Preferred Stock cannot be effected without the affirmative vote or consent of Holders, voting separately as a class, of at least a majority of the Convertible Preferred Stock then outstanding.
(iii) Certain Amendments Permitted Without Consent. Notwithstanding anything to the contrary in Section 9(a)(i)(2), the Company may amend, modify or repeal any of the terms of the Convertible Preferred Stock without the vote or consent of any Holder to:
(1) cure any ambiguity or correct any omission, defect or inconsistency in this Certificate of Designations or the Certificates representing the Convertible Preferred Stock, including the filing of a certificate of correction, or a corrected instrument, pursuant to Section 103(f) of the Delaware General Corporation Law in connection therewith; or
(2) make any other change to the Certificate of Incorporation, this Certificate of Designations or the Certificates representing the Convertible
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Preferred Stock that does not, individually or in the aggregate with all other such changes, adversely affect the rights of any Holder (other than any Holders that have consented to such change), as such, in any material respect.
(b) Procedures for Voting and Consents.
(i) Rules and Procedures Governing Votes and Consents. If any vote or consent of the Holders will be held or solicited, including at a regular annual meeting or a special meeting of stockholders, then (1) the Board of Directors will adopt customary rules and procedures at its discretion to govern such vote or consent, subject to the other provisions of this Section 9; and (2) such rules and procedures may include fixing a record date to determine the Holders (and, if applicable, holders of Voting Parity Stock) that are entitled to vote or provide consent, as applicable, rules governing the solicitation and use of proxies or written consents and customary procedures for the nomination and designation, by Holders (and, if applicable, holders of Voting Parity Stock), of Preferred Stock Directors for election.
(ii) Voting Power of the Convertible Preferred Stock and Voting Parity Stock. Each share of Convertible Preferred Stock will be entitled to one vote on each matter on which the Holders of the Convertible Preferred Stock are entitled to vote separately as a class and not together with the holders of any other class or series of stock. The respective voting powers of the Convertible Preferred Stock and all classes or series of Voting Parity Stock entitled to vote on any matter together as a single class will be determined (including for purposes of determining whether a plurality, majority or other applicable portion of votes has been obtained) in proportion to their respective liquidation amounts. Solely for purposes of the preceding sentence, the liquidation amount of the Convertible Preferred Stock or any such class or series of Voting Parity Stock will be the maximum amount payable in respect of the Convertible Preferred Stock or such class or series, as applicable, assuming the Company is liquidated on the record date for the applicable vote or consent (or, if there is no record date, on the date of such vote or consent).
(iii) Voting Standard for the Election of Preferred Stock Directors. At any meeting in which the Convertible Preferred Stock (and, if applicable, any class or series of Voting Parity Stock) is entitled to elect any Preferred Stock Director (including to fill any vacancy in the office of any Preferred Stock Director), the presence, in person or by proxy, of Holders of Convertible Preferred Stock (and, if applicable, holders of each such class or series) representing a majority of the outstanding voting power of the Convertible Preferred Stock (and, if applicable, each such class or series) will constitute a quorum. The affirmative vote of a majority of the outstanding voting power of the Convertible Preferred Stock (and, if applicable, each such class or series) so present at such a meeting at which a quorum is present will be sufficient to elect the Preferred Stock Director(s).
(iv) Written Consent in Lieu of Stockholder Meeting. A consent or affirmative vote of the Holders pursuant to Section 9(a) may be given or obtained either in writing without a meeting or in person or by proxy at a regular annual meeting or a special meeting of stockholders.
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Section 10. Conversion.
(a) Generally. Subject to the provisions of this Section 10, the Convertible Preferred Stock may be converted only pursuant to a Mandatory Conversion or an Optional Conversion.
(b) Conversion at the Option of the Holders.
(i) Conversion Right; When Shares May Be Submitted for Optional Conversion. Holders will have the right to submit all, or any whole number of shares that is less than all, of their shares of Convertible Preferred Stock pursuant to an Optional Conversion at any time; provided, however, that, notwithstanding anything to the contrary in this Certificate of Designations,
(1) if a Change of Control Repurchase Notice is validly delivered pursuant to Section 8(f)(i) with respect to any share of Convertible Preferred Stock, then such share may not be submitted for Optional Conversion, except to the extent (A) such share is not subject to such notice; (B) such notice is withdrawn in accordance with Section 8(f)(iii); or (C) the Company fails to pay the Change of Control Repurchase Price for such share in accordance with this Certificate of Designations;
(2) shares of Convertible Preferred Stock that are called for Redemption may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Redemption Date (or, if the Company fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Company pays such Redemption Price in full); and
(3) shares of Convertible Preferred Stock that are subject to Mandatory Conversion may not be submitted for Optional Conversion after the Close of Business on the Business Day immediately before the related Mandatory Conversion Date.
(ii) Conversions of Fractional Shares Not Permitted. Notwithstanding anything to the contrary in this Certificate of Designations, in no event will any Holder be entitled to convert a number of shares of Convertible Preferred Stock that is not a whole number.
(c) Mandatory Conversion at the Company’s Election.
(i) Mandatory Conversion Right. Subject to the provisions of this Section 10, the Company has the right (the “Mandatory Conversion Right”), exercisable at its election, to designate any Business Day after the second anniversary of the Initial Issue Date as a Conversion Date for the conversion (such a conversion, a “Mandatory Conversion”) of all, but not less than all, of the outstanding shares of Convertible Preferred Stock, but only if the Last Reported Sale Price per share of Common Stock exceeds the product of (i) the Conversion Price in effect as of such date and (ii) 115% on each of at least twenty (20) Trading Days (whether or not consecutive) during the thirty (30) consecutive Trading Days ending on, and including, the Trading Day immediately before
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the Mandatory Conversion Notice Date for such Mandatory Conversion.
(ii) Mandatory Conversion Prohibited in Certain Circumstances. The Company will not exercise its Mandatory Conversion Right, or otherwise send a Mandatory Conversion Notice, with respect to any Convertible Preferred Stock pursuant to this Section 10(c) unless (1) the Common Stock Liquidity Conditions are satisfied with respect to the Mandatory Conversion and (2) either (x) the Requisite Stockholder Approval is obtained or (y) the Company has previously held one or more meetings of stockholders for the purposes of obtaining the Requisite Stockholder Approval and the Mandatory Conversion Date for such Mandatory Conversion occurs after the second anniversary of the Initial Issue Date. Notwithstanding anything to the contrary in this Section 10(c), the Company’s exercise of its Mandatory Conversion Right, and any related Mandatory Conversion Notice, will not apply to any share of Convertible Preferred Stock as to which a Change of Control Repurchase Notice has been duly delivered, and not withdrawn, pursuant to Section 8(f).
(iii) Mandatory Conversion Date. The Mandatory Conversion Date for any Mandatory Conversion will be a Business Day of the Company’s choosing that is no more than fifteen (15), nor less than ten (10), Business Days after the Mandatory Conversion Notice Date for such Mandatory Conversion.
(iv) Mandatory Conversion Notice. To exercise its Mandatory Conversion Right with respect to any shares of Convertible Preferred Stock, the Company must send to each Holder of such shares a written notice of such exercise (a “Mandatory Conversion Notice”).
Such Mandatory Conversion Notice must state:
(1) that the Company has exercised its Mandatory Conversion Right to cause the Mandatory Conversion of the shares, briefly describing the Company’s Mandatory Conversion Right under this Certificate of Designations;
(2) the Mandatory Conversion Date for such Mandatory Conversion and the date scheduled for the settlement of such Mandatory Conversion;
(3) that shares of Convertible Preferred Stock subject to Mandatory Conversion may be converted earlier at the option of the Holders thereof pursuant to an Optional Conversion at any time before the Close of Business on the Business Day immediately before the Mandatory Conversion Date; and
(4) the Conversion Price and the Conversion Rate in effect on the Mandatory Conversion Notice Date for such Mandatory Conversion.
(d) Conversion Procedures.
(i) Mandatory Conversion. If the Company duly exercises, in accordance with this Section 10(c), its Mandatory Conversion Right with respect to any share of Convertible Preferred Stock, then (1) the Mandatory Conversion of such share will occur
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automatically and without the need for any action on the part of the Holder(s) thereof; and (2) the shares of Common Stock due upon such Mandatory Conversion will be registered in the name of, and, if applicable, the cash due upon such Mandatory Conversion will be delivered to, the Holder(s) of such share of Convertible Preferred Stock as of the Close of Business on the related Mandatory Conversion Date.
(ii) Requirements for Holders to Exercise Optional Conversion Right.
(1) Generally. To convert any share of Convertible Preferred Stock pursuant to an Optional Conversion, the Holder of such share must (w) complete, manually sign and deliver to the Company a Conversion Notice; (x) deliver any Physical Certificate representing such Convertible Preferred Stock to the Company (at which time such Optional Conversion will become irrevocable); (y) furnish any endorsements and transfer documents that the Company may require; and (z) if applicable, pay any documentary or other taxes as pursuant to Section 11(d).
(2) Optional Conversion Permitted only During Business Hours. Convertible Preferred Stock may be surrendered for Optional Conversion only after the Open of Business and before the Close of Business on a day that is a Business Day.
(iii) No Adjustments for Accumulated Regular Dividends. Without limiting the operation of Sections 5(a)(ii)(1) and 10(e)(i), the Conversion Rate will not be adjusted to account for any accumulated and unpaid Regular Dividends on any Convertible Preferred Stock being converted.
(iv) When Holders Become Stockholders of Record of the Shares of Common Stock Issuable Upon Conversion. The Person in whose name any share of Common Stock is issuable upon conversion of any Convertible Preferred Stock will be deemed to become the holder of record of such share as of the Close of Business on the Conversion Date for such conversion.
(e) Settlement upon Conversion.
(i) Generally. Subject to Section 10(e)(ii), Section 10(h) and Section 14(b), the consideration due upon settlement of the conversion of each share of Convertible Preferred Stock will consist of a number of shares of Common Stock equal to the product of (A) the Conversion Rate in effect immediately before the Close of Business on the Conversion Date for such conversion; and (B) the quotient obtained by dividing (I) the sum of (x) the Liquidation Preference of such share of Convertible Preferred Stock immediately before the Close of Business on such Conversion Date; and (y) an amount equal to accumulated and unpaid Regular Dividends on such share of Convertible Preferred Stock to, but excluding, such Conversion Date (but only to the extent such accumulated and unpaid Regular Dividends are not included in the Liquidation Preference referred to in the preceding clause (x)), by (II) the Initial Liquidation Preference per share of Convertible
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Preferred Stock.
(ii) Payment of Cash in Lieu of any Fractional Share of Common Stock. Subject to Section 14(b), if any fractional share of Common Stock is otherwise due upon conversion of any Convertible Preferred Stock, the Company may, at its option, (i) issue an additional fraction of a share of Common Stock such that the total number of shares of Common Stock issuable pursuant to such conversion equals the next highest whole number of shares of Common Stock or (ii) to the extent it is legally able to do so, either arrange for the disposition of fractional interests by those entitled thereto or pay in cash the fair value thereof, which value will be based on the Last Reported Sale Price per share of Common Stock on the Conversion Date for such conversion (or, if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(iii) Delivery of Conversion Consideration. The Company will pay or deliver, as applicable, the Conversion Consideration due upon conversion of any Convertible Preferred Stock on or before the second (2nd) Business Day immediately after the Conversion Date for such conversion.
(f) Conversion Rate Adjustments.
(i) Events Requiring an Adjustment to the Conversion Rate. The Conversion Rate will be adjusted from time to time as follows:
(1) Stock Dividends, Splits and Combinations. If the Company issues solely shares of Common Stock as a dividend or distribution on all or substantially all shares of the Common Stock, or if the Company effects a stock split or a stock combination of the Common Stock (in each case excluding an issuance solely pursuant to a Common Stock Change Event, as to which Section 10(i) will apply), then the Conversion Rate will be adjusted based on the following formula:
where:
CR0 = the Conversion Rate in effect immediately before the Close of Business on the Record Date for such dividend or distribution, or immediately before the Close of Business on the effective date of such stock split or stock combination, as applicable;
CR1 = the Conversion Rate in effect immediately after the Close of Business on such Record Date or effective date, as applicable;
OS0 = the number of shares of Common Stock outstanding immediately before the Close of Business on such Record Date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and
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OS1 = the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, stock split or stock combination.
If any dividend, distribution, stock split or stock combination of the type described in this Section 10(f)(i)(1) is declared or announced, but not so paid or made, then the Conversion Rate will be readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution or to effect such stock split or stock combination, to the Conversion Rate that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced.
(2) Degressive Issuances. Subject to Section 10(h), if, at any time during the period from, and including, the Initial Issue Date to, and including, the Degressive Issuance Sunset Date, the Company or any of its Subsidiaries issues or otherwise sells any shares of Common Stock, or any Equity-Linked Securities, in each case at an Effective Price per share of Common Stock that is less than the Conversion Price in effect (before giving effect to the adjustment required by this Section 10(f)(i)(2)) as of the date of the issuance or sale of such shares or Equity-Linked Securities (such an issuance or sale, a “Degressive Issuance”), then, effective as of the Close of Business on such date, the Conversion Rate will be increased to an amount equal to (x) the Initial Liquidation Preference per share of Convertible Preferred Stock, divided by (y) such Effective Price per share of Common Stock; provided, however, that (A) the Conversion Rate will not be adjusted pursuant to this Section 10(f)(i)(2) solely as a result of an Exempt Issuance; (B) the issuance of shares of Common Stock pursuant to any such Equity-Linked Securities will not constitute an additional issuance or sale of shares of Common Stock for purposes of this Section 10(f)(i)(2) (it being understood, for the avoidance of doubt, that the issuance or sale of such Equity-Linked Securities, or any re-pricing or amendment thereof, will be subject to this Section 10(f)(i)(2)); and (C) in no event will the Conversion Rate be decreased pursuant to this Section 10(f)(i)(2).
For purposes of this Section 10(f)(i)(2), any re-pricing or amendment of any Equity-Linked Securities (including, for the avoidance of doubt, any Equity-Linked Securities existing as of the Initial Issue Date) will be deemed to be the issuance of additional Equity-Linked Securities, without affecting any prior adjustments theretofore made to the Conversion Rate.
(ii) No Other Required Adjustments. Without limiting the operation of Sections 5(a)(ii)(1) and 10(e)(i), the Company will not be required to adjust the Conversion Rate except pursuant to Section 10(f)(i).
(iii) Determination of the Number of Outstanding Shares of Common Stock. For purposes of Section 10(f)(i), the number of shares of Common Stock outstanding at any time will (1) include shares issuable in respect of scrip certificates issued in lieu of fractions
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of shares of Common Stock; and (2) exclude shares of Common Stock held in the Company’s treasury (unless the Company pays any dividend or makes any distribution on shares of Common Stock held in its treasury).
(iv) Calculations. All calculations with respect to the Conversion Rate and adjustments thereto will be made to the nearest 1/10,000th unit (with 5/100,000ths rounded upward).
(v) Notice of Conversion Rate Adjustments. Upon the effectiveness of any adjustment to the Conversion Rate pursuant to Section 10(f)(i), the Company will promptly send notice to the Holders containing (1) a brief description of the transaction or other event on account of which such adjustment was made; (2) the Conversion Rate in effect immediately after such adjustment; and (3) the effective time of such adjustment.
(g) Voluntary Conversion Rate Increases.
(i) Generally. To the extent permitted by law and applicable stock exchange rules, the Company, from time to time, may (but is not required to) increase the Conversion Rate by any amount if (1) the Board of Directors determines that such increase is advisable to avoid or diminish any income tax imposed on holders of Common Stock or rights to purchase Common Stock as a result of any dividend or distribution of shares (or rights to acquire shares) of Common Stock or any similar event; (2) such increase is in effect for a period of at least twenty (20) Business Days; and (3) such increase is irrevocable during such period.
(ii) Notice of Voluntary Increase. If the Board of Directors determines to increase the Conversion Rate pursuant to Section 10(g)(i), then, no later than the first Business Day of the related twenty (20) Business Day period referred to in Section 10(g)(i), the Company will send notice to each Holder of such increase to the Conversion Rate, the amount thereof and the period during which such increase will be in effect.
(h) Restriction on Conversions and Certain Degressive Issuances.
(i) Limitation on Conversion Right. Notwithstanding anything to the contrary in this Certificate of Designations, unless and until the Requisite Stockholder Approval is obtained, no shares of Common Stock will be issued or delivered upon conversion of any Convertible Preferred Stock of any Holder, and no Convertible Preferred Stock of any Holder will be convertible, in each case to the extent, and only to the extent, that (x) such issuance, delivery, conversion or convertibility would result in such Holder or a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) beneficially owning in excess of nineteen and ninety-nine-one-hundredths percent (19.99%) of the outstanding shares of Common Stock as of the date of the Investment Agreement or (y) the number of shares of Common Stock deliverable per share of Convertible Preferred Stock in such conversion would exceed the Conversion Share Cap (the restrictions set forth in this sentence, the “Ownership Limitation”). For these purposes, beneficial ownership and calculations of percentage ownership will be determined in accordance with Rule 13d-3 under the Exchange Act; provided that, for the avoidance of doubt, shares of Series A
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Convertible Preferred Stock held by any Holder shall not count towards the Ownership Limitation for any such Holder.
If any Conversion Consideration otherwise due upon the conversion of any Convertible Preferred Stock is not delivered as a result of the Ownership Limitation, then the Company’s obligation to deliver such Conversion Consideration will not be extinguished, and the Company will deliver such Conversion Consideration as soon as reasonably practicable after the Holder of such Convertible Preferred Stock provides written evidence satisfactory to the Company that such delivery will not contravene the Ownership Limitation.
(ii) Limitation of Adjustments for Certain Degressive Issuances. Notwithstanding anything to the contrary in this Certificate of Designations, unless and until the Requisite Stockholder Approval is obtained, no adjustment will be made to the Conversion Rate pursuant to Section 10(f)(i)(2) to the extent, but only to the extent, such adjustment would cause the Conversion Price to be less than $11.39 per share of Common Stock (subject to proportionate adjustment for stock dividends, stock splits or stock combinations with respect to the Common Stock). Unless and until the Requisite Stockholder Approval is obtained, the Company will not, without the prior written consent of Holders of a majority of the Convertible Preferred Stock then outstanding, effect any Degressive Issuance if the adjustment on account of such Degressive Issuance pursuant to Section 10(f)(i)(2) would be limited by the preceding sentence. If the Requisite Stockholder Approval is obtained at any time after any adjustment to the Conversion Rate is limited pursuant to the first sentence of this Section 10(h)(ii), then, effective as of the time such Requisite Stockholder Approval is obtained, the Conversion Rate will be adjusted to the Conversion Rate that would then be in effect assuming that the first sentence of this Section 10(h)(ii) had not applied to any prior adjustment to the Conversion Rate.
(iii) Covenant to Seek the Requisite Stockholder Approval; Adjustment to Regular Dividend Rate. The Company will use its reasonable best efforts to obtain the Requisite Stockholder Approval, including by seeking such approval, if not previously obtained, at each future special meeting and regular annual meeting of its stockholders following the Initial Issue Date and endorsing its approval in the related proxy materials (including a preliminary proxy statement that the Company shall cause to be filed with the SEC within 10 calendar days after the Initial Issue Date); provided, however, that each party acknowledges that such stockholder meeting may be postponed or adjourned in accordance with the Company’s bylaws or as otherwise required by applicable law if (x) there is an insufficient number of shares of Common Stock present or represented by proxy at such stockholder meeting to conduct business at such stockholder meeting, (y) the Company is required to postpone or adjourn such stockholder meeting by applicable law or a request from the SEC or its staff, or (z) the Company determines in good faith that it is necessary or appropriate to postpone or adjourn such stockholder meeting in order to give the stockholders sufficient time to evaluate any supplemental information or disclosure that the Company has sent or otherwise made available to them. If the Requisite Stockholder Approval is not obtained on or before the Requisite Stockholder Approval Deadline Date, then the Regular Dividend Rate will be increased by one percent (1%) during the period from, and including, the Requisite Stockholder Approval Deadline Date
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to, but excluding, the date when the Requisite Stockholder Approval is first obtained, if at all.
(i) Effect of Common Stock Change Event.
(i) Generally. If there occurs any:
(1) recapitalization, reclassification or change of the Common Stock, other than (x) changes solely resulting from a subdivision or combination of the Common Stock, (y) a change only in par value or from par value to no par value or no par value to par value or (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities;
(2) consolidation, merger, combination or binding or statutory share exchange involving the Company;
(3) sale, lease or other transfer of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person; or
(4) other similar event,
and, as a result, the Common Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing (such an event, a “Common Stock Change Event,” and such other securities, cash or property, the “Reference Property,” and the amount and kind of Reference Property that a holder of one (1) share of Common Stock would be entitled to receive on account of such Common Stock Change Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property), a “Reference Property Unit”), then, notwithstanding anything to the contrary in this Certificate of Designations,
(A) from and after the effective time of such Common Stock Change Event, (I) the consideration due upon conversion of any Convertible Preferred Stock will be determined in the same manner as if each reference to any number of shares of Common Stock in this Section 10 or in Section 11, or in any related definitions, were instead a reference to the same number of Reference Property Units; (II) for purposes of Section 10(c), each reference to any number of shares of Common Stock in such Section (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units; and (III) for purposes of the definition of “Change of Control,” the terms “Common Stock” and “common equity” will be deemed to mean the common equity (including depositary receipts representing common equity), if any, forming part of such Reference Property; and
(B) for these purposes, the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities will be the fair value of such Reference Property Unit or portion thereof, as applicable,
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determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof).
If the Reference Property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per share of Common Stock, by the holders of Common Stock. The Company will notify the Holders of such weighted average as soon as practicable after such determination is made.
(ii) Compliance Covenant. The Company will not become a party to any Common Stock Change Event unless its terms are consistent with this Section 10(i).
(iii) Execution of Supplemental Instruments. On or before the date the Common Stock Change Event becomes effective, the Company and, if applicable, the resulting, surviving or transferee Person (if not the Company) of such Common Stock Change Event (the “Successor Person”) will execute and deliver such supplemental instruments, if any, as the Company reasonably determines are necessary or desirable to (1) provide for subsequent adjustments to the Conversion Rate pursuant to Section 10(f)(i) in a manner consistent with this Section 10(i); and (2) give effect to such other provisions, if any, as the Company reasonably determines are appropriate to preserve the economic interests of the Holders and to give effect to Section 10(i)(i). If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such other Person will also execute such supplemental instrument(s) and such supplemental instrument(s) will contain such additional provisions, if any, that the Company reasonably determines are appropriate to preserve the economic interests of Holders.
(iv) Notice of Common Stock Change Event. The Company will provide notice of each Common Stock Change Event to Holders no later than the effective date of the Common Stock Change Event.
Section 11. Certain Provisions Relating to the Issuance of Common Stock.
(a) Equitable Adjustments to Prices. Whenever this Certificate of Designations requires the Company to calculate the average of the Last Reported Sale Prices, or any function thereof, over a period of multiple days (including to calculate an adjustment to the Conversion Rate), the Company will make appropriate adjustments, if any, to those calculations to account for any adjustment to the Conversion Rate pursuant to Section 10(f)(i) that becomes effective, or any event requiring such an adjustment to the Conversion Rate where the Record Date or effective date, as applicable, of such event occurs, at any time during such period.
(b) Reservation of Shares of Common Stock. The Company will reserve, out of its authorized, unreserved and not outstanding shares of Common Stock, for delivery upon conversion of the Convertible Preferred Stock, a number of shares of Common Stock that would be sufficient to settle the conversion of all shares of Convertible Preferred Stock then outstanding, if any. To the extent the Company delivers shares of Common Stock held in the Company’s treasury in settlement of any obligation under this Certificate of Designations to deliver shares of Common
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Stock, each reference in this Certificate of Designations to the issuance of shares of Common Stock in connection therewith will be deemed to include such delivery.
(c) Status of Shares of Common Stock. Each share of Common Stock delivered upon conversion of on the Convertible Preferred Stock of any Holder will be a newly issued or treasury share and will be duly and validly issued, fully paid, non-assessable, free from preemptive rights and free of any lien or adverse claim (except to the extent of any lien or adverse claim created by the action or inaction of such Holder or the Person to whom such share of Common Stock will be delivered). If the Common Stock is then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Company will use commercially reasonable efforts to cause each such share of Common Stock, when so delivered, to be admitted for listing on such exchange or quotation on such system. In addition, if such Convertible Preferred Stock is then represented by a Global Certificate, then each such share of Common Stock will be so delivered through the facilities of the applicable Depositary (and identified by an “unrestricted” CUSIP number (and, if applicable, ISIN number) if the Convertible Preferred Stock represented by such Global Certificate is represented by an “unrestricted” CUSIP or ISIN number).
(d) Taxes Upon Issuance of Common Stock. The Company will pay any documentary, stamp or similar issue or transfer tax or duty due on the issue of any shares of Common Stock upon conversion of the Convertible Preferred Stock of any Holder, except any tax or duty that is due because such Holder requests those shares to be registered in a name other than such Holder’s name.
Section 12. No Preemptive Rights. Without limiting the rights of Preferred Stockholders set forth in this Certificate of Designations (including in connection with the issuance of Common Stock or Reference Property upon conversion of the Convertible Preferred Stock), the Convertible Preferred Stock will not have any preemptive rights to subscribe for or purchase any of the Company’s securities.
Section 13. Tax Treatment. Notwithstanding anything to the contrary in this Certificate of Designations, for U.S. federal and other applicable state and local income tax purposes, it is intended that the Convertible Preferred Stock will not be treated as “preferred stock” within the meaning of Section 305(b)(4) of Code and Treasury Regulations Section 1.305-5(a). The Company will, and will cause its Subsidiaries and agents to, report consistently with, and take no positions or actions inconsistent with, the foregoing treatment (including by way of withholding) unless otherwise required by a determination within the meaning of Section 1313(a) of the Code.
Section 14. Calculations.
(a) Responsibility; Schedule of Calculations. Except as otherwise provided in this Certificate of Designations, the Company will be responsible for making all calculations called for under this Certificate of Designations or the Convertible Preferred Stock, including determinations of the Conversion Rate, the Last Reported Sale Prices, the Conversion Share Cap, the Liquidation Preference and accumulated Regular Dividends on the Convertible Preferred Stock. The Company will make all calculations in good faith, and, absent manifest error, its calculations will be final
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and binding on all Holders. The Company will provide a schedule of such calculations to any Holder upon written request.
(b) Calculations Aggregated for Each Holder. The composition of the Conversion Consideration due upon conversion of the Convertible Preferred Stock of any Holder will be computed based on the total number of shares of Convertible Preferred Stock of such Holder being converted with the same Conversion Date. For these purposes, any cash amounts due to such Holder in respect thereof will be rounded to the nearest cent.
Section 15. Notices. The Company will send all notices or communications to Holders pursuant to this Certificate of Designations in writing by first class mail, certified or registered, return receipt requested, by email (deemed to have been delivered upon sending of such email, so long as notice shall be sent by first class mail on the next Business Day thereafter) or by overnight air courier guaranteeing next day delivery, to the Holders’ respective addresses shown on the Register.
Section 16. Legally Available Funds. Without limiting the rights of the Preferred Stockholders (including pursuant to Section 6), if the Company does not have sufficient funds legally available to fully pay any cash amount otherwise due on the Convertible Preferred Stock, then the Company will pay the deficiency promptly after funds thereafter become legally available therefor.
Section 17. No Other Rights. The Convertible Preferred Stock will have no rights, preferences or voting powers except as provided in this Certificate of Designations or the Certificate of Incorporation or as required by applicable law.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be duly executed as of the date first written above.
| Katapult Holdings, Inc. | |||
| By: | /s/ Orlando Zayas | ||
| Name: | Orlando Zayas | ||
| Title: | CEO | ||
[Signature Page to Certificate of Designations]
EXHIBIT A
FORM OF CONVERTIBLE PREFERRED STOCK
[Insert Restricted Stock Legend, if applicable]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.
Katapult Holdings, Inc.
Series B Convertible Preferred Stock
Certificate No. [___]
Katapult Holdings, Inc., a Delaware corporation (the “Company”), certifies that [____] is the registered owner of [___] shares of the Company’s Series B Convertible Preferred Stock (the “Convertible Preferred Stock”) represented by this certificate (this “Certificate”). The special rights, preferences and voting powers of the Convertible Preferred Stock are set forth in the Certificate of Designations of the Company establishing the Convertible Preferred Stock (the “Certificate of Designations”). Capitalized terms used in this Certificate without definition have the respective meanings ascribed to them in the Certificate of Designations.
Additional terms of this Certificate are set forth on the other side of this Certificate.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
A-1
IN WITNESS WHEREOF, Katapult Holdings, Inc. has caused this instrument to be duly executed as of the date set forth below.
| Katapult Holdings, Inc. | |||||
| Date: | By: | ||||
| Name: | |||||
| Title: | |||||
| Date: | By: | ||||
| Name: | |||||
| Title: | |||||
A-2
KATAPULT HOLDINGS, INC.
Series B Convertible Preferred Stock
This Certificate represents duly authorized, issued and outstanding shares of Convertible Preferred Stock. Certain terms of the Convertible Preferred Stock are summarized below. Notwithstanding anything to the contrary in this Certificate, to the extent that any provision of this Certificate conflicts with the provisions of the Certificate of Designations or the Certificate of Incorporation, the provisions of the of the Certificate of Designations or the Certificate of Incorporation, as applicable, will control.
1. Method of Payment. Cash amounts due on the Convertible Preferred Stock represented by this Certificate will be paid in the manner set forth in Section 3(e) of the Certificate of Designations.
2. Persons Deemed Owners. The Person in whose name this Certificate is registered will be treated as the owner of the Convertible Preferred Stock represented by this Certificate for all purposes, subject to Section 3(l) of the Certificate of Designations.
3. Denominations; Transfers and Exchanges. All shares of Convertible Preferred Stock will be in registered form and in denominations equal to any whole number of shares. Subject to the terms of the Certificate of Designations and the Investment Agreement, and subject to compliance with applicable Federal and state securities laws, the Holder of the Convertible Preferred Stock represented by this Certificate may transfer or exchange this Convertible Preferred Stock by presenting this Certificate to the Company and delivering any required documentation or other materials.
4. Dividends. Dividends on the Convertible Preferred Stock will accumulate and will be paid in the manner, and subject to the terms, set forth in Section 5 of the Certificate of Designations.
5. Liquidation Preference. The Liquidation Preference per share of Convertible Preferred Stock is initially equal to the Initial Liquidation Preference per share of Convertible Preferred Stock; provided, however, that the Liquidation Preference is subject to adjustment pursuant to Section 5(a)(ii)(1)(y) and Section 5(a)(ii)(2) of the Certificate of Designations. The rights of Holders upon the Company’s liquidation, dissolution or winding up are set forth in Section 6 of the Certificate of Designations.
6. Right of the Company to Redeem the Convertible Preferred Stock. The Company will have the right to redeem the Convertible Preferred Stock in the manner, and subject to the terms, set forth in Section 7 of the Certificate of Designations.
7. Voting Rights. Holders of the Convertible Preferred Stock have the voting rights set forth in Section 9 of the Certificate of Designations.
8. Conversion. The Convertible Preferred Stock will be convertible into Conversion
A-3
Consideration in the manner, and subject to the terms, set forth in Section 10 of the Certificate of Designations.
9. Abbreviations. Customary abbreviations may be used in the name of a Holder or its assignee, such as TEN COM (tenants in common), TEN ENT (tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
* * *
To request a copy of the Certificate of Designations, which the Company will provide to any Holder at no charge, please send a written request to the following address:
Katapult Holdings, Inc.
5360 Legacy Drive, Building 2
Plano, Texas 75024
A-4
CONVERSION NOTICE
KATAPULT HOLDINGS, INC.
Series B Convertible Preferred Stock
Subject to the terms of the Certificate of Designations, by executing and delivering this Conversion Notice, the undersigned Holder of the Convertible Preferred Stock identified below directs the Company to convert (check one):
| o | all of the shares of Convertible Preferred Stock |
| o | * shares of Convertible Preferred Stock |
identified by Certificate No. .
| Date: | |||||
| (Legal Name of Holder) | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Signature Guaranteed: | |||||
| Participant in a Recognized Signature | |||||
| Guarantee Medallion Program | |||||
| By: | |||||
| Authorized Signatory | |||||
___________
| * Must | be a whole number. |
A-5
CHANGE OF CONTROL REPURCHASE NOTICE
KATAPULT HOLDINGS, INC.
Series B Convertible Preferred Stock
Subject to the terms of the Certificate of Designations, by executing and delivering this Change of Control Repurchase Notice, the undersigned Holder of the Convertible Preferred Stock identified below is exercising its Change of Control Repurchase Right with respect to (check one):
| o | all of the shares of Convertible Preferred Stock |
| o | 2 shares of Convertible Preferred Stock |
identified by Certificate No. .
The undersigned acknowledges that Certificate identified above, duly endorsed for transfer, must be delivered to the Company before the Change of Control Repurchase Price will be paid.
| Date: | |||||
| (Legal Name of Holder) | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Signature Guaranteed: | |||||
| Participant in a Recognized Signature | |||||
| Guarantee Medallion Program | |||||
| By: | |||||
| Authorized Signatory | |||||
___________
| 2 Must | be a whole number. |
A-6
EXHIBIT B
FORM OF RESTRICTED STOCK LEGEND
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
BEFORE THE REGISTRATION OF ANY SALE OR TRANSFER, THE COMPANY RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATES OR OTHER DOCUMENTATION OR EVIDENCE AS THEY MAY REASONABLY REQUIRE IN ORDER FOR THE COMPANY TO DETERMINE THAT THE PROPOSED SALE OR TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
B-1
Exhibit 10.1
LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into this 2nd day of November, 2025, by and among KATAPULT SPV-1 LLC, a Delaware limited liability company (“Borrower”), KATAPULT GROUP, INC, a Delaware corporation (“Holdings”), KATAPULT HOLDINGS, INC., a Delaware corporation (“Parent Entity” and Borrower, Holdings and Parent Entity together, collectively, the “Credit Parties”), each of the lenders party to the Loan Agreement (defined below) (individually, each a “Lender” and collectively, the “Lenders”) and MIDTOWN MADISON MANAGEMENT LLC, a Delaware limited liability company, as administrative, payment and collateral agent for itself, as a Lender, and for the other Lenders (in such capacities, “Agent”).
Recitals
A. Borrower, Holdings, Parent Entity, Lenders and Agent entered into that certain Amended and Restated Loan and Security Agreement, dated as of June 12, 2025 (as amended, amended and restated, supplemented, revised, or otherwise modified from time to time, including pursuant to that certain Limited Waiver dated September 15, 2025 (the “First Limited Waiver”), that certain Limited Waiver dated September 29, 2025 (the “Second Limited Waiver”) , that certain Limited Waiver dated October 13, 2025 (the “Third Limited Waiver”), that certain Limited Waiver dated October 20, 2025 (the “Fourth Limited Waiver”), that certain Limited Waiver dated October 27, 2025 (the “Fifth Limited Waiver”) and that certain Limited Waiver dated October 29, 2025 (the “Sixth Limited Waiver”), the “Loan Agreement”);
B. One or more Defaults or Events of Default under (and as defined in) the Loan Agreement exist and are continuing under the Loan Agreement, as described further in Section 2 below and as a consequence, Agent and Lenders are entitled to the rights and remedies as a result thereof under the Loan Agreement and other Loan Documents;
C. Pursuant to the First Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the First Limited Waiver);
D. Pursuant to the Second Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the Second Limited Waiver);
E. Pursuant to the Third Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the Third Limited Waiver);
F. Pursuant to the Fourth Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the Fourth Limited Waiver);
G. Pursuant to the Fifth Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the Fifth Limited Waiver);
H. Pursuant to the Sixth Limited Waiver, Agent and the Lenders agreed to, among other things, temporarily waive such Defaults and/or Events of Default for the duration of the Limited Waiver Period (as defined in the Sixth Limited Waiver);
I. Borrower has requested that Agent and Lenders (i) permanently waive such Defaults and/or Events of Default and (ii) amend the Loan Agreement as set forth herein; and
J. Agent and Lenders are willing to do so upon and subject to the terms and conditions of this Agreement and the compliance of the Credit Parties and their Affiliates with the conditions set forth herein and the other provisions of this Agreement.
Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
Agreement
1. Definitions. Capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Loan Agreement, as amended by this Agreement.
2. Existing Default. The Credit Parties have failed to maintain a Minimum Trailing Three-Month Originations of at least $61,000,000 as of the last Business Day of (x) the calendar month ended August 31, 2025, (y) the calendar month ended September 30, 2025 and (z) and the calendar month ended October 31, 2025, in each case as required by the Loan Agreement and the other Loan Documents, resulting in the occurrence of a Default and/or Event of Default under the Loan Agreement (and the other Loan Documents) (the “Existing Default”).
3. Limited Waiver.
3.1 The Agent and the Lenders party hereto (constituting Requisite Lenders) hereby permanently waive the Existing Default (the “Limited Waiver”). The Limited Waiver shall be effective on and at all times after the Limited Waiver Effective Date.
3.2 Agent and Lenders have not waived, and are not by this Agreement waiving, any other Default or Event of Default that may occur from events or circumstances arising after the effectiveness of this Agreement, and Agent and Lenders have not agreed to waive any of their respective rights or remedies concerning any Default or Event of Default (other than the Existing Default). Without limiting the foregoing, as of the date hereof, Agent does not have actual knowledge of the continuation of any Event of Default other than the Existing Default. Each of the Agent and each Lender party hereto reserves all of its respective rights and remedies set forth in, and subject to the terms of, the Loan Agreement, the other Loan Documents and applicable Law.
4. No Waiver, Ratification, Further Assurances and Consent.
4.1 Except as specifically set forth in Section 3 hereof, nothing contained in this Agreement, or any other communication among Agent, Lenders, Borrower or any other Credit Party on or prior to the date hereof in connection with this Agreement shall be construed as a standstill or waiver by Agent or Lenders of any covenant or provision of the Loan Agreement, the other Loan Documents, this Agreement or any other contract or instrument among any Credit Party, Agent and/or Lenders, or of any similar future transaction and the failure of Agent and/or Lenders at any time or times hereafter to require strict performance by any Credit Party of any provision thereof shall not waive, affect or diminish any right
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of Agent and/or Lenders to thereafter demand strict compliance therewith. Except as expressly set forth herein, nothing contained in this Agreement shall directly or indirectly in any way whatsoever either: (i) impair, prejudice or otherwise adversely affect Agent’s or any Lender’s right at any time to exercise any right, privilege or remedy in connection with the Loan Agreement, as amended hereby on the Limited Waiver Effective Date, or any other Loan Documents, (ii) amend or alter any provision of the Loan Agreement or any other Loan Documents or any other contract or instrument, or (iii) constitute any course of dealings or other basis for altering any obligation of any Credit Party under the Loan Agreement or any other Loan Documents or any right, privilege or remedy of Agent or any Lender under the Loan Agreement, any other Loan Documents or any other contract or instrument.
4.2 Each of the Credit Parties ratifies and confirms that all of its respective obligations under the Loan Documents are in full force and effect and are performable in accordance with their respective terms without setoff, defense, counter-claim or claims in recoupment. This Agreement shall be construed in connection with and as part of the Loan Agreement and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Agreement, as amended hereby on the Limited Waiver Effective Date, and each other Loan Document are hereby ratified and confirmed and shall remain in full force and effect (giving effect to the Limited Waiver on the Limited Waiver Effective Date).
4.3 The Credit Parties and Agent agree that at any time and from time to time, upon the written request of the other, it will execute and deliver such further documents and do such further acts and things as the other may reasonably request in order to effect the purposes of this Agreement and the Loan Documents
5.
Amendments to Loan Agreement. Effective
as of the Limited Waiver Effective Date, the Loan Agreement is hereby amended (a) to delete the stricken text (indicated textually in
the same manner as the following examples: stricken text and stricken
text) and (b) to add the double-underlined text (indicated textually in the same manner as the following examples: double-underlined
text and double-underlined text), in each case, as set
forth in the marked copy of the Loan Agreement, along with those certain exhibits, schedules and appendices to the Loan Agreement, attached
hereto as Exhibit A and made a part hereof for all purposes.
6. Conditions Precedent to Effectiveness of Agreement. The effectiveness of this Agreement is conditioned upon the satisfaction of the following conditions precedent (the date on which the conditions have been satisfied or waived in writing by Agent being the “Signing Date”).
6.1 Agent shall have received this Agreement, duly executed by each Credit Party, the Lenders and Agent.
6.2 Agent shall have received such additional documents, instruments and information as Agent may have requested in writing at least two Business Days prior to the date hereof.
6.3 The representations and warranties contained or incorporated herein shall be true and correct in all material respects (except to the extent already qualified by materiality, in which case it shall be true and correct in all respects).
Agent and each Lender party hereto, by delivering its signature page to this Agreement, shall be deemed to have accepted or been satisfied with (or waived) each condition set forth in this Section 6. The parties hereto hereby agree that notwithstanding any other provision hereof, the Signing Date is November 2, 2025.
7. Conditions Precedent to Effectiveness of the Limited Waiver and Amendment. The
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Limited Waiver and the amendments to the Loan Agreement set forth in Section 5 are conditioned upon the satisfaction of the following condition precedent (the date on which such condition has been satisfied or waived in writing by Agent being the “Limited Waiver Effective Date”).
7.1 The aggregate outstanding principal balance of the Term Loan and all accrued and unpaid interest (including all PIK Interest) and all other Obligations owing to the Class B Lenders in respect thereof under the Loan Agreement shall have been (or substantially concurrently shall be) paid in full in cash in immediately available funds pursuant to that certain partial payoff letter, dated on or prior to the date hereof, it being understood and agreed that such partial payoff letter, together with this Agreement, constitutes (and shall be deemed to constitute) all notices required by, and satisfies all notice requirements under, the Loan Agreement in connection with the prepayment of the Term Loan (including, without limitation, Section 2.5(c) of the Loan Agreement).
8. Representations and Warranties. To induce Agent and Lenders to enter into this Agreement, each Credit Party hereby represents and warrants to Agent and Lender as follows:
8.1 The execution, delivery and performance of this Agreement by each Credit Party has been duly authorized by all requisite action of such parties;
8.2 Immediately after giving effect to this Agreement (a) except with respect to the Existing Default, the representations and warranties contained in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such date), (b) except with respect to the Existing Default, no Regulatory Trigger Event, Default Trigger Event, First Payment Default Trigger Event, Default or Event of Default has occurred and is continuing, (c) each Credit Party is in good standing under the laws of its jurisdiction of organization, and (d) since June 12, 2025, no amendment, modification or other change has been made to (i) the articles of organization (or other applicable charter document), or (ii) the limited liability company agreement (or any other equivalent governing agreement or document) of any Credit Party except those approved by Agent;
8.3 Each Credit Party has all requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, the Loan Agreement, as amended hereby on the Limited Waiver Effective Date, and the other Loan Documents;
8.4 The execution and delivery by the Credit Parties of this Agreement and the performance by the Credit Parties of their respective obligations under the Loan Agreement, as amended hereby on the Limited Waiver Effective Date, and the other Loan Documents do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on any Credit Party, except as already have been obtained or made;
8.5 This Agreement has been duly executed and delivered by each Credit Party and is the binding obligation of each Credit Party, enforceable against each Credit Party in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity (whether in a proceeding at law or in equity); and
8.6 Each Credit Party has reviewed this Agreement and acknowledges and agrees that it (a) understands fully the terms of this Agreement and the consequences of the issuance hereof, (b) has been afforded an opportunity to have this Agreement reviewed by, and to discuss this Agreement with, such
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attorneys and other Persons as it may wish, and (c) has entered into this Agreement of its own free will and accord and without threat or duress. This Agreement and all information furnished to Agent and Lenders is made and furnished in good faith, for value and valuable consideration. This Agreement has not been made or induced by any fraud, duress or undue influence exercised by any Agent, any Lender or any other Person.
9. Miscellaneous.
9.1 Integration. This Agreement and the Loan Agreement, as amended hereby, represent the entire agreement between the parties about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties and negotiations between the parties about the subject matter of this Agreement and the Loan Agreement merge into this Agreement and the Loan Agreement, as amended hereby.
9.2 Severability. If any term or provision of this Agreement is adjudicated to be illegal, invalid or unenforceable under Applicable Law, such term or provision shall be inapplicable to the extent of such illegality, invalidity or unenforceability without affecting the legality, validity or enforceability of the remainder of this Agreement which shall be given effect so far as possible.
9.3 Successors and Assigns. Subject to Section 12.2 of the Loan Agreement, this Agreement shall be binding upon and inure to the benefit of the Credit Parties, Agent and Lenders and their respective successors and permitted assigns, except that the Credit Parties shall not have the right to assign any rights hereunder or any interest herein without Agent’s and the Lender’s prior written consent.
9.4 WAIVER OF JURY TRIAL. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS Agreement SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE LOAN AGREEMENT AND SHALL BE SUBJECT TO ANY WAIVER OF JURY TRIAL AND NOTICE PROVISIONS SET FORTH IN THE LOAN AGREEMENT.
9.5 No Oral Agreements. Neither this Agreement nor any provision hereof may be changed, waived, discharged, modified or terminated orally, but only by an instrument in writing signed by the parties required to be a party thereto pursuant to the Loan Agreement.
9.6 Counterparts. This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Signature pages delivered by facsimile or other electronic means shall have the same effect as manually executed signature pages. The words “execution,” “executed,” “signed,” “signature,” and words of like import in this Agreement shall be deemed to include electronic signatures, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature.
10. Release. BORROWER, HOLDINGS AND PARENT ENTITY, AND EACH OF THEIR RESPECTIVE PREDECESSORS, SUCCESSORS, HEIRS, AND ASSIGNS (INDIVIDUALLY AND COLLECTIVELY, “RELEASORS”) HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND EACH LENDER AND THEIR RESPECTIVE PARENTS, DIVISIONS, SUBSIDIARIES, AFFILIATES, SUCCESSORS, AND ASSIGNS, AND EACH OF ITS CURRENT AND FORMER DIRECTORS, OFFICERS, SHAREHOLDERS, MEMBERS, MANAGERS, PARTNERS, ATTORNEYS, AGENTS, AND EMPLOYEES, AND EACH OF THEIR RESPECTIVE PREDECESSORS, SUCCESSORS, HEIRS, AND ASSIGNS (INDIVIDUALLY AND COLLECTIVELY, THE “RELEASED PARTIES”) FROM ALL POSSIBLE CLAIMS,
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COUNTERCLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, WHETHER KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY CASE ORIGINATING ON OR BEFORE THE DATE HEREOF THAT ANY OF THE RELEASORS MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES (OR ANY OF THEM), IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, ARISING DIRECTLY OR INDIRECTLY FROM THE LOAN AGREEMENT, THE LOAN DOCUMENTS, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT OR THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, IN EACH CASE EXCLUDING FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT (THE “RELEASED CLAIMS”). RELEASED CLAIMS SHALL NOT INCLUDE CLAIMS TO ENFORCE THIS AGREEMENT OR FOR BREACH OF THIS AGREEMENT, IN EACH CASE MADE AFTER THE DATE HEREOF. EACH OF THE RELEASORS WAIVES THE BENEFITS OF ANY LAW, WHICH MAY PROVIDE IN SUBSTANCE: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS SETTLEMENT WITH THE DEBTOR.” EACH OF THE RELEASORS UNDERSTANDS THAT THE FACTS WHICH IT BELIEVES TO BE TRUE AT THE TIME OF MAKING THE RELEASE PROVIDED FOR HEREIN MAY LATER TURN OUT TO BE DIFFERENT THAN IT NOW BELIEVES, AND THAT INFORMATION WHICH IS NOT NOW KNOWN OR SUSPECTED MAY LATER BE DISCOVERED. EACH OF THE RELEASORS ACCEPTS THIS POSSIBILITY, AND EACH OF THEM ASSUMES THE RISK OF THE FACTS TURNING OUT TO BE DIFFERENT AND NEW INFORMATION BEING DISCOVERED; AND EACH OF THEM FURTHER AGREES THAT THE RELEASE PROVIDED FOR HEREIN SHALL IN ALL RESPECTS CONTINUE TO BE EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BECAUSE OF ANY DIFFERENCE IN SUCH FACTS OR ANY NEW INFORMATION. RELEASORS AGREE THAT (I) THE COMMENCEMENT OF ANY LITIGATION OR LEGAL PROCEEDINGS BY ANY RELEASOR AGAINST ANY RELEASED PARTY WITH RESPECT TO ANY CLAIMS, COUNTERCLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES RELEASED HEREBY, PURPORTED TO BE RELEASED HEREBY OR ARISING ON OR BEFORE THE DATE HEREOF, AND/OR (II) THE COMMENCEMENT OF ANY CLAIM, INITIATION OR COMMENCEMENT OF ANY CLAIM OR PROCEEDING BY ANY RELEASOR WHICH ALLEGES THAT THE RELEASE HEREIN IS INVALID OR UNENFORCEABLE IN ANY RESPECT, SHALL, IN EACH CASE, CONSTITUTE AN IMMEDIATE EVENT OF DEFAULT.
[Signature pages follow.]
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IN WITNESS WHEREOF, this Agreement is being executed as of the date first written above.
| BORROWER: | ||
| KATAPULT SPV-1 LLC | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | Chief Executive Officer | |
| HOLDINGS: | ||
| KATAPULT GROUP, INC. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | Chief Executive Officer | |
| PARENT ENTITY: | ||
| Katapult Holdings, Inc. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | Chief Executive Officer | |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Loan and Security Agreement]
| AGENT: | ||
| MIDTOWN MADISON MANAGEMENT LLC | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Loan and Security Agreement]
| CLASS A-1 LENDERS: | ||
| BLUE OWL ASSET Income Fund IV LP | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
| BLUE OWL ASSET Income Fund (Cayman) IV LP | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
| BLUE OWL Asset Income Fund V LP | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
| BLUE OWL Asset Income Fund (Cayman) V LP | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Loan and Security Agreement]
| CLASS A-2 LENDERS: | ||
| BLUE OWL Asset Income Fund V LP | ||
| By: | /s/ David Aidi | |
| Name: | David Aidi | |
| Title: | Authorized Signatory | |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Loan and Security Agreement]
EXHIBIT A
Amended Loan Agreement
$110,000,000
SENIOR SECURED REVOLVING LOAN FACILITY AND $32,654,469.23
SENIOR SECURED TERM LOAN
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
among
KATAPULT SPV-1 LLC,
as Borrower,
and
KATAPULT GROUP, INC.,
as Holdings
and
Katapult Holdings, Inc.,
as Parent Entity
and
MIDTOWN MADISON
MANAGEMENT LLC
as Agent
and
THE FINANCIAL INSTITUTIONS PARTY HERETO FROM TIME TO TIME
as Lenders
Dated as of
June 12, 2025
TABLE OF CONTENTS
| Page | |||
| I. | DEFINITIONS | ||
| 1.1 | General Terms | ||
| II. | LOAN, PAYMENTS, INTEREST AND COLLATERAL | ||
| 2.1 | The Revolving Loan Advances |
||
| 2.2 | Interest on the Loan | ||
| 2.3 | Loan Collections; Repayment. | ||
| 2.4 | Promise to Pay; Manner of Payment. | ||
| 2.5 | Voluntary Prepayments | ||
| 2.6 | Mandatory Prepayments | ||
| 2.7 | Payments by Agent; Protective Advances | ||
| 2.8 | Grant of Security Interest; Collateral | ||
| 2.9 | Collateral Administration | ||
| 2.10 | Power of Attorney | ||
| 2.11 | Deposit of Release Price or Substitution of Eligible Lease | ||
| 2.12 | Collection Account and Collateral Account | ||
| 2.13 | |||
| III. | FEES AND OTHER CHARGES | ||
| 3.1 | Computation of Fees; Lawful Limits | ||
| 3.2 | Default Rate of Interest | ||
| 3.3 | Increased Costs; Capital Adequacy | ||
| 3.4 | Administration Fee | ||
| 3.5 | [Reserved]. | ||
| 3.6 | Additional Interest. | ||
| IV. | CONDITIONS PRECEDENT | ||
| 4.1 | Conditions to Closing | ||
| 4.2 | Conditions to Initial Revolving Advances and Subsequent Revolving Advances | ||
| V. | REPRESENTATIONS AND WARRANTIES | ||
| 5.1 | Organization and Authority | ||
| 5.2 | Loan Documents | ||
| 5.3 | Requisite Stockholder Approval | ||
| 5.4 | Subsidiaries, Capitalization and Ownership Interests | ||
| 5.5 | Properties | ||
| 5.6 | Other Agreements | ||
| 5.7 | Litigation | ||
| 5.8 | Tax Returns; Taxes | ||
| 5.9 | Financial Statements and Reports | ||
| 5.10 | Compliance with Law | ||
| 5.11 | Intellectual Property | ||
| 5.12 | Licenses and Permits; Labor | ||
| 5.13 | No Default; Solvency | ||
| 5.14 | Disclosure | ||
| 5.15 | Existing Indebtedness; Investments, Guarantees and Certain Contracts | ||
| 5.16 | Affiliated Agreements | ||
| 5.17 | Insurance | ||
| 5.18 | Names; Location of Offices, Records and Collateral; Deposit Accounts and Investment Property | ||
| 5.19 | Non-Subordination | ||
| 5.20 | Leases | ||
| 5.21 | Servicing | ||
| 5.22 | Legal Investments; Use of Proceeds | ||
| 5.23 | Broker’s or Finder’s Commissions | ||
| 5.24 | Anti-Terrorism; OFAC | ||
| 5.25 | Survival | ||
| VI. | AFFIRMATIVE COVENANTS | ||
| 6.1 | Financial Statements, Reports and Other Information | ||
| 6.2 | Payment of Obligations | ||
| 6.3 | Conduct of Business and Maintenance of Existence and Assets | ||
| 6.4 | Compliance with Legal and Other Obligations | ||
| 6.5 | Insurance | ||
| 6.6 | True Books | ||
| 6.7 | Inspection; Periodic Audits; Quarterly Review | ||
| 6.8 | Further Assurances; Post Closing | ||
| 6.9 | Payment of Indebtedness | ||
| 6.10 | Other Liens | ||
| 6.11 | Use of Proceeds | ||
| 6.12 | Collateral Documents; Security Interest in Collateral | ||
| 6.13 | Servicing Agreement; Backup Servicer | ||
| 6.14 | [RESERVED] | ||
| 6.15 | Collections; Deposit Accounts | ||
| 6.16 | Right of First Refusal | ||
| 6.17 | Requisite Special Stockholder Meeting Items. | ||
| 6.18 | Board of Directors; Observer Rights. | ||
| 6.19 | Financial Covenants. | ||
| 6.20 | [Reserved]. | ||
| 6.21 | Federal Securities Laws. | ||
| 6.22 | Government Receivables. | ||
| VII. | NEGATIVE COVENANTS | ||
| 7.1 | Indebtedness | ||
| 7.2 | Liens | ||
| 7.3 | Investments; Investment Property; New Facilities or Collateral; Subsidiaries | ||
| 7.4 | Dividends; Redemptions; Equity; Compensation | ||
| 7.5 | Transactions with Affiliates | ||
| 7.6 | Charter Documents; Fiscal Year; Dissolution; Use of Proceeds; Insurance Policies; Disposition of Collateral; Trade Names | ||
| 7.7 | Transfer of Collateral; Amendment of Pledged Leases | ||
| 7.8 | Contingent Obligations and Risks | ||
| 7.9 | Truth of Statements | ||
| 7.10 | Modifications of Agreements | ||
| 7.11 | Anti-Terrorism; OFAC | ||
| 7.12 | Deposit Accounts and Payment Instructions | ||
| 7.13 | Servicing Agreement | ||
| 7.14 | ERISA. | ||
| 7.15 | Restrictive Agreements. | ||
| 7.16 | Sale and Leaseback Transactions. | ||
| 7.17 | Hedging Transactions. | ||
| 7.18 | Loans. | ||
| 7.19 | Borrower Purpose. | ||
| VIII. | EVENTS OF DEFAULT | ||
| IX. | RIGHTS AND REMEDIES AFTER DEFAULT | ||
| 9.1 | Rights and Remedies | ||
| 9.2 | Application of Proceeds | ||
| 9.3 | Rights to Appoint Receiver | ||
| 9.4 | Attorney-in-Fact | ||
| 9.5 | Rights and Remedies not Exclusive | ||
| X. | WAIVERS AND JUDICIAL PROCEEDINGS | ||
| 10.1 | Waivers | ||
| 10.2 | Delay; No Waiver of Defaults | ||
| 10.3 | Jury Waiver | ||
| 10.4 | Amendment and Waivers | ||
| XI. | EFFECTIVE DATE AND TERMINATION | ||
| 11.1 | Effectiveness and Termination | ||
| 11.2 | Survival | ||
| XII. | MISCELLANEOUS | ||
| 12.1 | Governing Law; Jurisdiction; Service of Process; Venue | ||
| 12.2 | Successors and Assigns; Assignments and Participations | ||
| 12.3 | Application of Payments | ||
| 12.4 | Indemnity | ||
| 12.5 | Notice | ||
| 12.6 | Severability; Captions; Counterparts; Facsimile Signatures | ||
| 12.7 | Expenses | ||
| 12.8 | Entire Agreement | ||
| 12.9 | Approvals and Duties | ||
| 12.10 | Publicity | ||
| 12.11 | Release of Collateral | ||
| 12.12 | Treatment of Fees | ||
| 12.13 | Release; Cooperation | ||
| 12.14 | Amendment and Restatement; Acknowledgements; No Termination; Reaffirmations; References; Conditional Waiver. | ||
| XIII. | AGENT PROVISIONS; SETTLEMENT | ||
| 13.1 | Agent | ||
| 13.2 | Lender Consent | ||
| 13.3 | Set-off and Sharing of Payments | ||
| 13.4 | Disbursement of Funds | ||
| 13.5 | Settlements; Payments; and Information | ||
| 13.6 | Dissemination of Information | ||
| 13.7 | Non-Funding Lender | ||
| 13.8 | Taxes | ||
| 13.9 | Patriot Act | ||
EXHIBITS
| Exhibit A | Borrowing Base Certificate |
| Exhibit B-1 | Form of Revolving Note |
| Exhibit B-2 | |
| Exhibit C | Form of Monthly Servicing Report/Lease Contract Multiple |
| Exhibit D | Form of Portfolio Documents |
| Exhibit E | Underwriting Guidelines |
| Exhibit F | Form of Request for Revolving Advance |
| Exhibit G | Servicing Policy |
| Exhibit H | Performance Covenant Tables |
| Exhibit I | Permitted Holders |
| Exhibit J | Approved States |
| Exhibit K | |
| Exhibit L | Registration Rights |
| Exhibit M | Allocation of Warrants |
| SCHEDULES | |
| Schedule A | Wiring Instructions |
| Schedule B | Commitments |
| Schedule 5.4 | Managers, Managing Members and Directors of each Credit Party |
| Schedule 5.11 | Intellectual Property |
| Schedule 5.16 | Affiliate Agreements |
| Schedule 5.17 | Insurance |
| Schedule 5.18A | Names |
| Schedule 5.18B | Location of Offices, Records and Collateral |
| Schedule 5.18C | Deposit Accounts and Investment Property |
| Schedule 6.8 | Further Assurances and Post Closing Deliverables |
| Schedule 7.1 | Permitted Indebtedness |
| Schedule 7.13(b) | Approved Sub-Servicers |
AMENDED AND
RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the “Agreement”) dated as of June 12, 2025, is entered into by and among KATAPULT SPV-1 LLC, a Delaware limited liability company (“Borrower”), KATAPULT GROUP, INC, a Delaware corporation (“Holdings”), Katapult Holdings, Inc., a Delaware corporation (“Parent Entity”), each of the lenders from time to time party hereto (individually each a “Lender” and collectively the “Lenders”) and MIDTOWN MADISON MANAGEMENT LLC, a Delaware limited liability company, as administrative, payment and collateral agent for itself, as a Lender, and for the other Lenders (in such capacities, “Agent”).
WHEREAS, pursuant to the Purchase and Sale Agreement, the Borrower has purchased, and will continue to purchase, from Holdings all of its rights, title and interest in and to the Collateral, including, but not limited to, the Pledged Leases which were originated by Holdings and the Inventory related thereto;
WHEREAS, Borrower, Holdings, Parent Entity, the Lenders and Agent are parties to that certain Loan and Security Agreement, dated as of the Original Closing Date (as defined herein) (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Original Loan Agreement”), pursuant to which the Lenders thereunder made available to Borrower a senior secured revolving credit facility and a senior secured term loan facility;
WHEREAS, the parties hereto desire to amend and restate the Original Loan Agreement in its entirety into this Agreement, on and subject to the terms and conditions set forth herein, in order to, among other things, make the Loans available to Borrower hereunder; and
WHEREAS, Borrower granted Agent, for the benefit of itself and the other Lenders, a first priority lien on and security interest in the Collateral to secure the Original Loan Agreement Obligations.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, Borrower, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1 General Terms
For purposes of the Loan Documents and all Annexes thereto, in addition to the definitions above and elsewhere in this Agreement or the other Loan Documents, the terms listed in this Article I shall have the meanings given such terms in this Article I. All capitalized terms used which are not specifically defined shall have the meanings provided in Article 9 of the UCC in effect on the date hereof to the extent the same are used or defined therein. Unless otherwise specified, if a provision of this Agreement or any other Loan Document requires the consent of or approval of Agent or any Lender, such consent or approval shall be in Agent’s or such Lender’s sole discretion. Unless otherwise specified herein, this Agreement and any agreement or contract referred to herein shall mean such agreement as modified, amended or supplemented from time to
time. Unless otherwise specified, as used in the Loan Documents or in any certificate, report, instrument or other document made or delivered pursuant to any of the Loan Documents, all accounting terms not defined in this Article I or elsewhere in this Agreement shall have the meanings given to such terms in and shall be interpreted in accordance with GAAP. Unless otherwise specified herein, the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
“Account Lessee” shall mean any Person that is an obligor in respect of any Lease.
“Additional Interest” shall have the meaning set forth in Section 3.6(b).
“Additional Payment Date” shall have the meaning assigned to it in Section 2.4(a) hereof.
“Adjusted Current Lease Balance” shall mean for each Lease, (a) if the ratio of the Original Net Lease Cost to Lease Cost is equal to or greater than ninety percent (90%), the Current Lease Balance, and (b) if the ratio of the Original Net Lease Cost to Lease Cost is less than ninety percent (90%), the lesser of (i) the Original Net Lease Cost and (ii) the Current Lease Balance.
“Adjusted Term SOFR” means, as of any date of determination, the rate per annum equal to (a) the Term SOFR Rate as of such date plus (b) a percentage per annum equal to 0.10%; provided if, as of any date of determination, “Adjusted Term SOFR” as determined in the manner as set forth above is less than three percent (3.00%), “Adjusted Term SOFR” for such date shall be deemed to be three percent (3.00%) for purposes of this Agreement.
“Administration Fee” shall have the meaning set forth in Section 3.4.
“Advance”
shall mean any borrowing under and advance of the Loan, including, but not limited to, the Term Loan,
each Revolving Advance and any Protective Advance. Any amounts paid by Agent on behalf of Borrower under any Loan Document
shall be an Advance for purposes of this Agreement.
“Advance Rate” shall mean, as of any date of determination, so long as no Advance Rate Trigger Event, Default or Event of Default exists, ninety percent (90.00%).
(a)
initially, ninety-one percent (91.00%);
(b)
immediately upon the occurrence of the Requisite Stockholder Approval
(and until the date specified in clause (c) (below)), ninety-five percent (95.00%);
(c)
on the first day of the next calendar month following the occurrence of the Requisite Stockholder Approval (for example, if the Requisite
Stockholder Approval is completed on the 15th of August, 2025, on the first day of September, 2025) (and until the date specified in
clause (d) (below)), ninety-six percent (96.00%);
(d)
on the first day of September, 2025 (and until the date specified in clause (e) (below)), ninety-six percent (96.00%);
(e)
on the first day of October, 2025 (and until the date specified in clause (f) (below)), ninety-seven percent (97.00%); and
(f)
on the first day of November, 2025 and at all times thereafter, ninety-nine percent (99.00%).
Notwithstanding
the foregoing, (x) prior to the occurrence of the Requisite Stockholder Approval, if the Borrower, on
one or more occasions, receives a written notice or other evidence from the relevant taxation authority of North Carolina, Maryland,
Colorado and/or Virginia that sales tax remediation payments are, or will be, due and payable pursuant to the relevant voluntary disclosure
agreement or other similar agreement with the applicable state authority (or are otherwise demanded), the Advance Rate shall immediately
and automatically (without any further action by any Person) be increased by the lesser of (a) the marginal amount sufficient to independently
(and without accounting for other cash sources) allow the Borrower (or its applicable Affiliate) to satisfy any and all such payments
and (b) three percent (3.00%) and (y) if any Advance Rate Trigger Event has occurred, the Advance Rate shall be immediately
reduced by five percent (5%); provided, that if, following any such Advance Rate Trigger Event, there occurs three (3) consecutive
calendar months in which such Advance Rate Trigger Event no longer exists and no other Advance Rate Trigger Event, Default or Event of
Default has occurred, then the Advance Rate shall be increased by five percent 5%.
“Advance Rate Trigger Event” shall mean the occurrence of any of the following events with respect to the portfolio of Pledged Leases securing the Loan, in each case, to be tested as of the last day of each calendar month:
(a) The Charge-off Percentage Ratio for any Vintage Pool exceeds the Advance Rate Trigger Charge-off Percentage Ratio for the corresponding thirty (30) day period set forth on Exhibit H-4 since the first payment date for each Lease within each such Vintage Pool. For the avoidance of doubt, the first thirty day period following the origination date for each Lease within each Vintage Pool shall be Period 1 and the final thirty day period shall be Period 13; or
(b) The Cumulative Cash Collection Percentage Ratio for any Vintage Pool is less than the Advance Rate Trigger Cumulative Cash Collection Percentage Ratio for the corresponding thirty (30) day period set forth on Exhibit H-3 since the first payment date for each Lease within each such Vintage Pool. For the avoidance of doubt, the first thirty day period following the origination date for each Lease within each Vintage Pool shall be Period 1 and the final thirty day period shall be Period 13; or
(c) The average First Payment Default Ratio for the three most recent Vintage Pools (excluding the Vintage Pool originated during the month ending on the date of determination (i.e. as of end of December 2025, excluding the December 2025 Vintage Pool)) exceeds the Advance Rate Trigger First Payment Default Ratio (Trailing Three Months T+30) ratio set forth on Exhibit H-2; or
(d) The First Payment Default Ratio for any Vintage Pool within the three most recent Vintage Pools (excluding the Vintage Pool originated during the month ending on the date of determination (i.e. as of end of December 2025, excluding the December 2025 Vintage Pool)) exceeds the Advance Rate Trigger First Payment Default Ratio (T+30) ratio set forth on Exhibit H-1.
“Advensus” means Nearshore Call Center Services LTD, dba Advensus, a British Virgin Islands corporation.
“Affiliate” or “affiliate” shall mean, as to any Person, any other Person (a) that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, (b) who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person described in clause (a) above with respect to such Person. For purposes of this definition, the term “control” (and the correlative terms, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, whether through the ability to exercise voting power, by contract or otherwise.
“Agent” shall have the meaning assigned to it in the introductory paragraph hereof.
“Agent Advance” shall have the meaning assigned to it in Section 13.4.
“Agreement” shall have the meaning assigned to it in the introductory paragraph hereof.
“Allocation Notice” shall have the meaning assigned to it in Section 2.12(b).
“Amortized Lease Cost” shall mean, for any Lease and as of any date of determination, the product of (i) the cumulative payments received to date (excluding upfront payments, application fees and/or merchant discounts) related to such Lease and (ii) the quotient of (x) one and (y) the Lease Contract Multiple of such Lease.
“Applicable Rate” shall mean the interest rates applicable from time to time under this Agreement.
“Applicable Law” shall mean any and all federal, state, local and/or applicable foreign statutes, ordinances, rules, regulations, court orders and decrees, administrative orders and decrees, and other legal requirements of any and every conceivable type applicable to the Loan, the Loan Documents, Borrower, Guarantors or the Collateral or any portion thereof, including, but not limited to, in each case, as applicable, Credit Protection Laws, credit disclosure laws and regulations, the Fair Labor Standards Act, and all state and federal usury laws.
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and (a) that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender or (b) is a Person (other than a natural person) primarily engaged in the making of commercial loans having total assets in excess of $500,000,000.
“Approved State” shall mean a state listed on Exhibit J attached hereto.
“Availability” shall mean, at any date of determination, the lesser of (a) the Borrowing Base or (b) the aggregate of the Revolving Loan Commitments, minus, in each case, the aggregate principal balance of the outstanding Revolving Advances.
“Available Amounts” shall mean, as of any Payment Date, the sum of (a) all payments, including all Scheduled Payments, any prepayments, fees or other amounts collected from or on behalf of the Account Lessees on the Pledged Leases during the related Due Period, (b) all liquidation proceeds from the sale or disposition of any Pledged Lease and/or any property related thereto during the related Due Period, whether to a third party purchaser or an Affiliate of the Borrower, (c) any amount received by the Borrower or the Servicer related to a payment from the Guarantors regarding any Guaranty since the most recent Payment Date, (d) all other proceeds of the Collateral received by the Borrower or Servicer during the Due Period, including, but not limited to, judgment awards or settlements, late charges and other income collected from any source arising in connection with the Collateral and (e) all interest earned on the amounts on deposit in the Collection Account since the previous Payment Date.
“Backup Servicer” shall mean Vervent Inc. (as successor to First Associates Loan Servicing, LLC), or such other Person designated and engaged by the Agent and, prior to the occurrence of an Event of Default, approved by the Borrower to succeed Vervent Inc. as Backup Servicer to perform the duties described in Section 6.13 hereunder and such other duties as may be agreed to by such Person, all in accordance with the terms, provisions, and conditions a Backup Servicing Agreement.
“Backup Servicer Fee” shall mean any fee payable monthly by Borrower to a Backup Servicer, such fee, including, without limitation, fees for verification services, to be as specified in the applicable Backup Servicing Agreement.
“Backup Servicing Agreement” shall mean that any Backup Servicing Agreement, dated as of May 14, 2019, by and among Agent, Borrower and Backup Servicer regarding the provision of certain services by the Backup Servicer with respect to the Leases, as the same may be amended, including pursuant to that certain Amendment No. 1 to Backup Servicing Agreement dated as of the Closing Date (the “Amendment No. 1 to Backup Servicing Agreement”), modified, supplemented, restated, replaced or renewed in writing from time to time.
“Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C. §§ 101 et. seq., as amended from time to time.
“Borrower” shall have the meaning assigned to it in the introductory paragraph hereof.
“Borrowing Base” shall mean the (a) product of (i) the Advance Rate multiplied by (ii) the aggregate sum of the Adjusted Current Lease Balance for all Eligible Leases pledged as Collateral hereunder.
“Borrowing Base Certificate” shall mean a Borrowing Base Certificate substantially in the form of Exhibit A hereto.
“BRG” shall mean Berkeley Research Group, LLC.
“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which (a) commercial banks in New York City are authorized or required by law to remain closed, or (b) with respect to the Term SOFR Rate, the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Calculated Rate” shall have the meaning assigned to it in Section 2.2(a) hereof.
“Cash Equivalents”: (a) securities with maturities of twelve (12) months or less from the date of acquisition or acceptance which are issued or fully guaranteed or insured by the United States, or any agency or instrumentality thereof, (b) bankers’ acceptances, certificates of deposit and eurodollar time deposits with maturities of nine (9) months or less from the date of acquisition and overnight bank deposits, in each case, of any Lender or of any international or national commercial bank with commercial paper rated, on the day of such purchase, at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s, (c) commercial paper or any other short term, liquid investment having a rating, on the date of purchase, of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and that matures or resets not more than nine (9) months after the date of acquisition, (d) investments in money market funds and (e) investments in mutual funds or other pooled investment vehicles, in each case acceptable to the Agent in its sole discretion, the assets of which consist solely of the foregoing.
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 3.3 by any lending office of such Lender or by such holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued by any Governmental Authority (x) under or in connection with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended to the date hereof and from time to time hereafter, and any successor statute and (y) in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), shall be a “Change in Law” regardless of the date adopted, issued, promulgated or implemented.
“Change of Control” shall mean the occurrence of any of the following:
(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) (but excluding any (a) employee benefit plan of such person or its subsidiaries, (b) any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and/or (c) any Permitted Holder and/or “group” of Permitted Holders) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person
or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time, in each case other than such right such person or group has during the pendency, but prior to the consummation, of an equity sale, merger, recapitalization or other form of transaction pursuant to which the Equity Interests of the Parent Entity is committed, or intended, to be sold or otherwise transferred to such person or group), directly or indirectly, of 35% or more of the equity securities of the Parent Entity entitled to vote for members of the board of directors or equivalent governing body of the Parent Entity on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or
(ii) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent Entity cease to be composed of individuals (a) who were members of that board or equivalent governing body on the first day of such period, (b) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in subclause (a) of this section constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (c) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in subclause (a) of this section and subclause (b) of this section constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or
(iii) Parent Entity at any time for any reason ceases to own 100% of the issued and outstanding Equity Interests of Holdings (as the same may be adjusted for any combination, recapitalization or reclassification into a greater or smaller number of shares or units), free and clear of all Liens, rights, options, warrants or other similar agreements or understandings other than in favor of Agent, Lenders or their Affiliates; or
(iv) Holdings at any time for any reason ceases to own 100% of the issued and outstanding Equity Interests of Borrower (as the same may be adjusted for any combination, recapitalization or reclassification into a greater or smaller number of shares or units), free and clear of all Liens, rights, options, warrants or other similar agreements or understandings other than in favor of Agent, Lenders or their Affiliates; or
(v) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Parent Entity and the assets of its Subsidiaries taken as a whole to any “person” (as that term is defined in Section 13(d)(3) of the Exchange Act) (other than to the Parent Entity or its Subsidiaries).
“Charged-off Lease” shall mean (a) any Pledged Lease for which any portion of a Scheduled Payment (without giving effect to any modifications of such Pledged Lease after the date such Pledged Lease was first pledged hereunder or under any other Loan Document) is delinquent more than ninety (90) days, (b) with respect to which Servicer or Borrower shall have reasonably determined in good faith that the related Account Lessee will not resume making
Scheduled Payments, (c) unless otherwise approved by Agent in writing in its sole discretion, the related Account Lessee shall have become the subject of a proceeding under a Debtor Relief Law and Servicer or Borrower shall have been notified thereof or (d) that has been specifically and separately reserved against by Borrower or deemed charged-off or non-collectible by Borrower or Servicer.
“Charge-off Percentage Ratio” shall mean, with respect to any Vintage Pool, the percentage equivalent to a fraction, (a) the numerator of which is the aggregate Lease Cost of such Lease related to such Vintage Pool that have become and remain Charged-off Leases and (b) the denominator of which is the aggregate Lease Cost of the Pledged Leases in such Vintage Pool.
“Charter and Good Standing Documents” shall mean, for the applicable Person, (i) a copy of the certificate of incorporation, certificate of formation, statutory certificate of trust or other applicable charter document certified as of a date not more than five (5) Business Days before the Closing Date by the applicable Governmental Authority of the jurisdiction of incorporation of such Person, (ii) a copy of the bylaws, operating agreement, trust agreement or other applicable organizational document certified as of the Closing Date by the corporate secretary or assistant secretary of such Person, (iii) an original certificate of good standing as of a date not more than five (5) Business Days before the Closing Date issued by the applicable Governmental Authority of the jurisdiction of incorporation of such Person and of every other jurisdiction in which such Person is otherwise required to be in good standing, and (iv) copies of the resolutions of the Board of Directors (or other applicable governing body) and, if required, stockholders or other equity owners authorizing the execution, delivery and performance of the Loan Documents to which such Person, as applicable, is a party, certified by an authorized officer of such Person as of the Closing Date.
“Claims” shall mean any and all liabilities, obligations, losses, damages, penalties, claims, actions, litigation, proceedings, investigations, judgments, suits, fees, costs, expenses, charges, advances and disbursements of any kind (including, without limitation, fees, costs, expenses and charges of counsel (including in-house counsel)).
“Class A Lender” shall mean each Lender having a Revolving Loan Commitment or holding Revolving Advances.
“Class A Obligations” shall mean all Obligations owed to the Class A Lenders in respect of the Revolving Advances.
“Class A-1 Lender” shall mean each Lender having a Class A-1 Revolving Loan Commitment or holding Class A-1 Revolving Advances.
“Class A-1 Obligations” shall mean all Obligations owed to the Class A-1 Lenders in respect of the Class A-1 Revolving Advances.
“Class A-1 Revolving Advance” or “Class A-1 Revolving Loan Advance” shall have the meaning assigned to it in Section 2.1 hereof.
“Class A-1 Revolving Loan Commitment” shall mean the commitment of a Class A Lender to make or otherwise fund Class A-1 Revolving Loan Advances and “Class A-1 Revolving Loan
Commitments”
shall mean such commitments of all Lenders to fund Class A-1 Revolving Loan Advances in the aggregate. The amount of each Lender’s
Class A-1 Revolving Loan Commitment, if any, is set forth on Schedule B attached hereto, subject to any adjustment or reduction
pursuant to the terms and conditions hereof. The aggregate amount of the Class A-1 Revolving Loan Commitments as of the ClosingFirst
Amendment Effective Date is $90,000,000.00.
“Class A-2 Lender” shall mean each Lender having a Class A-2 Revolving Loan Commitment or holding Class A-2 Revolving Advances.
“Class A-2 Obligations” shall mean all Obligations owed to the Class A-2 Lenders in respect of the Class A-2 Revolving Advances.
“Class A-2 Revolving Advance” or “Class A-2 Revolving Loan Advance” shall have the meaning assigned to it in Section 2.1 hereof.
“Class
A-2 Revolving Loan Commitments” shall mean the commitment of a Class A Lender to make or otherwise fund Class A-2 Revolving
Loan Advances and “Class A-2 Revolving Loan Commitments” shall mean such commitments of all Lenders to fund Class
A-2 Revolving Loan Advances in the aggregate. The amount of each Lender’s Class A-2 Revolving Loan Commitment, if any, is set forth
on Schedule B attached hereto, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate
amount of the Class A-2 Revolving Loan Commitments as of the ClosingFirst
Amendment Effective Date is $20,000,000.00.
“Class
B Lender” shall mean each Lender having a Term Loan Commitment or holding a portion of the Term Loan.
“Closing” shall mean the satisfaction, or written waiver by Agent and the Lenders, of all of the conditions precedent set forth in this Agreement required to be satisfied prior to the consummation of the transactions contemplated hereby.
“Closing Date” shall mean the date of this Agreement.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and all rules and regulations promulgated thereunder.
“Collateral” shall mean, collectively and each individually, all collateral and/or security granted and/or securities pledged to Agent for the benefit of itself and the other Lenders, by Borrower pursuant to the Loan Documents including, without limitation, the items set forth in Section 2.8 of this Agreement.
“Collateral Assignment of Purchase Agreement” shall mean that certain Collateral Assignment of Purchase and Sale Agreement, dated on or about the Original Closing Date, executed by Borrower in favor of Agent and agreed to and acknowledged by Holdings, as the same may be amended, restated or modified from time to time.
“Collateral Account” shall mean, individually and collectively, (a) that certain deposit account of Agent at Collateral Account Bank with account number 80016919635 or (b) following
the occurrence and during the continuance of an Event of Default, such other deposit account as designated from time to time by Agent in a written notice to Borrower and Servicer.
“Collateral Account Bank” shall mean J.P. Morgan Chase Bank, N.A. or such other bank where the Collateral Account is being held from time to time in accordance with the terms of this Agreement.
“Collection Account” shall mean, individually and collectively, (a) that certain deposit account of Borrower at Collection Account Bank with account number 4023920515 or (b) following the occurrence and during the continuance of an Event of Default, such other deposit account as designated from time to time by Agent in a written notice to Borrower and Servicer.
“Collection Account Bank” shall mean Wells Fargo Bank, National Association or such other bank where the Collection Account is being held from time to time in accordance with the terms of this Agreement.
“Collection Account Control Agreement” shall mean any full dominion account control agreement by and among Agent, Borrower and Collection Account Bank, which pledges a Collection Account and all funds and sums contained therein to Agent, for the benefit of the Lenders, and provides for a standing instruction for Collection Account Bank to automatically transfer funds therein to the Collateral Account via wire transfer two (2) Business Days prior to each Payment Date, as the same may be amended, modified, supplemented, restated, replaced or renewed in writing from time to time.
“Common Stock” means the common stock of Parent Entity, par value $0.0001 per share.
“Contingent Obligations” shall mean, as to any Person, any obligation of such Person guaranteeing or intending to guaranty any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or to hold harmless the owner of such primary obligation against loss in respect thereof, provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“Contract Right” shall mean any right of Borrower to payment under a contract for the sale or lease of goods or the rendering of services, which right is at the time not yet earned by performance.
“Conversion
Stock” means any Common Stock issuable or issued upon any conversion of the Term Loan in accordance with Section 2.13(a)
and having the registration rights described in Section 2.13(b).
“Credit Card Account” shall mean an arrangement whereby an Account Lessee makes Scheduled Payments under a Lease via pre-authorized debit or charge to a Major Credit Card.
“Credit Party” shall mean individually, Borrower and each Guarantor and “Credit Parties” shall mean, collectively, the Borrower and Guarantors.
“Credit Protection Laws” shall mean all federal, state and local laws in respect of the business of extending credit to borrowers, including without limitation, the Truth in Lending Act (and Regulation M promulgated thereunder), Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Gramm-Leach-Bliley Financial Privacy Act, Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, all rules and regulations issued by the Consumer Financial Protection Bureau, Dodd–Frank Wall Street Reform and Consumer Protection Act, anti-discrimination and fair lending laws, laws relating to servicing procedures or maximum charges and rates of interest, and other similar laws, each to the extent applicable, and all applicable regulations in respect of any of the foregoing.
“Cumulative Cash Collection Percentage Ratio” shall mean, with respect to any Vintage Pool, the percentage equivalent to a fraction, the numerator of which is the sum of all payments (including prepayments and application and/or other upfront payments, but excluding any sales tax payments) collected from or on behalf of the Account Lessees on each Pledged Lease in such Vintage Pool since the date that such Pledged Lease was originated and the denominator of which is the sum of the Lease Costs (as determined for each Pledged Lease as of the date such Pledged Lease was originated) of each Pledged Lease with respect to such Vintage Pool.
“Current Lease Balance” shall mean, for any Lease and as of any date of determination (i) the Lease Cost less (ii) the Amortized Lease Cost of such Lease at such time.
“Debtor Relief Law” shall mean, collectively, the Bankruptcy Code and all other United States or foreign applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws from time to time in effect affecting the rights of creditors generally, as amended from time to time.
“Default” shall mean any event, fact, circumstance or condition that, with the giving of applicable notice or passage of time, if any, or both, would constitute or be or result in an Event of Default.
“Default Rate” shall have the meaning assigned to it in Section 3.2 hereof.
“Default Trigger Event” shall mean the occurrence of any of the following events with respect to the portfolio of Pledged Leases securing the Loan, in each case, to be tested as of the last day of each calendar month:
(a) The Charge-off Percentage Ratio for any Vintage Pool exceeds the Charge-off Trigger Percentage Ratio for the corresponding month set forth on Exhibit H-4
since the first payment date for each Lease within each such Vintage Pool. For the avoidance of doubt, the first thirty day period following the origination date for each Lease within each Vintage Pool shall be Period 1 and the final thirty day period shall be Period 13; or
(b) The Cumulative Cash Collection Percentage Ratio for any Vintage Pool is less than the Default Trigger Cumulative Cash Collection Percentage Ratio for the corresponding month set forth on Exhibit H-3 since the first payment date for each Lease within each such Vintage Pool. For the avoidance of doubt, the first thirty day period following the origination date for each Lease within each Vintage Pool shall be Period 1 and the final thirty day period shall be Period 13.
“Defaulted Lease” shall mean (a) any Pledged Lease for which any portion of a Scheduled Payment (without giving effect to any modifications of such Pledged Lease after the date such Pledged Lease was first pledged hereunder or under any other Loan Document) is delinquent more than sixty (60) days, (b) with respect to which Servicer or Borrower shall have reasonably determined in good faith that the related Account Lessee will not resume making Scheduled Payments, (c) unless otherwise approved by Agent in writing in its sole discretion, the related Account Lessee shall have become the subject of a proceeding under a Debtor Relief Law and Servicer or Borrower shall have been notified thereof or (d) that has been specifically and separately reserved against by Borrower or deemed charged-off or non-collectible by Borrower or Servicer.
“Defective Lease” shall mean any Pledged Lease with an uncured breach of any representation or warranty of Borrower or that Holdings made under the Purchase and Sale Agreement.
“Deposit Account” shall mean, individually and collectively, any bank or other depository accounts of Borrower (or if referring to another Person, such other Person’s).
“Designee” shall have the meaning assigned to it in Section 6.18 hereof.
“Division” shall mean, with respect to any Person which is an entity, the division of such Person into two (2) or more separate such Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other Applicable Law with respect to any corporation, limited liability company, partnership or other entity. The word “Divide,” when capitalized, shall have a correlative meaning.
“Dollars” and “$” shall mean lawful money of the United States of America.
“Due Period” shall mean with respect to any Payment Date, (x) with respect to the accrual of interest (including Additional Interest), the period of time beginning on the most recently preceding Payment Date through and including the day immediately preceding such Payment Date and (y) with respect to the accrual of any other amounts hereunder (including the determination of Available Amounts available for application on any Payment Date), the period of time beginning
on the date immediately following the second most recent Reporting Date through and including the Reporting Date for such Payment Date.
“Eligible Leases” shall mean those Leases that meet, as of any date of determination, all of the following requirements:
(i) such Lease has a Lease Term of no more than eighteen (18) months;
(ii) such Lease has a Current Lease Balance of not more than $5,000; provided that the aggregate amount of Eligible Leases that have a Current Lease Balance of greater than $3,500 shall not exceed 10% of the aggregate sum of the Adjusted Current Lease Balance for all Eligible Leases pledged as Collateral hereunder at any time;
(iii) payments under such Lease are due in Dollars and the Portfolio Documents do not permit the currency in which such Lease is payable to be changed, and all previous payments have been made by the related Account Lessee and not by Holdings, Borrower or any Affiliate thereof;
(iv) payments in respect of such Lease shall be due and payable weekly, bi-weekly, monthly or semi-monthly in equal installments;
(v) such Lease and all related Portfolio Documents shall be in full force and effect and shall represent a legal, or valid and binding and absolute and unconditional payment obligation of the applicable Account Lessee enforceable against such Account Lessee in accordance with its terms for the amount outstanding thereof without any right of rescission, offset, counterclaim or defense, except to the extent that enforceability may be limited by Debtor Relief Laws and general principles of equity, and is not contingent in any respect for any reason (provided that a Lease shall not be excluded (or determined not to be an Eligible Lease) solely pursuant to this clause (v) if any failure to meet the criteria in this clause (v) relates solely to (A) funding status as described in clause (xxiv) below and/or (B) delivery status, if in the case of this clause (B), such Lease otherwise meets the applicable requirements of clause (xxxv) below;
(vi) to Borrower’s knowledge after due inquiry, the applicable Account Lessee is not the subject of any proceeding under any Debtor Relief Law;
(vii) such Lease is not a Defaulted Lease;
(viii) such Lease would not cause the percentage of Eligible Leases for which the Account Lessee thereon nor any guarantor thereof is an employee, officer, director or Affiliate of, Holdings or Borrower to exceed 1% of Eligible Leases;
(ix) Holdings or Borrower shall not be engaged in any adverse litigation with the applicable Account Lessee in respect of such Lease;
(x) such Lease shall have been originated, documented and closed in accordance with the Underwriting Guidelines in all material respects and such Lease and related Portfolio Documents shall not have been modified from their original terms in any material respect;
(xi) the applicable Account Lessee’s Lease application and the Portfolio Documents evidencing such Lease shall have been delivered to Agent or Backup Servicer in accordance with Section 2.9 hereof and the related Verification Certificate shall not have any exceptions noted by the Backup Servicer;
(xii) such Lease shall comply in all material respects with all Applicable Laws and all statutory or other applicable cancellation or rescission periods related thereto have expired;
(xiii) to Borrower’s knowledge, all amounts and information in respect of such Lease or furnished to Agent in connection therewith shall be true and correct and undisputed by the Account Lessee thereon or any guarantor thereof;
(xiv) such Lease shall not be a renewal, amendment, modification, waiver or extension of any Defective Lease or Defaulted Lease that was previously substituted with an Eligible Lease, except as otherwise approved in writing by Agent;
(xv) neither Borrower nor Holdings shall have made a Material Modification with respect to such Lease without the consent of Agent;
(xvi) such Lease shall not be evidenced by a judgment or have been reduced to judgment;
(xvii) such Lease shall not be a revolving line of credit;
(xviii) such Lease shall not have been specifically and separately reserved against by Borrower or Holdings (except for loss provisions that Borrower or Holdings makes as part of its policies in accordance with GAAP), have been the subject of fraud of any kind or deemed charged-off or non-collectible by Holdings, Borrower or Servicer in accordance with standard servicing procedures;
(xix) the form of Portfolio Documents relating to such Lease shall be (i) substantially in the form of the Portfolio Documents in use by Holdings or Borrower as of the Closing Date, (ii) substantially in the form attached hereto as Exhibit D or (iii) otherwise in form and content acceptable to Agent in its sole discretion and approved in advance by Agent in writing, in each case, except as may be required by Applicable Law;
(xx) following the sale of such Lease to Borrower, such Lease shall be 100% owned by Borrower and no other Person (other than Borrower and Agent) owns or claims any legal or beneficial interest therein;
(xxi) the Lease and all other Portfolio Documents requiring the signature of an Account Lessee was signed with a digital or electronic signature that complies with the Uniform Electronic Transaction Act or, as applicable to the jurisdiction governing such Lease, the Electronic Signatures in Global and National Commerce Act (E-Sign Act), including all consumer consent and other applicable provisions thereof;
(xxii) such Lease represents the undisputed, bona fide transaction created by Holdings in the ordinary course of Holdings’ business and completed in accordance with the terms and provisions contained in the related Portfolio Documents;
(xxiii) the Account Lessee thereunder is a resident of the United States and/or its territories;
(xxiv) such Lease and the Inventory related to such Lease has been absolutely sold, transferred and conveyed by Holdings to Borrower and purchased and accepted by Borrower from Holdings, pursuant to the Purchase and Sale Agreement and, after giving effect to such sale, transfer and conveyance, such Lease shall be 100% owned by Borrower and no other Person (other than Borrower and Agent) owns or claims any legal or beneficial interest therein (provided that, to the extent the Inventory has not yet transferred to Holdings or the Borrower because any such Lease was originated on a Saturday, Sunday or other non-Business Day and therefore was not funded until the following Monday, Tuesday or Wednesday, such Lease shall still be an Eligible Lease so long as (A) it meets the other relevant criteria of this definition and (B) such Lease transaction shall have been (or will be) funded by the Borrower or an Affiliate thereof on or prior to the Wednesday immediately following such Saturday, Sunday or non-Business Day (unless such Wednesday is a non-Business Day, in which case such funding shall have been made by the next Business Day);
(xxv) except as specifically addressed in clause (xxiv) above and/or clause (xxxv) below, no facts, events or occurrences exist that, in any way, impair the validity or enforcement thereof or tend to reduce the amount payable thereunder from the amount of the Lease shown on any schedule, or on all contracts, invoices or statements delivered to Agent with respect thereto;
(xxvi) all Account Lessees in connection with such Lease were of sufficient age to have the legal capacity to contract at the time any contract or other document giving rise to the Lease was executed and generally have the ability to pay their debts as they become due;
(xxvii) no proceedings or actions are pending, in existence or are, to Borrower’s knowledge, threatened against any Account Lessee with respect to such Lease could reasonably be expected to materially impair such Account Lessee’s ability to perform its obligations under the applicable Lease, provided, that Borrower shall have no obligation to make any inquiry of any Account Lessee regarding the same;
(xxviii) such Lease and the Collateral related to such Lease have not been assigned or pledged to any Person other than Agent, for the benefit of itself and the other Lenders;
(xxix) except as would not result in a failure to satisfy the requirements set forth in clause (xiv) above no instrument of release or waiver has been executed in connection with any Portfolio Document with respect to such Lease, and the Account Lessee in respect of such Lease has not been released from its obligations thereunder, in whole or in part, and no action has been taken by the Borrower to release any collateral from the Portfolio Documents with respect to such Lease;
(xxx) the Account Lessee related to such Lease does not reside in a state for which a Regulatory Trigger Event has occurred and is continuing;
(xxxi) such Lease is not a Defective Lease;
(xxxii) no buyout or repurchase option with respect to such Lease or the Inventory that is the subject of such Lease has been exercised by the Account Lessee related to such Lease;
(xxxiii) the goods that are the subject of such Lease shall consist solely of Inventory and related items;
(xxxiv) the Lease Contract Multiple with respect to such Lease is not less than 1.7x;
(xxxv) such Lease is for the leasing of goods (a) that, if the applicable merchant provides expected delivery date information, such expected delivery date is occurring or has passed as of such date of determination (or, if such delivery date is not occurring or has not passed as of such date of determination, such Lease is not a Lease that would cause Eligible Leases pledged as Collateral for which such expected date of delivery is not yet occurring or has not passed (as of such date of determination) to exceed four percent (4%) (as determined on the basis of the aggregate Current Lease Balances of the Eligible Leases pledged as Collateral)), and at the time of such expected delivery were (or will be) new and in good working order, and for which there are no outstanding disputes or (b) for which the applicable merchant does not provide expected delivery date information and for which there are no outstanding disputes;
(xxxvi) the goods which are the subject of such Lease have not been (i) returned to Borrower by the Account Lessee, (ii) repossessed by Borrower, or (iii) acquired by the Account Lessee by exercising any option to acquire said goods;
(xxxvii) such Lease is not a Lease that would cause (a) the Eligible Leases pledged as Collateral with Account Lessees who resided in any single State at the time of the origination of such Lease to exceed thirty percent (30%) (as determined on the basis of the aggregate Current Lease Balances of the Eligible Leases pledged as Collateral) or (b) the Eligible Leases pledged as Collateral with Account Lessees who resided at the time of the origination of such Lease in all of the four (4) States with the highest aggregate Current Lease Balances of the Eligible Leases pledged as Collateral to exceed fifty-five percent (55%) (as determined on the basis of the aggregate Current Lease Balances and the Eligible Leases pledged as Collateral);
(xxxviii) such Lease is not a Lease that would cause Eligible Leases pledged as Collateral originated through (i) the Wayfair Inc. direct retail partnership to exceed forty percent (40%) or (ii) any other single retail partnership of Borrower, Holdings or Parent Entity to exceed, unless otherwise approved by the Agent in writing, twenty-five percent (25%) (in each case, as determined on the basis of the aggregate Current Lease Balances of the Eligible Leases pledged as Collateral);
(xxxix) such Lease is not a Lease that would cause the quotient of Original Net Lease Cost to Lease Cost or all Eligible Leases to be less than 95%.
(xl) such Lease is not a Lease that would cause Eligible Leases pledged as Collateral that constitute Unmatured Defaulted Leases to exceed twelve percent (12%) (as determined on the basis of the aggregate Current Lease Balances of the Eligible Leases pledged as Collateral);
(xli) such Lease is not a Lease that would cause the average Current Lease Balance of all Eligible Leases to exceed $1,200;
(xlii) such Lease shall have been originated in an Approved State.
“Equity Interests” shall mean, with respect to any Person, its equity ownership interests, its common stock and any other capital stock or other equity ownership units of such Person authorized from time to time, and any other shares, options, interests, participations or other equivalents (however designated) of or in such Person, whether voting or nonvoting, including, without limitation, common stock, options, warrants, preferred stock, phantom stock, membership units (common or preferred), stock appreciation rights, membership unit appreciation rights, convertible notes or debentures, stock purchase rights, membership unit purchase rights and all securities convertible, exercisable or exchangeable, in whole or in part, into any one or more of the foregoing.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.
“ERISA Affiliate” shall mean, with respect to any Person, any trade or business (whether or not incorporated) which is treated as a single employer with such Person under Section 414 of the Code or Section 4001 of ERISA.
“Event of Default” shall mean the occurrence of any event set forth in Article VIII.
“Excess
Unrestricted Cash” shall mean, (i) if Liquidity is equal to or greater than $25,000,000, an amount equal to
the difference between the amount of Liquidity as of such date of determination and $10,000,000 and (ii) if Liquidity is less than $25,000,000,
zero.
“Exit Additional Interest” shall have the meaning assigned to it in Section 3.6(c) hereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Excluded Deposit Account” shall mean (i) deposit accounts or trust accounts specifically and exclusively used for payroll, payroll taxes, deferred compensation and other employee wage and benefit payments to or for the direct benefit of a Credit Party’s employees, and (ii) escrow accounts and other accounts holding funds for third parties, including that certain account maintained in the name of Holdings at Silicon Valley Bank having account number 3302893366 so long as it is maintained for the benefit of Holdings’ landlord with respect to the real property located at 27 West 24th Street, Suite 1101, New York, NY 10010.
“Excluded Taxes” shall have the meaning assigned to it in Section 13.8(a) hereof.
“Fair Valuation” shall mean the determination of the value of the consolidated assets of a Person on the basis of the amount which may be realized by a willing seller within a reasonable time through collection or sale of such assets at market value on a going concern basis to an interested buyer who is willing to purchase under ordinary selling conditions in an arm’s length transaction.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“First Amendment” means that certain Limited Waiver and First Amendment to Amended and Restated Loan and Secured Agreement dated as of November 2, 2025 by and among the Borrower, Holdings, the Parent Entity, the Agent and the Lenders.
“First Amendment Effective Date” shall have the meaning ascribed to the term “Limited Waiver Effective Date” in the First Amendment.
“First Payment Default Ratio” shall mean, with respect to any Vintage Pool as of the date on which all Leases in such Vintage Pool have had their first Scheduled Payment date occur and, subsequently, thirty (30) calendar days have elapsed, the percentage equivalent of the fraction (a) whose numerator is the number of Pledged Leases comprising such Vintage Pool whose first Scheduled Payment (excluding any Scheduled Payment that was due on the date of origination of a Lease) was thirty (30) calendar days delinquent and (b) whose denominator is the number of all Pledged Leases comprising such Vintage Pool for which, as of the date of determination, have had their first Scheduled Payment date occur and, subsequently, thirty (30) calendar days have elapsed.
“First Payment Default Trigger Event” shall mean the occurrence of any of the following events with respect to the portfolio of Pledged Leases securing the Loan, in each case, to be tested as of the last day of each calendar month:
(a) The average First Payment Default Ratio for the three most recent Vintage Pools (excluding the Vintage Pool originated during the month ending on the date of determination (i.e. as of end of December 2025, excluding the December 2025 Vintage Pool)) exceeds the Default Trigger First Payment Default Ratio (Trailing Three Months T+30) set forth on Exhibit H-2; or
(b) The First Payment Default Ratio for any Vintage Pool (excluding the Vintage Pool originated during the month ending on the date of determination (i.e. as of end of December 2025, excluding the December 2025 Vintage Pool)) exceeds the Default Trigger First Payment Default Ratio (T+30) ratio set forth on Exhibit H-1.
“GAAP” shall mean generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental Authority” shall mean any federal, state, municipal, national, local or other governmental department, court, commission, board, bureau, agency or instrumentality or political subdivision thereof, or any entity or officer exercising executive, legislative or judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case, whether of the United States or a state, territory or possession thereof, a foreign sovereign entity or country or jurisdiction or the District of Columbia.
“Guarantor” shall mean, at any time, collectively and each individually, all guarantors of the Obligations or any part thereof at such time, including, without limitation, the Payment Guarantors and the Indemnity Guarantors.
“Guaranty” shall mean, collectively and each individually, all guarantees executed by any Guarantors, including, but not limited to, the Payment Guaranty and the Indemnity Guaranty.
“Hedging Transaction” of any Person shall mean (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into by such Person that is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, spot transaction, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Holdings” shall have the meaning assigned to it in the introductory paragraph hereof.
“Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (in which case non-recourse Indebtedness, for the purpose of this clause (f), shall be limited to the fair market value of the property subject to such Lien), (g) all Guaranties or other Contingent Obligations by such Person of Indebtedness of others, (h) all capital lease obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Persons” shall have the meaning assigned to it in Section 12.4 hereof.
“Indemnified Taxes” shall have the meaning assigned to it in Section 13.8(a) hereof.
“Indemnity Guarantor” shall mean each of Holdings, Parent Entity and each other Person party to the Indemnity Guaranty from time to time.
“Indemnity Guaranty” shall mean each Indemnity Guaranty, dated as of the Original Closing Date, made by each Indemnity Guarantor in favor of Agent, as amended from time to time.
“Ineligible Lease” shall mean any Lease that fails at any time to meet all of the criteria set forth in the definition of “Eligible Lease” set forth herein.
“Ineligible Transferee” shall have the meaning assigned to it in Section 12.2(a) hereof.
“Insured Event” shall have the meaning assigned to it in Section 12.4 hereof.
“Inventory” shall mean furniture, household furnishings, appliances, consumer electronics (including cell phones), fitness equipment, tools and/or other moveable but non-perishable goods, together with accessories related thereto.
“Key Man Trigger Event” shall mean the failure of Orlando Zayas to be the Chief Executive Officer of Holdings, unless a successor chief executive officer approved by the Agent is appointed within ninety (90) days thereafter.
“Lease Contract Multiple” shall mean, for each Pledged Lease, quotient of (a) the aggregate dollar amount of the scheduled payments (excluding upfront payments, application fees, and/or merchant discounts) owed by an Account Lessee over the term of such Pledged Lease and (b) the Lease Cost of such Pledged Lease.
“Lease Cost” shall mean, for any Pledged Lease, the total purchase price paid (excluding any delivery, installation and warranty costs charged to the applicable Account Lessee) by Holdings to purchase the Inventory that is the subject of such Pledged Lease at the origination of such Pledged Lease.
“Lease Term” shall mean, with respect to any Pledged Lease, the original term of the Lease to expiration calculated in calendar months.
“Leases” shall mean all rights to payment (including, without limitation, the Scheduled Payments) owing by an Account Lessee in respect of a lease or leases, lease-to-own or other financial accommodations made or extended by Borrower (or a predecessor in interest, including, without limitation, Holdings) to or for the benefit of such Account Lessee in connection with the
purchase of Inventory. Any such Lease shall include, without limitation, all rights (including payment rights and enforcement rights), claims and entitlements under or pursuant to all related Portfolio Documents in respect thereof, and all supporting obligations in connection therewith.
“Lender” and “Lenders” shall have the meanings assigned to them in the introductory paragraph hereof.
“Lender Addition Agreement” shall have the meaning assigned to it in Section 12.2(a) hereof.
“Lending Office” shall mean the office or offices of any Lender set forth opposite its name on the signature page hereto, as updated from time to time.
“Lien” shall mean any mortgage, deed of trust, deed to secure debt, or pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof), or any other arrangement pursuant to which title to the property is retained by or vested in some other Person for security purposes.
“Liquidity”
shall mean, as of any date of determination, the sum of the amount of (x) unrestricted cash and Cash Equivalents on hand of Parent Entity
and its Subsidiaries as of such date and (y) cash held in the Marqeta Account as of such date; provided
that any amounts constituting Term Advance Rate Reserve Amount held in the Term Advance Rate Reserve Account shall not be included in
the calculation of Liquidity.
“Loan”
shall mean, collectively, the Term Loan, each Revolving Advance made by Lenders to the
Borrower, any Protective Advances or other Advances by Agent or Lenders pursuant to the terms hereof, and all Obligations related thereto.
“Loan Documents” shall mean, collectively and each individually, this Agreement, the Notes, the Security Documents, each Servicing Agreement, the Backup Servicing Agreement, the Borrowing Base Certificate, the Collection Account Control Agreement, any other blocked account agreement or account control agreement and all other agreements, documents, instruments and certificates heretofore or hereafter executed or delivered to Agent and/or Lenders in connection with any of the foregoing or the Loan, as the same may be amended, modified or supplemented from time to time.
“Major Credit Card” shall mean a bank card issued by any VISA USA, Inc., MasterCard International Incorporated, American Express Company or Discover Bank.
“Marqeta Account” shall mean a bank account of Marqeta Inc. or one of its Affiliates (collectively, “Marqeta”) into which Parent Entity makes payments to satisfy Parent Entity’s minimum balance obligation and to fund additional amounts to purchase Inventory leased under virtual “KPay” Leases, in each pursuant to or in connection with Parent Entity’s virtual credit card program with Marqeta.
“Material Agreements” shall mean (a) all instruments, agreements, indentures or notes governing the terms of any Indebtedness, (b) the Purchase and Sale Agreement, (c) the Servicing
Agreement and (d) all other agreements, documents, contracts, indentures and instruments (x) involving the performance of services, delivery of goods or materials, or payments by or to the applicable Person of an amount or value in excess of $500,000 in the aggregate per year for agreements of Borrower and $1,000,000 in the aggregate per year for agreements of any other Credit Party, other than (i) leases of real property, (ii) merchant service agreements, (iii) payment processing agreements, (iv) professional service contract, (v) service agreements (including with respect to software and other information technology), (vi) advertising, promotional and/or marketing agreements and (vii) employment agreements or (y) of which a default, breach or termination could reasonably be expected to result in a Material Adverse Effect.
“Material Adverse Effect” shall mean any event, condition, obligation, liability or circumstance or set of events, conditions, obligations, liabilities or circumstances or any change(s) which:
(i) has had or reasonably could be expected to have a material adverse effect upon or change in (a) the legality, validity or enforceability of any Loan Document, (b) the perfection or priority of any Lien granted to Agent or any Lender under any of the Security Documents or (c) the value, validity, enforceability or collectability of a material portion of the Pledged Leases or any of the other Collateral;
(ii) has been or reasonably could be expected to be material and adverse to the value of the business, operations, properties, assets, liabilities or financial condition of any Credit Party; or
(iii) has materially impaired or reasonably could be expected to materially impair the ability of the Credit Parties to perform any of the Obligations or their obligations under the Loan Documents.
“Material Modification” means any modification of a Lease that would (a) forgive any scheduled repayment, (b) reduce the interest rate, (c) reduce the Current Lease Balance of the Lease or (d) be materially adverse to Agent and/or Lenders.
“Maturity
Date” shall mean September 1, 2025; provided, however,
if the Requisite Stockholder Approval has occurred on or before September 1, 2025, the Maturity Date shall be automatically extended,
without the necessity of any amendment to this Agreement to December 4, 2026.
“Maximum Revolving Loan Amount” shall mean at any time the aggregate amount of the Revolving Loan Commitments held by all Lenders at such time.
“Maximum Rate” shall mean the highest lawful and non-usurious rate of interest applicable to the Loan, that at any time or from time to time may be contracted for, taken, reserved, charged, or received on the Loan and the Obligations under the laws of the United States and the laws of such states as may be applicable thereto, that are in effect or, to the extent allowed by such laws, that may be hereafter in effect and that allow a higher maximum nonusurious and lawful interest rate than would any Applicable Laws now allow.
“Maximum Warrant Shares” shall mean the “Maximum Warrant Shares” under and as defined in the Closing Date Warrants.
“Minimum Trailing Three-Month Net Originations” shall mean the difference between (i) the aggregate Lease Cost (as of the origination date of such Leases) of all newly originated Leases in the immediately trailing three calendar month period and (ii) the aggregate Lease Cost (as of the origination date of such Leases) of all Leases that have been cancelled and/or refunded (in part or in whole) in the immediately trailing three calendar month period.
“Minimum Utilization Additional Interest” shall have the meaning set forth in Section 3.6 hereof.
“Minimum Utilization Ratio” shall mean fifty percent (50%).
“Monthly Servicing Report” shall mean each monthly report prepared by the Servicer in accordance with the Servicing Agreement substantially in the form of Exhibit C attached hereto.
“Non-Consenting Lender” shall have the meaning assigned to it in Section 10.4(d).
“Non-Funding Lender” shall have the meaning assigned to it in Section 13.7.
“Note(s)” shall mean, individually and collectively, any Notes payable to the order of the Agent, for the benefit of Lenders, or payable to a Lender, executed by Borrower evidencing the Loan, as the same may be amended, modified, supplemented and/or restated from time to time.
“Obligations”
shall mean, without duplication, all present and future obligations, Indebtedness and liabilities of Borrower to Agent and Lenders at
any time and from time to time of every kind, nature and description, direct or indirect, secured or unsecured, joint and several, absolute
or contingent, due or to become due, matured or unmatured, now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, under any of the Loan Documents or otherwise relating to this Agreement, any Notes and/or the Loan, including, without
limitation, principal, interest (including PIK Interest), all applicable fees, charges
and expenses and/or all amounts paid or advanced by Agent or a Lender on behalf of or for the benefit of Borrower for any reason at any
time, and including, in each case, obligations of performance as well as obligations of payment and interest that accrue after the commencement
of any proceeding under any Debtor Relief Law by or against Borrower. For the avoidance of doubt, “Obligations”
shall not include any portion of the Term Loan that has been converted into Common Stock.
“OFAC” shall mean the U.S. Department of Treasury’s Office of Foreign Asset Control.
“Original Closing Date” shall mean May 14, 2019.
“Original Loan Agreement” shall have the meaning assigned to it in the recitals hereof.
“Original Net Lease Cost” shall mean, for each Lease, the difference between (a) the total retail price charged to the Account Lessee (including any delivery, installation and warranty costs) related to such Lease and (b) any upfront Account Lessee payments (including, but not limited to, application fees), and merchant discounts associated with such Lease.
“Other Lender” shall have the meaning assigned to it in Section 13.7 hereof.
“Other Taxes” shall have the meaning assigned to it in Section 13.8(b) hereof.
“PAC” shall mean an arrangement whereby an Account Lessee makes Scheduled Payments under a Pledged Lease via pre-authorized debit.
“Parent Entity” shall have the meaning assigned to it in the introductory paragraph hereof.
“Participant” shall have the meaning assigned to it in Section 12.2(b) hereof.
“Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as amended.
“Payment Date” shall mean any Scheduled Payment Date or Additional Payment Date, as context requires.
“Scheduled Payment Date” shall mean Friday of each calendar week that the Loans are outstanding, or if such day is not a Business Day, the next succeeding Business Day; provided that, if the Borrower timely delivers a Borrowing Base Certificate on Tuesday (rather than Wednesday) of a calendar week, then the Scheduled Payment Date for such calendar week shall be Thursday of such calendar week (so long as such Thursday is a Business Day).
“Payment Guarantor” shall mean each of Holdings, Parent Entity, each subsidiary of Holdings (other than Borrower) and each other Person party to the Payment Guaranty from time to time.
“Payment Guaranty” shall mean that certain Payment Guaranty and Security Agreement dated as of the Original Closing Date made by Holdings, Parent Entity and each subsidiary of Holdings (other than Borrower) from time to time party thereto, in favor of Agent, as amended from time to time.
“Permit” shall mean collectively all licenses, leases, powers, permits, franchises, certificates, authorizations and approvals.
“Permitted Discretion” shall mean a determination or judgment made in good faith in the exercise of reasonable (from the perspective of a secured lender) credit or business judgment.
“Permitted
Holder” shall mean (x) any “Permitted Holder” set forth on Exhibit I as of the Closing Date and their respective
Affiliates (including any affiliated advisors and their managed funds and accounts) and,
(y) Blue Owl Alternative Credit Advisors LLC and its Affiliates (including any affiliated
advisors and their managed funds and accounts) and Atalaya Capital
Management and its Affiliates (including any affiliated advisors and their managed funds and accounts) and
(z) Hawthorn Horizon Credit Fund, LLC, HHCF Series 21 Sub, LLC and their respective Affiliates (including any affiliated advisors and
their managed funds and accounts).
“Permitted Indebtedness” shall mean: (a) the Obligations; (b) existing Indebtedness listed on Schedule 7.1 hereof; (c) Indebtedness consisting of Permitted Loans made by one or more
Credit Parties to any other Credit Party; (d) interest rate hedges that are entered into by Credit Parties to hedge their risks with respect to outstanding Indebtedness of Credit Parties and not for speculative or investment purposes; (e) trade debt incurred in the ordinary course of business; (f) Indebtedness consisting of financing of insurance premiums in respect of insurance policies owned by a Credit Party in the ordinary course of business (the Indebtedness under this clause (f), “Permitted Insurance Premium Indebtedness”); and (g) Guaranties by, or other Contingent Obligations of, any Credit Party of Permitted Indebtedness of another Credit Party.
“Permitted Liens” shall mean Liens of Borrower permitted under Section 7.2 hereof.
“Permitted Loan” shall mean, with respect to any Credit Party, an intercompany loan owed by such Credit Party to another Credit Party, which intercompany loan is unsecured and subject to a subordination agreement substantially in form and substance satisfactory to Agent in its Permitted Discretion.
“Person” shall mean an individual, a partnership, a corporation, a limited liability company, a business trust, a joint stock company, a trust, an unincorporated association, a joint venture, a Governmental Authority or any other entity of whatever nature.
“PIK
Interest” shall mean interest that is paid in kind, and not in cash, by capitalizing such interest as principal
of the outstanding Loan as provided herein.
“Pledge Agreement” shall mean that certain Pledge Agreement made by Holdings in favor of Agent, as the same may be amended, modified, supplemented and/or restated from time to time.
“Pledged Leases” shall mean each Lease pledged as Collateral hereunder in accordance with Section 2.8 hereof or any other Loan Document. For the avoidance of doubt, the term “Pledged Leases” shall not include any Third Party Serviced Lease.
“Portfolio Documents” shall mean, collectively, any Lease or contract, and any other agreement or document executed and delivered by an Account Lessee in connection with such Lease to or for the benefit of Holdings or any subsequent transferee thereof, including renewals, extensions, modifications and amendments thereof.
“Prepayment
Date” shall mean (i) the date of prepayment of Revolving Advances and/or the Term Loan pursuant
to Section 2.5(b) or Section 2.5(c), as applicable, and (ii) or the date of any prepayment
of the Loans pursuant to Section 2.6(a) or Section 2.6(b), as applicable.
“Pro Rata Share” shall mean, (a) with respect to any Lender as to all Lenders holding Revolving Loan Commitments or Revolving Advances, the percentage obtained by dividing (i) the aggregate amount of the Revolving Loan Advances outstanding made by such Lender by (ii) the aggregate amount of all the Revolving Loan Advances outstanding, as such percentage may be adjusted by assignments as permitted hereunder; provided, however, that if no Revolving Loan Advances are outstanding, then the percentage shall be obtained by dividing (i) the sum of the Revolving Loan Commitment each held by such Lender by (ii) the sum of the aggregate amount of all of the Revolving Loan Commitments, (b) with respect to any Lender as to all Lenders holding Class A-1 Revolving Loan Commitments or Class A-1 Revolving Advances, the percentage obtained by dividing (i) the aggregate amount of the Class A-1 Revolving Loan Advances
outstanding made
by such Lender by (ii) the aggregate amount of all the Class A-1 Revolving Loan Advances outstanding, as such percentage may be adjusted
by assignments as permitted hereunder; provided, however, that if no Class A-1 Revolving Loan Advances are outstanding, then the percentage
shall be obtained by dividing (i) the sum of the Class A-1 Revolving Loan Commitment each held by such Lender by (ii) the sum of the
aggregate amount of all of the Class A-1 Revolving Loan Commitments, and
(c) with respect to any Lender as to all Lenders holding Class A-2 Revolving Loan Commitments or Class A-2 Revolving Advances,
the percentage obtained by dividing (i) the aggregate amount of the Class A-2 Revolving Loan Advances outstanding made by such Lender
by (ii) the aggregate amount of all the Class A-2 Revolving Loan Advances outstanding, as such percentage may be adjusted by assignments
as permitted hereunder; provided, however, that if no Class A-2 Revolving Loan Advances are outstanding, then the percentage shall be
obtained by dividing (i) the sum of the Class A-2 Revolving Loan Commitment each held by such Lender by (ii) the sum of the aggregate
amount of all of the Class A-2 Revolving Loan Commitments and (d) with respect to any Lender as to all
Lenders holding Term Loan Commitments or Term Loans, the percentage obtained by dividing (i) the aggregate amount of the Term Loans outstanding
made by such Lender by (ii) the aggregate amount of all the Term Loans outstanding, as such percentage may be adjusted by assignments
as permitted hereunder; provided, however, that if no Term Loans are outstanding, then the percentage shall be obtained by dividing (i)
the sum of the Term Loan Commitment each held by such Lender by (ii) the sum of the aggregate amount of all of the Term Loan Commitments.
The terms “Pro Rata Basis” when capitalized, shall have a correlative meaning.
“Protective Advance” shall have the meaning assigned to it Section 2.7(b).
“Purchase and Sale Agreement” shall mean that certain Master Purchase and Sale Agreement, dated as of the Original Closing Date, by and between Holdings, as seller of the Pledged Leases, and Borrower, as purchaser of the Pledged Leases, as the same may be amended, modified, supplemented, restated, replaced or renewed in writing from time to time.
“Receipt” shall have the meaning assigned to it in Section 12.5 hereof.
“Register” shall have the meaning assigned to it in Section 12.2(c) hereof.
“Regulatory Trigger Event” shall mean (x) a “Level One Regulatory Trigger Event” which shall mean, the commencement by any Governmental Authority of any formal inquiry or investigation (which for the avoidance of doubt excludes any Routine Inquiry), legal action or proceeding, against (i) any of Borrower, Holdings, Servicer, any third party that has been engaged by Servicer as a sub-servicer or any of Borrower’s Affiliates challenging its authority to originate, hold, own, service, collect, pledge or enforce any Pledged Lease with respect to the residents of any state, or otherwise alleging any non-compliance by any of Borrower, Holdings, Servicer, any third party that has been engaged by Servicer as a sub-servicer or any of Borrower’s Affiliates with such state’s Applicable Laws related to originating, holding, collecting, pledging, servicing or enforcing such Pledged Leases or otherwise related to such Pledged Leases; (ii) any of Borrower, Holdings, Servicer, any third party that has been engaged by Servicer or as a sub-servicer or any of Borrower’s Affiliates, relating to the operation of its business; or (iii) the consumer leasing industry or consumer retail installment contract industry or any member of such industries, which the Agent, in its Permitted Discretion, believes would have a material adverse
effect on either of such industries, as a whole, which inquiry, investigation, legal action or proceeding is not released or terminated in a manner acceptable to Agent in its Permitted Discretion within forty-five (45) calendar days of commencement thereof or (y) a “Level Two Regulatory Trigger Event” which shall mean the issuance or entering of any stay, order, judgment, cease and desist order, injunction, temporary restraining order, or other judicial or non-judicial sanction, order or ruling against any of Borrower, Holdings, Servicer, any third party that has been engaged by Servicer as a sub-servicer or any of Borrower’s Affiliates related in any way to the originating, holding, collecting, pledging, servicing or enforcing of any Pledged Leases or rendering the Purchase and Sale Agreement or Portfolio Documents unenforceable in such state; provided, that, in each case, upon the favorable resolution of such inquiry, investigation, action or proceeding as determined by Agent in its Permitted Discretion and confirmed by written notice from Agent (whether by judgment, withdrawal of such action or proceeding or settlement of such action or proceeding), such Regulatory Trigger Event for such Governmental Authority shall cease to exist immediately upon such determination by Agent.
“Release Price” shall mean an amount equal to the then Current Lease Balance of the Pledged Lease as of the close of business on the last Business Day of the Due Period relating to the Payment Date immediately preceding the date on which the release is to be made.
“Request for Revolving Advance” shall have the meaning assigned to it in Section 4.2(a) hereof.
“Required Loan Overadvance Principal Payment” shall mean, with respect to any Payment Date, the positive difference, if any, as of the Reporting Date preceding such Payment Date of (a) the outstanding principal balance of the Revolving Advances (prior to giving effect to any payments to be made on such Payment Date) minus (b) the Borrowing Base.
“Requisite Lenders” shall mean at any time Lenders then holding fifty-one percent (51%) or more of the aggregate amount of the Advances then outstanding, provided, that at any time that Agent and its Affiliates collectively own more than thirty five percent (35%) or more of the aggregate amount of the Advances then outstanding, then Requisite Lenders must include Agent and any matter requiring the consent or approval of Requisite Lenders shall require the consent or approval of Agent.
“Requisite
Special Stockholder Meeting” shall mean the special meeting of the stockholders of the Parent Entity to approve the issuance
of Conversion Stock upon the Term Loan Conversion, the issuance of thethe
Maximum Warrant Shares upon the exercise of the Closing Date Warrants and, if applicable (including
if needed in order to comply with the provisions of Exhibit K), an amendment to the charter to increase the authorized
and unissued Common Stock of the Parent Entity to the Required Reserve Amount (as defined in Exhibit
K) plus the amount of the Maximum Warrant Shares under the Closing Date Warrants.
“Requisite Stockholder Approval” shall have the meaning set forth in Section 5.3 hereof.
“Responsible Officer” shall mean the chief executive officer, chief financial officer, chief accounting officer or the president of Borrower, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants or delivery of
financial information, the chief financial officer, chief accounting officer, the treasurer or the controller of Borrower, or any other officer having substantially the same authority and responsibility, and in all cases such person shall be listed on an incumbency certificate delivered to Agent, in form and substance acceptable to Agent in its sole discretion.
“Revolving Advance” or “Revolving Loan Advance” shall have the meaning assigned to it in Section 2.1 hereof.
“Revolving Calculated Rate” shall have the meaning assigned to it in Section 2.2 hereof.
“Revolving Credit Period” shall mean the period beginning on the Closing Date and ending on the Maturity Date, unless terminated earlier in accordance with the provisions hereof.
“Revolving
Loan Commitment” shall mean the commitment of a Class A Lender to make or otherwise fund Revolving Loan Advances and “Revolving
Loan Commitments” shall mean such commitments of all Lenders to fund Revolving Loan Advances in the aggregate. The amount of
each Lender’s Revolving Loan Commitment, if any, is set forth on Schedule B attached hereto, subject to any adjustment or
reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Loan Commitments as of the ClosingFirst
Amendment Effective Date is $110,000,000.00 (which, for the avoidance of doubt, is comprised of Class A-1 Revolving Loan Commitments
in an amount equal to $90,000,000.00 and Class A-2 Revolving Loan Commitments in an amount equal to $20,000,000.00, in each case, as
set forth on Schedule B attached hereto).
“Routine Inquiry” shall mean, without limitation, any inquiry, written or otherwise, made by a competent Governmental Authority with legal authority to regulate the activities of Borrower, Holdings or their respective Affiliates with respect to the Leases, made via a form letter or otherwise in connection with the routine transmittal of a consumer complaint or an alleged failure to comply with such State’s lending licensing requirements or its deferred deposit or “payday” lending laws or similar laws that are not applicable to Borrower, Holdings or their respective Affiliates with respect to the Leases.
“Scheduled Payment” shall mean the originally scheduled weekly, bi-weekly or monthly payment by or on behalf of an Account Lessee on a Lease.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Security Documents” shall mean this Agreement, each Guaranty, the Collateral Assignment of Purchase Agreement, the Pledge Agreement, UCC financing statements, the Collection Account Control Agreement, other agreements related to Deposit Accounts, and all other documents or instruments necessary to create or perfect the Liens in the Collateral, as such may be modified, amended or supplemented from time to time.
“Servicer” shall mean Holdings or such other Person, prior to the occurrence of an Event of Default, designated and engaged by the Borrower and approved by Agent (including, without limitation, BRG or Advensus).
“Servicer Default” shall mean a “Servicer Event of Default” as such term is defined in the Servicing Agreement.
“Servicer Physical Payment Address” shall have the meaning assigned to it in Section 2.3(a) hereof.
“Servicing Agreement” shall mean (a) that certain Servicing Agreement, dated as of the Original Closing Date, by and among the Borrower, Holdings and Agent, as the same may be amended, modified, supplemented, restated, replaced or renewed in writing from time to time and (b) each other agreement pursuant to which Pledged Leases will be serviced and administered in accordance with the terms of this Agreement.
“Servicing Fee” shall mean the fee payable monthly to Holdings pursuant to the Servicing Agreement, which shall be equal to the product of (i) three percent (3%) and (ii) the sum of the amounts described in clauses (a), (c) and (e) of the definition of “Available Amounts” collected by Servicer during the calendar month immediately preceding the applicable Scheduled Payment Date on which fee is to be paid to the Servicer.
“Servicing Policy” means servicing, collections and payment plan policies of each Servicer, copies of which are attached hereto as Exhibit G, as such policies may be amended from time to time in compliance with the applicable Servicing Agreement.
“Settlement Date” shall have the meaning assigned to it in Section 13.5(a)(ii) hereof.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Solvency Certificate” shall have the meaning assigned to it in Section 4.1(e) hereof.
“Specified Regulatory Change” means a legal or regulatory change, the effect of which is to materially and adversely impair the ability of any Borrower, Holdings or Parent Entity to originate, own, hold, pledge, service, collect or enforce the Pledged Leases or similar assets.
“Subsidiary” shall mean, as to any Person, any other Person in which more than fifty percent (50%) of all Voting Equity Interests is owned directly or indirectly by such Person or one or more of its Subsidiaries.
“Taxes” shall mean present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (including penalties, interest and additions to tax), imposed by any Governmental Authority.
“Termination Date” shall have the meaning assigned to it in Section 11.1 hereof.
“Term
Advance Rate” shall mean, as of any date of determination, a percentage equal to the quotient of (a) the sum
of (i) the total principal amount outstanding under the Term Loan as of such date (inclusive of any PIK Interest) plus
(ii) the difference between (x) the total amount of Revolving Loan Advances outstanding as of such date (excluding, for the avoidance
of doubt, any Exit Additional Interest) and the sum of (A) Excess Unrestricted Cash as of such date and (B) the amount of Term Advance
Rate Reserve Amount on deposit in Term Advance Rate Reserve Account as of such date divided,
by (b) the aggregate Adjusted Current Lease Balance for all Eligible Leases pledged hereunder.
“Term
Advance Rate Reserve Account” shall mean a deposit account or securities account established in the name of
the Borrower to fund cure payments pursuant to pursuant to Section 6.19(c); provided that such
deposit account or securities account must be subject to a full dominion account control agreement among the Borrower, the Agent and
the depositary bank or securities intermediary, as applicable, maintaining such deposit account or securities account, in form and substance
reasonably satisfactory to the Agent. Notwithstanding the foregoing, as of the Closing Date, the Collateral Account shall serve as the
Term Advance Rate Reserve Account, provided that upon the Collection Account being made subject to a full dominion account control agreement,
as contemplated by Schedule 6.8, the Collection Account may serve as the Term Advance Rate Reserve Account.
“Term
Loan” shall mean the term loan made by the Class B Lenders on the Original Closing Date. As of the Closing
Date, the outstanding principal balance (inclusive of any outstanding original issue discount and accrued and unpaid interest) of the
Term Loan is $32,654,469.23, and the portion of such Term Loan held by each Class B Lender as
of the Closing Date is set forth on Schedule
B attached hereto.
“Term
Loan Commitment” shall mean, as to any Class B Lender, the obligation of such Lender (if applicable), to make
its portion of the Term Loan. The amount of each Lender’s Term Loan Commitment, if any, is set forth on Schedule
B attached hereto, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The Term Loan
was made to the Borrower by the Class B Lenders on the Original Closing Date. As of the Closing Date, there are no unfunded Term Loan
Commitments.
“Term
Loan Conversion” shall have the meaning set
forth in Section 2.13(a) hereof.
“Term SOFR Administrator” shall mean the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).
“Term SOFR Rate” shall mean, in respect of any calendar month, a rate per annum rounded upwards, if necessary, to the nearest 1/1000 of 1% (3 decimal places) equal to the one-month forward-looking term rate (“Term SOFR Reference Rate”) based on SOFR appearing on Bloomberg Professional Service page TSFR1M (or any equivalent page used by Bloomberg Professional Service from time to time or, if Bloomberg Professional Service no longer reports the Term SOFR Rate, another nationally-recognized rate reporting source acceptable to Agent) as the offered rate for loans in United States dollars for a one (1) month period as of 5:00 p.m. (New York City time) on the day (such day “Periodic Term SOFR Determination Date”) that is two (2)
Business Days prior to the first calendar day of such month (or, in the case of the month that includes the date hereof, the date hereof), provided, however, that if as of 5:00 p.m. (New York City Time) on any Periodic Term SOFR Determination Date the Term SOFR Reference Rate for a one (1) month period has not been published, then the Term SOFR Rate will be the Term SOFR Reference Rate for a one (1) month period that was published on the first preceding Business Day for which such rate was published, so long as such preceding Business Day is not more than three (3) Business Days prior to such Periodic Term SOFR Determination Date. If Bloomberg Professional Service (or another nationally-recognized rate reporting source acceptable to Agent) no longer reports the Term SOFR Rate, then Agent may select a replacement for such page that displays the Term SOFR Reference Rate as published by Term SOFR Administrator. If (i) the Term SOFR Administrator permanently or indefinitely ceases to provide the Term SOFR Reference Rate, (ii) the Term SOFR Reference Rate has been determined and announced by the regulatory supervisor for the Term SOFR Administrator to be non-representative or (iii) the Governmental Authority having jurisdiction over the Term SOFR Administrator has made a public statement identifying a specific date after which the Term SOFR Reference Rate shall no longer be used or published for determining interest rates for loans, Agent in its Permitted Discretion, may select a comparable replacement rate that gives due consideration to the then prevailing market convention for determining a rate of interest for privately placed secured loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable to effect a comparable overall yield to that which was in place immediately prior to the occurrence of any of the foregoing events described by clauses (i) through (iii) in the foregoing clause (provided that such replacement rate and amendments are approved by the Borrower (which approval shall not be unreasonably withheld or delayed)).
“Third Party Serviced Lease” shall mean any Lease originated through Holdings’ origination platform on behalf of a third-party (including Metro PCS) and serviced by Holdings.
“Transferee” shall have the meaning assigned to it in Section 12.2(a) hereof.
“UCC” shall mean the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“Underwriting Guidelines” shall mean Holdings’ customary credit and underwriting and guidelines as set forth in its underwriting model, a copy of each is attached hereto as Exhibit E, as such guidelines are amended from time to time with the consent of Agent (which consent may be provided in Agent’s Permitted Discretion), provided, that any material amendments thereto shall be subject to Agent’s consent, which may be granted in Agent’s Permitted Discretion.
“Unmatured Defaulted Lease” shall mean any Pledged Lease for which any portion of a Scheduled Payment (without giving effect to any modifications of such Pledged Lease after the date such Pledged Lease was first pledged hereunder or under any other Loan Document) is delinquent more than thirty (30) but less than sixty (60) days.
“Unrelated Connections” shall have the meaning assigned to it in Section 13.8(a) hereof.
“Utilization Ratio” shall mean, as of any date of determination, the percentage calculated as (a) the total outstanding principal balance of the Loans as of such date, divided by (b) the then applicable Maximum Revolving Loan Amount.
“Verification Certificate” shall mean the original certificate in the form annexed to the Backup Servicing Agreement, duly completed and signed by the Backup Servicer.
“Verification Deliverables” shall mean:
with respect to each Pledged Lease:
| (a) | an electronic schedule in a format described in the Backup Servicing Agreement containing a list of the proposed Leases to be pledged to Agent as Collateral for the Loan (including such Pledged Lease), and account information with respect thereto; |
| (b) | complete and accurate copy of the electronic record of the original electronic credit application, Lease and the electronic signature by the related Account Lessee, and which shall originally be payable to Holdings and, with respect to each electronic Lease, a bill of sale (or other documentation acceptable to Agent in its Permitted Discretion) which evidences a complete chain of title and ownership from Holdings to Borrower, and such other documentation evidencing the pledge from Borrower in favor of Agent, all as further provided in the Backup Servicing Agreement; |
| (c) | electronic copies of all other agreements and documents relating to such Lease; and |
| (d) | a copy of each of the credit application, truth-in-lending disclosure, credit report and similar information provided by or related to each Account Lessee for such Lease; and |
| (e) | such other documents not otherwise described above as Agent, as specified in writing to Borrower, may reasonably require from time to time. |
“Vintage Pool” shall mean and refers to, at any given time, all Pledged Leases that were originated in a particular fiscal month. By way of example, and not by way of limitation, all Pledged Leases that were originated in a single fiscal month shall constitute one Vintage Pool, regardless of when Borrower purchases said Pledged Leases from Holdings.
“Voting Equity Interests” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to so vote has been suspended by the happening of such contingency.
“Warrants”
means, individually and collectively, (a) the Warrant issued by Parent Entity to Agent on or about the March 6, 2023, as amended, restated,
supplemented or otherwise modified from time to time, and (b) the Warrants to be issued
by Parent Entity to Agent or its Affiliates set forth on Exhibit M
(together with their respective successors and assigns, the “Closing Date Warrant Holders”) on the Closing
Date, as amended, restated, supplemented, assigned or otherwise modified
from time to time (the Warrants described in this clause (b), the “Closing Date Warrants”).
II. LOAN, PAYMENTS, INTEREST AND COLLATERAL
2.1 The Revolving Loan Advances; Term Loan
(a) Revolving Loan Advances.
(i) Rollover of Existing Revolving Loan Advances. Prior to the date hereof, pursuant to and in accordance with the Original Loan Agreement, certain Lenders made Revolving Loan Advances (as defined in the Original Loan Agreement) (the “Existing Revolving Loan Advances”) and immediately prior to giving effect to this Agreement, the Existing Revolving Loan Advances remain outstanding under the Original Loan Agreement in an aggregate outstanding principal amount (inclusive of any outstanding original issue discount) of $80,921,728.82. Immediately upon the effectiveness of this Agreement, such Existing Revolving Loan Advances shall, without any further action, automatically roll and convert into, and shall be deemed to be, a Revolving Loan Advance made hereunder, and shall continue under this Agreement as included as part of the Revolving Loan Advances and shall be governed by this Agreement and the other Loan Documents.
(ii) Revolving Loan Advances. Subject to the provisions of this Agreement, including, without limitation satisfaction or waiver in writing by Agent of all conditions set forth in Article IV hereof, (x) each Lender severally agrees to make Advances (or to request Agent to make Agent Advances pursuant to Section 13.4(b)) up to such Lender’s respective Class A-1 Revolving Loan Commitment to Borrower under the Loan from time to time on or prior to the last day of the Revolving Credit Period (collectively, the “Class A-1 Revolving Advances” or the “Class A-1 Revolving Loan Advances”) and (y) solely to the extent the Class A-1 Revolving Loan Commitments are fully utilized as of any date of determination, each Lender severally agrees to make Advances (or to request Agent to make Agent Advance pursuant to Section 13.4(b)) up to such Lender’s respective Class A-2 Revolving Loan Commitment to Borrower under the Loan from time to time on or prior to the last day of the Revolving Credit Period (collectively, the “Class A-2 Revolving Advances” or the “Class A-2 Revolving Loan Advances” and together with the Class A-1 Revolving Advances and/or the Class A-2 Revolving Loan Advances, collectively the “Revolving Advances” or the “Revolving Loan Advances”). Each Revolving Loan Advance shall be made in an amount requested by Borrower not to exceed the Availability as of such date of determination by deposit into a Deposit Account designated by Borrower; provided, that under no circumstances shall the outstanding amount of the Revolving Loan Advances exceed neither (i) the aggregate Revolving Loan Commitment without Agent’s consent nor (ii) the Maximum Revolving
Loan Amount under any circumstances, and provided, further, no Lender shall be obligated to provide funding for any Revolving Loan Advance that would increase the aggregate of all outstanding amounts funded by such Lender (including any Revolving Loan Advances made by any predecessor in interest to such Lender) to an amount in excess of the stated principal amount of that Lender’s Note or such Lender’s Revolving Loan Commitment. For the avoidance of doubt, no Class A-2 Revolving Loan Advance shall be made hereunder unless the Class A-1 Revolving Loan Commitments are fully utilized at the time of such Class A-2 Revolving Loan Advance. Unless otherwise permitted by Agent, each Revolving Loan Advance shall be in an amount of at least Two Hundred Fifty Thousand Dollars ($250,000). No more than one (1) Revolving Loan Advance may be made hereunder in any calendar week. Any such request for a Revolving Loan Advance by Borrower must be made by 1:00 p.m. EST two (2) Business Days prior to the proposed borrowing date and shall contain a certification from an officer of Borrower representing that all conditions precedent to the funding of such Revolving Advance contained herein are satisfied. Subject to the terms hereof Revolving Advances may be repaid (including, through application of Available Amounts pursuant to Section 2.4 hereof) and re-borrowed prior to the expiration of the Revolving Credit Period. The failure of any Lender to make any Advance required to be made by it shall not relieve any other Lender of its obligations hereunder; provided, that the Revolving Loan Commitment of each Lender is several and no Lender shall be responsible for any other Lender’s failure to make required Advances. Notwithstanding anything else herein to the contrary, no Revolving Loan Advances shall be made or requested after the last day of the Revolving Credit Period.
(b)
Term Loan.
(i)
Rollover of Existing Term Loan. Prior to the date hereof, pursuant to and in accordance with
the Original Loan Agreement, the Class B Lenders made the initial Term
Loan (as defined in the Original Loan Agreement) (the “Existing
Term Loan”), and immediately prior
to giving effect to this Agreement, the Existing Term Loan remains
outstanding under the Original Loan Agreement in an aggregate outstanding principal amount (inclusive of any outstanding original issue
discount and accrued and unpaid interest) of $32,654,469.23. Immediately upon the effectiveness of this Agreement, such Existing Term
Loan (including, for the avoidance of doubt, any accrued and unpaid interest thereon) shall, without any further action, automatically
roll and convert into, and shall be deemed to be, the Term Loan hereunder, and shall continue under this Agreement as included as the
Term Loan and shall be governed by this Agreement and the other Loan Documents.
(b)
(ii) Term Loan.
The Term Loan was made by the Class B Lenders in accordance with their Term Loan Commitments on the
Original Closing Date. Immediately upon making the Term Loan on the Original Closing Date, the Term Loan Commitments automatically terminated.
The Term Loan shall be, with respect to principal, payable For
purposes of clarity, the Term Loan (as defined
in this Agreement immediately
prior to giving effect to the First Amendment),
was paid in full in cash on
the MaturityFirst Amendment
Effective Date.
(c) Notes. The Advances made by each Lender shall, to the extent requested by a Lender, be evidenced by a promissory note payable to the order of such Lender, substantially
in the form of
Exhibit B-1 with respect to Revolving Loan Advances and Exhibit B-2
with respect to Advances of the Term Loan (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, a “Note”), executed by Borrower and delivered to the Agent on or prior to the Closing
Date, as applicable (or after the Closing Date in respect of any
assignee of a Lender who becomes a Lender pursuant to Section 12.2 or any Lender who requests a Note after the third Business
Day prior to the Closing Date). The Note payable to the order of a Lender shall be in a stated maximum principal amount equal to such
Lender’s (i) Revolving Loan Commitment or (ii)
Term Loan Commitment, as applicable.
(d) Payment of the Loan. Borrower shall repay the Loan pursuant to and in accordance with the terms of this Agreement and the Notes evidencing the Loans. Each Revolving Advance shall be due and payable in full, if not earlier in accordance with this Agreement, on the Maturity Date. All other amounts outstanding under the Loan and all other Obligations under the Loan shall be due and payable in full, if not earlier in accordance with this Agreement, on the Maturity Date.
(e) Promptly following receipt of a Request for Revolving Advance in accordance with Section 4.2(a) and all other deliverables described therein, Agent shall advise each Class A Lender of the details thereof and of the amount of such Class A Lender’s Revolving Advance to be made as a part of the requested Revolving Advance. Each Class A Lender shall make each Revolving Advance to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon (New York City time) to the account of Agent most recently designated by it for such purpose by notice to Lenders. Unless Agent shall have received notice from a Class A Lender prior to the proposed date of any Revolving Advance that such Class A Lender will not make available to Agent such Class A Lender’s share of such Revolving Advance, Agent may assume that such Class A Lender has made such share available on such date in accordance with the previous sentence and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In lieu of the foregoing, Agent may, on behalf of any Class A Lender, make, or cause Lender that is an Affiliate of Agent to make, Revolving Advances hereunder upon satisfaction of the provisions of Section 4.2(a). Each Class A Lender shall, upon demand, reimburse Agent (or such Affiliate of Agent) for such Class A Lender’s Pro Rata Share of each such Revolving Advance. In such event, if a Class A Lender has not in fact made its share of the applicable Revolving Advance available to Agent, then the applicable Lender and Borrower severally agree to pay to Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Agent, at the applicable Revolving Calculated Rate and, until such Lender has paid such amount to Agent, all amounts owed to such Lender hereunder (whether interest, fees, principal or otherwise) shall paid to Agent (or any Affiliate of Agent that has funded such amounts in lieu of such Lender) in such amount as is necessary to repay in full such unfunded amounts owed by such Lender and such Lender shall not be entitled to receive any amounts hereunder until such unfunded amounts have been repaid in full. If such Lender pays such amount to Agent, then such amount shall constitute such Lender’s Pro Rata Share of such Revolving Advance. No Class A Lender shall be obligated to make a Revolving Advance on behalf of another Class A Lender.
2.2 Interest on the Loan
(a)
The Borrower agrees to pay interest in respect of the outstanding principal amount of the Revolving Loan Advances, weekly in arrears
in accordance with Section 2.4 to Agent for the account of Lenders, from the date the proceeds thereof are made available to the Borrower
until paid in full, at a rate per annum equal to the lesser of (i)(A) Adjusted Term SOFR plus (B) seven percent (7.00%) per annum (such
rate, the “Revolving Calculated Rate”) and (ii)
the Maximum Rate. The Borrower agrees to pay interest in respect of the outstanding principal amount
of the Term Loan, to Agent for the account of Lenders holding Term Loan Commitments, (1) solely prior to the Closing Date, as set forth
in the Original Loan Agreement and (2) from and after the Closing Date until the Term Loans are paid in full, which interest shall be
paid in kind by capitalizing such interest and adding it to the outstanding principal balance of the Term Loan (“PIK
Interest”), at a rate per annum equal to the lesser of (i) eighteen percent (18.0%) and (ii) the Maximum
Rate (the “Term Loan Calculated Rate” and together with the Revolving Calculated
Rate, the “Calculated Rate”). Interest shall not be payable on any principal
amount of the Term Loan following the Conversion Date for such principal amount, but shall remain due and owing to the extent accrued
but not paid prior to such conversion into Common Stock (it being understood that any such accrued and unpaid interest shall be repaid
with Conversion Stock as set forth in Section 2.13 and Exhibit K). All such payments of interest shall be made weekly
pursuant to Section 2.4, and, in any event, shall be due and owing for each Due Period no later than the Payment Date immediately
following such Due Period, provided, that, on any Interest Settlement Date on which interest has accrued, but has not been paid
pursuant to Section 2.4, Agent shall be entitled to apply any or all Available Amounts on deposit in the Collection Account or
the Collateral Account to the payment of any accrued interest and fees for the preceding month payable to the Lenders pursuant to Section
13.5(a)(iii) hereof. The amount of PIK Interest accrued on any Payment Date shall automatically
and without further action be added to the outstanding principal balance of the Term Loan on such Payment Date and any outstanding PIK
Interest as of the Maturity Date shall be payable in cash as part of the principal required to be repaid on the earlier of (1) the Maturity
Date or (2) the required repayment of the Term Loan, whether by reason of acceleration or otherwise. If Lenders are prevented
from charging or collecting interest at the applicable Calculated Rate, to the extent permitted by law, then the interest rate shall
continue to be the Maximum Rate until such time as Lenders have charged and collected the full amount of interest that would be chargeable
and collectable if interest at the applicable Calculated Rate had always been lawfully chargeable and collectible. Whenever, subsequent
to the date of this Agreement, Adjusted Term SOFR is increased or decreased, the Applicable Rate shall be similarly changed without notice
or demand of any kind by an amount equal to the amount of such change in Adjusted Term SOFR (in each case, subject to the Maximum Rate).
(b) The weekly interest due on the principal balance of the Loan outstanding shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days and shall be calculated by determining the average daily principal balance of the Obligations under the Loan Documents outstanding for each day.
2.3 Loan Collections; Repayment.
(a) Borrower shall, or shall cause Servicer to, instruct the Account Lessee and the Servicer’s payment processing company of each Pledged Lease to pay directly to the Collection
Account or by delivery to the addresses set forth in the Servicing Agreement (the “Servicer Physical Payment Address”), all Scheduled Payments, prepayments (both voluntary and mandatory), and other amounts received of any and every description payable to Borrower by or on behalf of such Account Lessee pursuant to the applicable Pledged Lease, the related Portfolio Documents, or any other related documents or instruments. All such amounts delivered to the Servicer Physical Payment Address shall be received and held in trust for the sole and exclusive benefit of the Agent and shall be directed to the Collection Account within two (2) Business Days after such amounts so received and held by the Servicer equals or exceeds $25,000. In the event that Servicer or Borrower receives any payments on any Pledged Lease directly from or on behalf of the Account Lessee thereof in a manner other than through a deposit into the Collection Account or a payment at a Servicer Physical Payment Address, the Servicer or Borrower, as applicable, shall receive and hold all such payments in trust for the sole and exclusive benefit of Agent, and Servicer or Borrower, as applicable, shall deliver to the Collection Account within two (2) Business Days after such amounts so received and held by the Servicer equals or exceeds $25,000 all such payments (in the form so received) as and when received by Servicer or Borrower, as applicable, unless Agent shall have notified Servicer or Borrower, as applicable, to deliver directly to Agent all payments in respect of the Leases after the occurrence and during the continuance of an Event of Default, in which event all such payments (in the form received) shall be endorsed by Servicer or Borrower, as applicable, to Agent and delivered to Agent promptly upon Servicer or Borrower’s receipt thereof. Borrower and Servicer shall cause, and shall cause Collection Account Bank to cause, all amounts delivered to the Collection Account to be automatically directed pursuant to a standing wire instruction to the Collateral Account two (2) Business Days prior to each Payment Date until all Obligations have been paid in full and this Agreement has been terminated.
(b) At any time after the occurrence and during the continuance of an Event of Default, Agent shall have the right to notify any Account Lessee to mail or otherwise deliver payments directly to an address determined by Agent or to otherwise deposit such sums in the Collateral Account or any other deposit account established by Agent from time to time.
(c) All Scheduled Payments, interest, principal, prepayments (both voluntary and mandatory), and other amounts received of any and every description payable to Borrower by or on behalf of such Account Lessee pursuant to the applicable Lease, the related Portfolio Documents, or any other related documents or instruments with respect to the Leases pledged as Collateral for the Revolving Advances shall be paid directly to the Collection Account, unless otherwise directed by Agent at any time after the occurrence and during the continuance of an Event of Default.
2.4 Promise to Pay; Manner of Payment.
(a) Payments. On each Payment Date, payments shall be made by the Agent from the Collateral Account in the following order of priority and to the extent of the Available Amounts:
(i) to the Borrower, the portion of the Available Amounts that are identifiable as sales tax receipts received by Borrower or Servicer during the period since the prior Payment Date with respect to any Pledged Lease;
(ii) on the last Scheduled Payment Date to occur in each calendar month, to Servicer, the Servicing Fee for such calendar month until paid in full, and any such fees that remain unpaid with respect to one or more prior Payment Dates, provided, that if Servicer is Holdings or an Affiliate of Holdings, such payments shall not be made if an Event of Default has occurred and is continuing as of such Payment Date unless otherwise agreed by Agent in its sole discretion;
(iii) on the last Scheduled Payment Date to occur in each calendar month, to the Backup Servicer, the Backup Servicer Fee for such calendar month until paid in full, including any such fees that remain unpaid with respect to one or more prior Payment Dates;
(iv) to Agent, for the benefit of Lenders, first, any Protective Advances, together with all interest owed with respect to all Protective Advances, and second, any indemnities owed by Borrower or any Guarantor to Agent or any Lender, in each case, to the extent not previously reimbursed or paid;
(v) to Agent, for the benefit of itself and the Class A Lenders, on a Pro Rata Basis, all accrued and unpaid, costs, fees and expenses relating to the Revolving Advances as of such Payment Date;
(vi) to Agent, for the benefit of itself and the Class A Lenders, on a Pro Rata Basis, all accrued and unpaid interest (including any Additional Interest) relating to the Revolving Advances as of such Payment Date;
(vii) if no Event of Default has occurred and is continuing and a Required Loan Overadvance Principal Payment is due, to Agent, for the benefit of itself and the Class A-2 Lenders on a Pro Rata Basis until the first to occur of (x) the Class A-2 Revolving Advances are reduced to zero or (y) the Required Loan Overadvance Principal Payment is repaid in full;
(viii) if no Event of Default has occurred and is continuing and a Required Loan Overadvance Principal Payment is due, to Agent, for the benefit of itself and the Class A-1 Lenders on a Pro Rata Basis until the first to occur of (x) the Class A-1 Revolving Advances are reduced to zero or (y) the Required Loan Overadvance Principal Payment is repaid in full;
(ix)
to Agent, for the benefit of itself and the Class B Lenders, all accrued and unpaid, costs, fees and expenses relating to the Term Loan
as of such Payment Date;
(ix)
(x) if no Event of Default
has occurred and is continuing and if directed in writing by the Borrower, to Agent, for the benefit of itself and the Lenders, the Revolving
Advances in the amount specified by the Borrower in such writing;
(x)
(xi) if an Event of Default
has occurred and is continuing, to Agent, for the benefit of Lenders, any remaining Available Amounts in the Collateral Account to the
extent of Obligations owing to Lenders to be applied in accordance with Section 2.4(c) hereof; and
(xi)
(xii) to the Borrower,
any remaining Available Amounts in the Collateral Account;
provided that the Borrower may from time-to-time during any calendar week deliver a Borrowing Base Certificate to Agent and elect that payments be made pursuant to this Section 2.4(a) mutatis mutandis on the date that is two (2) Business Days after delivery of such Borrowing Base Certificate (any such date on which such payments are to be made, an “Additional Payment Date”). In no event shall there be more than one (1) Additional Payment Date in any calendar week absent the prior written consent of the Agent.
(b) In the event that amounts distributed under Section 2.4(a) as of each Payment Date are insufficient for payment of the amounts set forth in Section 2.4(a)(i),(ii), (iii), (iv), (v), (vi), (vii), and (viii) for such Payment Date, Borrower shall pay an amount equal to the extent of such insufficiency (i) through a Revolving Loan Advance (if available pursuant to the terms hereof) hereunder on such date of determination, or (ii) if insufficient Availability or another failure of a condition precedent to an Advance then exists, from a wire transfer of immediately available funds by Holdings or Borrower within two (2) Business Days of request by Agent. Agent shall distribute any such payment received by it for the account of any Lender to the appropriate Lender in accordance with the terms hereof.
(c) Following the occurrence and during the continuance of an Event of Default, payments shall be made by the Agent from the Collateral Account in the following order of priority and to the extent of the Available Amounts:
(i) on the last Scheduled Payment Date to occur in each calendar month, to Servicer, the Servicing Fee for such calendar month until paid in full, and any such fees that remain unpaid with respect to one or more prior Payment Dates, provided, that if Servicer is Holdings or an Affiliate of Holdings, such payments shall not be made unless otherwise agreed by Agent in its sole discretion;
(ii) on the last Scheduled Payment Date to occur in each calendar month, to the Backup Servicer, the Backup Servicer Fee for such calendar month until paid in full, including any such fees that remain unpaid with respect to one or more prior Payment Dates;
(iii) to Agent, for the benefit of Lenders, first, any Protective Advances, together with all interest owed with respect to all Protective Advances, and second, any indemnities owed by Borrower or any Guarantor to Agent or any Lender, in each case, to the extent not previously reimbursed or paid;
(iv) to Agent, for the benefit of itself and the Class A-2 Lenders, all accrued and unpaid, costs, fees and expenses (including the Exit Additional Interest) relating to the Class A-2 Revolving Advances as of such Payment Date;
(v) to Agent, for the benefit of itself and the Class A-1 Lenders, all accrued and unpaid, costs, fees and expenses (including the Exit Additional Interest) relating to the Class A-1 Revolving Advances as of such Payment Date;
(vi) to Agent, for the benefit of itself and the Class A-2 Lenders all accrued and unpaid interest (including any Additional Interest) relating to the Class A-2 Revolving Advances as of such Payment Date;
(vii) to Agent, for the benefit of itself and the Class A-1 Lenders all accrued and unpaid interest (including any Additional Interest) relating to the Class A-1 Revolving Advances as of such Payment Date;
(viii) to Agent, for the benefit of itself and the Class A-2 Lenders the outstanding principal amount of the Advances in respect of the Class A-2 Obligations until the aggregate outstanding principal amount of the Class A-2 Revolving Advances have been reduced to zero;
(ix) to Agent, for the benefit of itself and the Class A-1 Lenders the outstanding principal amount of the Advances in respect of the Class A-1 Obligations until the aggregate outstanding principal amount of the Class A-1 Revolving Advances have been reduced to zero; and
(x)
to Agent, for the benefit of itself and the Class B Lenders, all accrued and unpaid, costs, fees and expenses relating to the Term Loan
as of such Payment Date;
(xi)
to Agent, for the benefit of itself and the Class B Lenders all accrued and unpaid interest (including any PIK Interest) relating to
the Term Loan as of such Payment Date;
(xii)
to Agent, for the benefit of itself and the Class B Lenders the outstanding principal amount of the Term Loan until the aggregate outstanding
principal amount of the Term Loan has been reduced to zero;
(x)
(xiii) to the Borrower,
any remaining Available Amounts in the Collateral Account.
(d) Borrower absolutely and unconditionally promises to pay, when due and payable pursuant hereto, principal, interest and all other amounts and Obligations payable, hereunder or under any other Loan Document, without any right of rescission and without any deduction whatsoever, including any deduction for set-off, recoupment or counterclaim, notwithstanding any damage to, defects in or destruction of the Collateral or any other event, including obsolescence of any property or improvements. Except as expressly provided for herein, Borrower hereby waives setoff, recoupment, demand, presentment, protest, and all notices and demands of any description, and the pleading of any statute of limitations as a defense to any demand under this Agreement and any other Loan Document, all to the extent permitted by law. Each Revolving Advance shall be due and payable in full, if not earlier in accordance with this Agreement, on the Maturity Date. All other amounts outstanding under the Loan and all other Obligations under the Loan shall be due and payable in full, if not earlier in accordance with this Agreement, on the Maturity Date.
2.5 Voluntary Prepayments
(a) Except as set forth in Section 2.5(b) below, the Loan may be prepaid only through the collections of Scheduled Payments and any other amounts with respect to the Leases.
(b)
Revolving Loan Voluntary Prepayment. Borrower may voluntarily prepay, in whole, but not in part (except as described in
Section 2.1 hereof), the principal balance of the Revolving Advances and all accrued and unpaid interest thereon, and terminate
the Revolving Loan Commitment in connection with such prepayment in full at any time, so long as (i)
the Term Loan (together with all accrued and unpaid interest thereof (including PIK Interest and Exit Additional Interest)) has been
or is simultaneously prepaid in full (including, for the avoidance of doubt, by its conversion into Common Stock), and (ii) Borrower
shall have identified the Prepayment Date and given Agent not less than thirty (30) calendar days prior written notice in advance of
such proposed Prepayment Date. Upon the payment by the Borrower in cash in full of the Obligations with respect to the Revolving Advances
(other than indemnity obligations that are not then due and payable or with respect to which no claim has been made) pursuant to this
Section 2.5(b), the Revolving Loan Commitments shall terminate. For the avoidance of doubt,
the Revolving Advances may not be prepaid in full so long as any portion of the Term
Loan (including accrued and unpaid interest thereon (including PIK Interest)) remain existing.
(c)
Term Loan Voluntary Prepayment. Borrower may voluntarily prepay, in whole, but not in part,
the principal balance of the Term Loan and all accrued and unpaid interest thereon (including PIK Interest) at any time so long as Borrower
shall have identified the Prepayment Date and given Agent not less than thirty (30) calendar days prior written notice in advance of
such proposed Prepayment Date.
2.6 Mandatory Prepayments
(a) If a Change of Control occurs that has not been consented to in writing by Agent prior to the consummation thereof, on or prior to the first Business Day following the date of such Change of Control, Borrower shall prepay the Loan and all other Obligations (other than, indemnity obligations that are not then due and payable or with respect to which no claim has been made) in full in cash together with accrued interest thereon to the date of such prepayment and all other amounts owing to Agent and Lenders under the Loan Documents, and whereupon the Revolving Loan Commitments shall be terminated; provided, that any such prepayment shall be in compliance with Section 6.16 hereof.
(b) In addition to and without limiting any provision of any Loan Document, if Borrower, in any transaction or series of related transactions, (i) sells any Pledged Lease or other material assets or other properties, (ii) sells or issues any equity or debt securities, Equity Interests or other ownership interests other than, in each case, to Holdings or (iii) incurs any Indebtedness except for Permitted Indebtedness, then it shall deposit 100% (or such lesser amount as is required to indefeasibly pay in cash in full the Obligations (other than indemnity obligations that are not then due and payable or with respect to which no claim has been made)) of the cash proceeds thereof (net of reasonable transaction costs and expenses and taxes) to the Collateral Account.
(c) In no event shall the sum of the aggregate outstanding principal balance of the Revolving Loan Advances exceed the lesser of (i) the Borrowing Base and (ii) the Maximum Revolving Loan Amount. If at any time and for any reason, the outstanding unpaid principal balance of the Revolving Loan Advances exceed the Maximum Revolving Loan Amount, Borrower shall promptly, and in any event within five (5) Business Days, without the necessity of any notice or demand, whether or not a Default or Event of Default has occurred or is continuing, prepay the principal balance of the Loan in an amount equal to the difference between the then aggregate outstanding principal balance of the Revolving Loan Advances and the Maximum Revolving Loan Amount. If at any time and for any reason, the outstanding unpaid principal balance of the Loan exceeds the Borrowing Base (including due to any Eligible Lease thereafter failing to meet the eligibility criteria and becoming an Ineligible Lease; provided, however, that if such Lease is an Ineligible Lease solely as a result of a Regulatory Trigger Event described in clause (xxx) of the definition of “Eligible Leases” Borrower shall have forty five (45) calendar days after the earlier of its discovery or receipt of notice thereof to comply with this clause(c) of Section 2.6), then Borrower shall without the necessity of any notice or demand, whether or not a Default or Event of Default has occurred or is continuing, either (x) prepay the principal balance of the Loan in an amount equal to the difference between the then aggregate outstanding principal balance of the Loan and the Borrowing Base or (y) increase the aggregate principal balance of Eligible Leases pledged to Agent in accordance with this Agreement so that the Borrowing Base is equal to or exceeds the then outstanding principal balance of the Loan. The pledge and delivery to Agent of additional Eligible Leases shall comply with the document delivery requirements set forth in Sections 2.9 and 4.2 of this Agreement, as applicable, and shall be accompanied by a certification from Borrower that demonstrates that after giving effect to the pledge to Agent of such additional Eligible Leases, the outstanding unpaid principal balance of the Loan is equal to or less than the Borrowing Base.
2.7 Payments by Agent; Protective Advances
(a) Should any amount required to be paid under any Loan Document be unpaid beyond any applicable cure period, such amount may be paid by Agent, for the account of Lenders, which payment shall be deemed a request for an Advance under the Loan as of the date such payment is due, and Borrower irrevocably authorizes disbursement of any such funds to Agent, for the benefit of itself and the Lenders, by way of direct payment of the relevant amount, interest or Obligations in accordance with Section 2.4 without necessity of any demand whether or not a Default or Event of Default has occurred or is continuing. No payment or prepayment of any amount by Agent, Lenders or any other Person shall entitle any Person to be subrogated to the rights of Agent and/or Lenders under any Loan Document unless and until the Obligations are repaid in full and the Loan Agreement and the other Loan Documents have been terminated. Any sums expended or amounts paid by Agent and/or Lenders as a result of Borrower’s failure to pay, perform or comply with any Loan Document or any of its Obligations may be charged to Borrower’s account as an Advance under the Loan and added to the Obligations.
(b) Notwithstanding any provision of any Loan Document, Agent, in its sole discretion, shall have the right, but not any obligation, at any time that Borrower fails to do so, and from time to time, without prior notice, to: (i) discharge (at the Borrower’s expense) taxes or Liens affecting any of the Collateral that have not been paid in violation of any Loan Document or that jeopardize the Agent’s Lien priority in the Collateral, including any underlying collateral securing
any Lease; or (ii) make any other payment (at the Borrower’s expense) for the administration, servicing, maintenance, preservation or protection of the Collateral, or any underlying collateral securing any Lease (each such advance or payment set forth in clauses (i) and (ii), a “Protective Advance”). Agent shall be reimbursed for all Protective Advances pursuant to Section 2.4 and any Protective Advances shall bear interest at the Applicable Rate plus the Default Rate from the date the Protective Advance is paid by Agent until it is repaid. No Protective Advance by Agent shall be construed as a waiver by Agent, or any Lender of any Default, Event of Default, Default Trigger Event, First Payment Default Trigger Event or any of the rights or remedies of Agent or any Lender.
2.8 Grant of Security Interest; Collateral
(a) To secure the payment and performance of the Obligations, Borrower hereby grants to Agent, for the benefit of itself and the other Lenders, a valid, perfected and continuing first priority Lien upon, and security interest in, all of Borrower’s right, title, and interest, whether now owned or existing or hereafter from time to time acquired or coming into existence, in, to, and under the following assets (collectively, the “Collateral”): (i) all Leases and all amounts due or to become due under the Leases, (ii) all Inventory and other personal property securing the payment of any Lease, (iii) all Portfolio Documents and all rights, remedies, powers, privileges, and claims under the Portfolio Documents, (iv) the Collection Account and all funds and other property credited to the Collection Account, (v) the Purchase and Sale Agreement, each Servicing Agreement, and the Backup Servicing Agreement and all rights, remedies, powers, privileges, and claims under those contracts, (vi) all Accounts, General Intangibles, Chattel Paper, Instruments, Documents, Goods, money and any rights to the payment of money or other forms of consideration of any kind, Deposit Accounts, Investment Property, letters of credit, Letter-of-Credit Rights, Contract Rights, Contracts, Supporting Obligations, Equipment, Inventory, Fixtures, Computer Hardware, Software, securities, Permits, intellectual property, and oil, gas and other minerals, (vii) all other personal property and other types of property of Borrower, including, but not limited to, all goods (including, but not limited to, the Inventory) owned by Borrower, whether or not such goods are the subject of a Lease and (viii) all Proceeds of all of the foregoing.
(b) Borrower shall promptly notify Agent of any Commercial Tort Claims of the Borrower, individually or in the aggregate, involving damages of more than $500,000 related to any Collateral in which Borrower has an interest arising after the Closing Date and shall provide all necessary information concerning each such Commercial Tort Claim and take all necessary action with respect thereto to grant and perfect a first priority Lien thereon in favor of Agent for the benefit of itself and the other Lenders.
(c) Borrower has full right and power to grant to Agent, for the benefit of itself and the other Lenders, a perfected, first priority Lien on the Collateral pursuant to this Agreement, subject to Permitted Liens. Upon the execution and delivery of this Agreement, and upon the filing of the necessary financing statements and other documents and the taking of all other necessary action, Agent will have a valid and first priority perfected Lien on the Collateral, subject to no transfer or other restrictions or Liens of any kind in favor of any other Person other than Permitted Liens. As of the Closing Date, no financing statement naming Borrower as debtor and describing any of the Collateral is on file in any public office except those naming Agent as secured party and
those related to the Permitted Liens. As of the Closing Date, Borrower is not party to any agreement, document or instrument that conflicts with this Section 2.8.
(d) Borrower hereby authorizes Agent to prepare and file financing statements provided for by the UCC with all appropriate jurisdictions to perfect or protect the Lenders’ security interest or rights hereunder, and to take such other action as may be required, in Agent’s Permitted Discretion, in order to perfect and to continue the perfection of Agent’s Lien on the Collateral, for the benefit of itself and the other Lenders, including a notice that any disposition of the Collateral, by either the Borrower or any other Person, shall be deemed to violate the rights of the Lender under the UCC. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in the Agent’s sole discretion.
(e) For the avoidance of doubt, no Collateral shall be released (except as specifically set forth herein) until payment in full of all of the Obligations.
(f) Agent, Lenders and Borrower hereby agree that upon funding of any Revolving Loan Advance, the Borrowing Base Certificate prepared by Borrower and approved by Agent shall automatically supplement and add the Leases described therein to any Leases described in any previously-delivered Borrowing Base Certificate and shall constitute Collateral for purposes of this Agreement.
2.9 Collateral Administration
(a) All tangible Collateral (except Collateral in the possession of Backup Servicer or Agent) will at all times be kept by Borrower or Servicer at the locations set forth on Schedule 5.18B hereto, and shall not, without thirty (30) calendar days prior written notice to Agent, be moved therefrom other than to another such location, and in any case shall not be moved outside the continental United States. Borrower hereby agrees to deliver to the Agent and Backup Servicer or, upon the request of the Agent, to the Servicer, on or prior to the date of each Revolving Advance, the Verification Deliverables for each Lease that is to be added to the Collateral in connection with such Revolving Advance. From and after the funding of each Advance hereunder, the originals of all Leases constituting Collateral in respect of such Advance shall, regardless of their location, be deemed to be under Agent’s dominion and control and deemed to be in Agent’s possession. Any of Agent’s officers, employees, representatives or agents, including, without limitation, Backup Servicer, shall have the right upon reasonable notice, at any time during normal business hours, in the name of Agent or any designee of Agent or Borrower, to verify the validity, amount or any other matter relating to the Collateral. Borrower shall cooperate fully with Agent in an effort to facilitate and promptly conclude such verification process. In addition to any provision of any Loan Document, Agent shall have the right at all times after the occurrence and during the continuance of an Event of Default to notify Account Lessees party to Leases held by Borrower that their Leases have been assigned to Agent and to collect such Leases directly in Agent’s own name, for the benefit of itself and the Lenders, and to charge collection costs and expenses, including attorney’s fees, to Borrower.
(b) As and when determined by Agent in its sole discretion, Agent will perform the searches described in clauses (i) and (ii) below against Borrower, Servicer and Holdings: (i)
UCC searches with the Secretary of State and local filing offices of each jurisdiction where Borrower, Servicer or Holdings is organized; and (ii) judgment, bankruptcy, federal tax lien and corporate and partnership tax lien searches, in each jurisdiction where Borrower, Servicer or Holdings maintains their executive offices, a place of business or any assets.
(c) Borrower shall keep accurate and complete records of the Collateral and all payments and collections thereon and shall submit such records to Agent on such periodic basis as Agent may request in its Permitted Discretion.
(d) In respect of the portion of the Collateral consisting of any Lease which is evidenced by an electronic record that is not a transferable record under Applicable Law, Borrower shall deliver to Agent or, at the request of Agent, Servicer (i) the original Portfolio Documents; and (ii) originals or true copies of the truth-in-lending disclosure statements and, if required by Agent, lease applications, any related Account Lessee’s acknowledgments and understandings, and other receipts and payment authorization agreements, which shall be delivered, at Borrower’s expense, to Agent at its address set forth herein or as otherwise specified by Agent and, except as otherwise expressly provided herein to the contrary, held in Agent’s custody or, if Agent has so requested, Servicer’s or Backup Servicer’s custody until all of the Obligations have been fully satisfied or Agent expressly agrees to release such custody of such documents. In respect of the portion of the Collateral consisting of any Lease which is evidenced by an electronic record that is a transferable record under applicable law, Borrower shall deliver to Agent the control of such transferable electronic record in accordance with Applicable Law (to ensure, among other things, that Agent has a first priority perfected Lien in such Collateral), which shall be delivered, at Borrower’s expense, to Agent at its address as set forth herein or as otherwise specified by Agent and, except as otherwise expressly provided herein to the contrary, held in Agent’s possession, custody, and control until all of the Obligations have been fully satisfied or Agent expressly agrees to release such documents. Alternatively, Agent, in its sole discretion, may elect for the Servicer or Backup Servicer or any other agent to accept delivery of and maintain possession, custody, and control of all such documents and any instruments on behalf of Agent during such period of time. Borrower shall identify (or cause any applicable servicing agent to identify) on the related electronic record the pledge of such Lease by Borrower to Agent.
(e) Borrower hereby agrees to, and to cause Servicer to, take the following protective actions to prevent destruction of records pertaining to the Collateral: create an electronic file of the computerized information regarding the Collateral and provide Agent and Backup Servicer monthly with a copy of such file (A) no later than fifteen (15) days following the Closing Date and (B) no later than fifteen (15) days following the end of each calendar month following the Closing Date. Subject to the limitations set forth in Section 6.7 of this Agreement, Agent at all times during regular business hours (provided, that any electronic materials available on a website or through other remote electronic means for which Agent has been given access shall be available to Agent at all times) shall have the right to access and review any and all Portfolio Documents in Borrower’s or Servicer’s possession and any and all data and other information relating to Portfolio Documents as may from time to time be input to or stored within Borrower’s or Servicer’s computers and/or computer records including, without limitation, diskettes, tapes and other computer software and computer systems.
2.10 Power of Attorney
Borrower hereby acknowledges and agrees that Agent is hereby irrevocably made, constituted and appointed the true and lawful attorney for Borrower (without requiring Agent to act as such) with full power of substitution to do the following upon the occurrence and during the continuation of an Event of Default: (i) endorse the name of Borrower upon any and all checks, drafts, money orders and other instruments for the payment of money that are payable to Borrower and constitute collections on the Pledged Leases; (ii) execute and/or file in the name of Borrower any financing statements, amendments to financing statements, schedules to financing statements, releases or terminations thereof, assignments, instruments or documents that it is obligated to execute and/or file under any of the Loan Documents (to the extent Borrower fails to so execute and/or file any of the foregoing within two (2) Business Days of Agent’s request or the time when Borrower is otherwise obligated to do so); (iii) execute and/or file in the name of Borrower assignments, instruments, documents, schedules and statements that it is obligated to give Agent under any of the Loan Documents (to the extent Borrower fails to so execute and/or file any of the foregoing within two (2) Business Days of Agent’s request or the time when Borrower is otherwise obligated to do so); (iv) execute and/or file such documents as may be necessary to register and/or otherwise perfect Agent’s Lien on Borrower’s owned goods, including, but not limited to, the Inventory, and (v) do such other and further acts and deeds in the name of Borrower that Agent may deem necessary to enforce, make, create, maintain, continue, enforce or perfect Lender’s security interest, Lien or rights in any Collateral.
2.11 Deposit of Release Price or Substitution of Eligible Lease.
(a) Subject to Section 2.11(b), at any time, upon discovery by Borrower or upon notice from Holdings, Servicer or Agent that (i) any Lease is a Defaulted Lease, Borrower may, within ten (10) calendar days after the earlier of its discovery or receipt of notice thereof deposit the Release Price for such Lease in the Collection Account. Notwithstanding the foregoing, Borrower may exercise its rights pursuant to this Section 2.11 solely with respect to the repurchase of Pledged Leases in a pool of Eligible Leases having an aggregate Current Lease Balance (measured as of the date of such repurchase) that is less than or equal to five percent (5%) of the sum of the funded Revolving Advances and the total unfunded Revolving Loan Commitment held by the Lenders with respect to such pool of Eligible Leases. Borrower shall deliver, or cause Servicer to deliver, a schedule of any Defaulted Leases so removed to Agent in connection with the Monthly Servicing Report and shall update all other reports and schedules accordingly.
(b) Release of Ineligible Lease. If the Release Price for any Defaulted Lease is deposited in the Collection Account then, (a) the Agent’s Lien on such Defaulted Lease and all related Collateral is automatically released without any further action and (b) Agent shall, and shall cause Backup Servicer to, at Borrower’s sole cost and expense, deliver the related Portfolio Documents to Borrower or its designee and shall execute such documents, releases and instruments of transfer, prepared by Borrower at its sole cost and expense, or assignment and take such other actions as shall reasonably be requested by the Borrower to effect the release of such Defaulted Lease and the related Collateral.
2.12 Collection Account and Collateral Account
(a) Collection Account. Deposits made into the Collection Account shall be limited to amounts deposited therein by, or at the direction of, Borrower or Servicer in accordance with this Agreement or the Purchase and Sale Agreement, as applicable, and Available Amounts and amounts deposited therein from the Collateral Account (it being understood that amounts returned to the Borrower pursuant to Section 2.4(a)(xiv) shall not be deposited in the Collection Account from the Collateral Account unless so directed in writing by the Borrower).
(b) Withdrawals. Other than as set forth in clause (c) below, Agent shall have the sole and exclusive right to withdraw or order a transfer of funds from the Collection Account and the Collateral Account, in all events in accordance with the terms and provisions of the Collection Account Control Agreement, the Monthly Servicing Report and this Agreement. In addition, notwithstanding anything in the foregoing to the contrary, the Servicer may request, but Agent is obligated to comply only if an Event of Default has not occurred and is then continuing with such request, withdrawals or order transfers of funds from the Collection Account or the Collateral Account, to the extent such funds either (i) have been mistakenly deposited into the Collection Account or the Collateral Account or (ii) related to items subsequently returned for insufficient funds or as a result of stop payments. In the case of any withdrawal or transfer pursuant to the foregoing sentence, the Servicer shall provide Agent with notice of such request of withdrawal or transfer, together with reasonable supporting details, on the next Monthly Servicing Report to be delivered by the Servicer following the date of such withdrawal or transfer (or in such earlier written notice as may be required by Agent from the Servicer from time to time). Borrower shall cause the Servicer to deposit all proceeds of the Collateral processed by the Servicer to the Collection Account within two (2) Business Days of receipt, which amounts shall be automatically swept to the Collateral Account two (2) Business Days prior to each Payment Date absent the consent of the Agent. On each Payment Date, amounts in the Collateral Account shall be applied to make the payments and disbursements described in Section 2.4 and this Section 2.12. Agent agrees to use its best efforts to provide Borrower and Servicer, at all times other than during the continuance of an Event of Default, with on-line access to view account related activity (such as deposits to and withdrawals from) the Collateral Account to view account related activity such as deposits to and withdrawals from the Collateral Account. On the Reporting Date prior to each Payment Date, Agent shall deliver to Borrower a notice setting forth the allocation of funds in the Collateral Account to be made on such Payment Date in accordance with Section 2.4 hereto (each such notice, an “Allocation Notice”), provided, that the failure of Agent to deliver an Allocation Notice to Borrower with respect to any Payment Date shall not affect any of the rights of Agent or any Lender or any obligation of Borrower under this Agreement or any other Loan Document. Except with respect to any manifest error in any Allocation Notice, the application of funds pursuant to Section 2.4 for the following Payment Date shall be made in accordance with such Allocation Notice.
(c) Irrevocable Deposit. Any deposit made into the Collection Account or the Collateral Account hereunder shall, except as otherwise provided herein, be irrevocable, and the amount of such deposit and any money, instruments, investment property or other property on deposit in, carried in or credited to the Collection Account or the Collateral Account, as applicable, hereunder and all interest thereon shall be held in trust by the Agent and applied solely as provided herein.
2.13
Conversion; Registration Rights
(a)
Conversion. No Lender shall have any Conversion Rights prior to the receipt of the Requisite
Stockholder Approval. Following the receipt of the Requisite Stockholder Approval, the Class B Lenders shall have the right to convert
the outstanding and unpaid Advances constituting the Term Loan, and/or all fees and interest thereon (collectively, the “Conversion
Amount”), into fully-paid Conversion Stock in accordance with the provisions set forth in Exhibit K
(any such conversion of all or any portion of the Term Loan under this Section 2.13 and
Exhibit K, a “Term Loan Conversion”,
and such rights to convert set forth in this Section 2.13 and Exhibit K,
the “Conversion Rights”). Any Term Loan Conversion shall reduce the amount
of the applicable Class B Lender’s Term Loan by the amount of Advances and/or interest thereon converted. Exhibit
K is incorporated herein by this reference.
(b)
Registration Rights. The Class B Lenders and AgentThe
Closing Date Warrant Holders shall receive the registration rights set forth in Exhibit L
with respect to (i) the Conversion Stock and (ii) the
shares of Common Stock issuable upon exercise of the Closing Date Warrants for the Maximum Warrant Shares in accordance
with the Closing Date Warrants issued by Parent Entity to the LendersClosing
Date Warrant Holders and in the amounts as set forth on Exhibit M hereto, on the Closing Date,
respectively. Exhibit L is incorporated herein by this reference. For
the avoidance of doubt, the resale of
the Closing Date Warrants by the Closing Date Warrant
Holders was registered pursuant to a Form S-1 filed on July 25, 2025.
III. FEES AND OTHER CHARGES
3.1 Computation of Fees; Lawful Limits
All fees hereunder shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In no contingency or event whatsoever, whether by reason of acceleration or otherwise, shall the interest and other charges paid or agreed to be paid to Agent, for the benefit of itself and the other Lenders, for the use, forbearance or detention of money hereunder exceed the Maximum Rate permissible under Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. If, due to any circumstance whatsoever, fulfillment of any provision hereof, at the time performance of such provision shall be due, shall exceed any such limit, then the obligation to be so fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall have received interest or any other charges of any kind which might be deemed to be interest under Applicable Law in excess of the Maximum Rate, then such excess shall be applied first to any unpaid fees and charges hereunder, then to unpaid principal balance owed by Borrower hereunder, and if the then remaining excess interest is greater than the previously unpaid principal balance, Agent and Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate. The terms and provisions of this Section 3.1 shall control to the extent any other provision of any Loan Document is inconsistent herewith.
3.2 Default Rate of Interest
Upon the occurrence and during the continuation of a Default or an Event of Default, the Applicable Rate of interest then in effect at such time with respect to the Obligations shall be
increased by three percent (3.0%) per annum (subject to the Maximum Rate) (the “Default Rate”). Interest at the Default Rate shall accrue from the initial date of such Default or Event of Default until such Default or Event of Default is waived or ceases to continue, and shall be payable upon demand.
3.3 Increased Costs; Capital Adequacy
(a) If any Change in Law shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (other than a Non-Funding Lender) and the result of any of the foregoing shall be to increase the cost (other than for Indemnified Taxes, Excluded Taxes or Other Taxes) to such Lender of making or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then Borrower will pay to such Lender on demand (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to Agent) such additional amount or amounts as will compensate Lender for such additional costs incurred or reduction suffered.
(b) If any Lender (other than a Non-Funding Lender) determines that any Change in Law regarding capital requirements (other than in respect of Taxes) has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level materially below that which such Lender or such Lender’s holding company, as applicable, could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company, as applicable, with respect to capital adequacy), then from time to time Borrower will pay to such Lender on demand (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to Agent) such additional amount or amounts as will compensate such Lender’s or such Lender’s holding company, as applicable, for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or such Lender’s holding company, as the case may be, as specified in Sections 3.3(a) and (b), shall be delivered to Borrower and shall be conclusive absent manifest error. Borrower shall pay such Lender on demand the amount shown as due on any such certificate pursuant to Section 2.4 of this Agreement.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 3.3 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this Section 3.3 for any increased costs or reductions incurred more than 180 days prior to the date such Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(e) Each Lender shall promptly notify Borrower and Agent of any event of which it has actual knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by Borrower to pay any amount pursuant to Sections 3.3(a) or (b) or (ii) the occurrence of any circumstances described in Sections 3.3(a) or (b) (and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify Borrower and Agent).
3.4 Administration Fee
Borrower hereby agrees to pay to Agent, solely for the account of Agent, an administration fee (the “Administration Fee”) in the sum of Twelve Thousand Five Hundred and No/100 Dollars ($12,500), which fee shall be payable on the Closing Date and on the first Scheduled Payment Date of each calendar quarter thereafter, in advance, for such calendar quarter.
3.5 [Reserved].
3.6 Additional Interest.
(a) On each Payment Date prior to the last day of the Revolving Credit Period, as well as on the Payment Date immediately following the expiration of the Revolving Credit Period, Borrower shall pay to Agent, for the benefit of Lenders, with respect to the Due Period occurring since the immediately prior Payment Date (or, with respect to the first Payment Date, for the Due Period occurring since the Closing Date and, with respect to the Payment Date immediately following the expiration of the Revolving Credit Period, for the Due Period up to and including the last day of the Revolving Credit Period), as additional interest (the “Unused Additional Interest”) an amount equal to the product of (A) one-half of one percent (0.50%) multiplied by (B) the difference between the then-applicable Maximum Revolving Loan Amount and the average daily principal balance of the Obligations for such period multiplied by (C) the number of days in the applicable Due Period, divided by (D) 360.
(b) In addition to the above, if, as of any Payment Date prior to the last day of the Revolving Credit Period, as well as on the Payment Date immediately following the expiration of the Revolving Credit Period, the Utilization Ratio is less than the Minimum Utilization Ratio for the correlative time period, Borrower shall pay to Agent, for the benefit of Lenders, with respect to the Due Period occurring since the immediately prior Payment Date (or, with respect to the first Payment Date, for the Due Period occurring since the Closing Date and, with respect to the Payment Date immediately following the expiration of the Revolving Credit Period, for the Due Period up to and including the last day of the Revolving Credit Period), as additional interest an amount equal to (a) the Revolving Calculated Rate multiplied by (b) the total amount of additional principal balance of the Revolving Advances that would have needed to be outstanding in order to cause the Utilization Ratio to be equal to Minimum Utilization Ratio for the correlative time period (the “Minimum Utilization Additional Interest” and together with the Unused Additional Interest, collectively, the “Additional Interest”). For the avoidance of doubt, if the Minimum Utilization Additional Interest is paid on any Payment Date, the Borrower shall not be required to pay any Unused Additional Interest solely with respect to the total amount of additional principal
balance of the Loan that would have needed to be outstanding in order to cause the Utilization Ratio to be equal to Minimum Utilization Ratio for the correlative time period.
(c)
Upon the repayment in full of the principal amount of the Loans and the termination of all of the Revolving Loan Commitments,
pursuant to (i) a voluntary prepayment under Section 2.5(b), (ii) a mandatory prepayment under Section 2.6(a) or 2.6(b),
(iii) the occurrence of the Maturity Date under Section 2.1, or (iv) Agent’s acceleration of the Obligations or termination
of its obligations hereunder, Borrower shall pay to Agent upon the occurrence thereof, for the benefit of Class A Lenders, exit additional
interest of $681,250 (the “Exit Additional Interest”) without set-off, counterclaim or deduction of any kind;
provided that, at all times prior to the Closing Date Warrants being collectively exercisable
for Maximum Warrant Shares, whether by the terms of the Closing Date Warrants or
for any other any reason (including, but not limited to, as a result of a stay, injunction or similar proceeding), the Exit Additional
Interest shall be increased by $20,000,000 until such time as such Closing Date Warrants are collectively fully exercisable for Maximum
Warrant Shares. For the avoidance of doubt, the Exit Additional Interest shall not accrue interest or be treated as principal
outstanding hereunder.
IV. CONDITIONS PRECEDENT
4.1 Conditions to Closing
The obligations of Agent and Lenders to consummate the transactions contemplated herein and the obligations of Lenders to make the initial Revolving Advance under the Loan are subject to the satisfaction (or waiver), in the sole judgment and discretion of Agent, of the following:
(a)
Borrower shall have delivered to Agent (i) a Note payable to each requesting Lender that has requested a Note at least three
Business Days prior to the Closing Date in an aggregate amount up to such Lender’s Revolving Loan Commitment, (ii) a
Note payable to each requesting Lender that has requested a Note at least three Business Days prior to the Closing Date in an aggregate
amount up to such Lender’s share of the Term Loan,[reserved],
(iii) the other Loan Documents to which it or any Guarantor is a party, each duly executed by a Responsible Officer of Borrower and the
Guarantors parties thereto, and (iv) a Borrowing Base Certificate for the initial Revolving Advances, executed by a Responsible Officer
of Borrower;
(b) all in form and substance satisfactory to Agent in its Permitted Discretion, Agent shall have received (i) a report of UCC financing statement, bankruptcy, tax and judgment lien searches performed with respect to Borrower and each Guarantor in each jurisdiction determined by Agent in its Permitted Discretion, and such report shall show no Liens on the Collateral (other than Permitted Liens), (ii) each document (including, without limitation, any UCC financing statement) required by any Loan Document or under law or requested by Agent to be filed, registered or recorded to create, in favor of Agent, for the benefit of itself and the other Lenders, a first priority and perfected security interest upon the Collateral, and (iii) evidence of each such filing, registration or recordation and of the payment by Borrower of any necessary fee, tax or expense relating thereto;
(c) Agent shall have received (i) the Charter and Good Standing Documents of Borrower and each Guarantor (to the extent applicable), all in form and substance acceptable to
Agent in its Permitted Discretion, (ii) a certificate of the secretary or assistant secretary of Borrower and each Guarantor in his or her capacity as such and not in his or her individual capacity dated the Closing Date, as to the incumbency and signature of the Persons executing the Loan Documents on behalf of such Person in form and substance acceptable to Agent in its Permitted Discretion, and (iii) a certificate executed by an authorized officer of Borrower, which shall constitute a representation and warranty by Borrower as of the Closing Date that the conditions contained in this Agreement have been satisfied;
(d) Agent shall have received the written legal opinions of Borrower’s and Guarantor’s outside legal counsel regarding certain customary closing matters;
(e) Agent shall have received a certificate of the chief financial officer (or, in the absence of a chief financial officer, the chief executive officer) of Borrower, in his or her capacity as such and not in his or her individual capacity, in form and substance satisfactory to Agent in its Permitted Discretion (each, a “Solvency Certificate”), certifying the solvency of Borrower, after giving effect to the transactions and the Indebtedness contemplated by the Loan Documents;
(f) Agent shall have completed examinations, the results of which shall be satisfactory in form and substance to Agent, in its Permitted Discretion, of Borrower and each Guarantor, including, without limitation, (i) an examination of background checks with respect to the chief executive officer, chief financial officer and chief operating officer of Holdings and (ii) an examination of the Collateral and the Underwriting Guidelines, and Borrower shall have demonstrated to Agent’s satisfaction, in its Permitted Discretion, that (x) the forms of Portfolio Documents used by Borrower and Holdings comply, in all respects deemed material by Agent, in its Permitted Discretion, with all Applicable Law and (y) no operations of Borrower or Holdings are the subject of any governmental investigation, evaluation or any remedial action which would be reasonably expected to result in it being unable to perform its obligations in connection with these transactions, and (z) Borrower has no liabilities or obligations (whether contingent or otherwise), other than the Obligations, that are deemed material by Agent, in its Permitted Discretion;
(g) Agent shall have received all fees, charges and expenses due and payable to Agent and Lenders on or prior to the Closing Date pursuant to the Loan Documents;
(h) upon giving effect to the waiver set forth in Section 12.14(f), no Event of Default shall exist and be continuing under this Agreement or any other Loan Document;
(i) all corporate and other proceedings, documents, instruments and other legal matters of Borrower and any Guarantor (to the extent applicable) in connection with the transactions contemplated by the Loan Documents (including, but not limited to, those relating to corporate and capital structures of the Borrower) shall be satisfactory to Agent in its Permitted Discretion;
(j) the making of the Loans shall not contravene in any material respects any Applicable Laws and there shall exist no Material Adverse Effect;
(k) each Lender shall have received all required internal approvals;
(l) Agent shall have received evidence of release and termination of, or Agent’s authority to release and terminate, any and all Liens and/or UCC financing statements in, on, against or with respect to any of the Collateral (other than Permitted Liens);
(m) Agent shall have received the Amendment No. 1 to Backup Servicing Agreement, duly executed by the parties thereto;
(n) the board observer Designee shall have been appointed in accordance with Section 6.18 hereof; and
(o)
the Closing Date Warrants shall have been issued and delivered to the LendersClosing
Date Warrant Holders and in the amounts as set forth next to each such Lender’sClosing
Date Warrant Holder’s name on Exhibit M.
For purposes of determining whether the conditions specified in this Section 4.1 have been satisfied on the Closing Date, Agent and each Lender, by delivering its signature page to this Agreement, shall be deemed to have consented to, approved or accepted, or to be satisfied with each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to Agent or such Lender as the case may be. The parties hereto hereby agree that, notwithstanding any other provision hereof, the Closing Date is June 12, 2025.
4.2 Conditions to Initial Revolving Advances and Subsequent Revolving Advances
The obligations of Lenders to make any Revolving Advance under the Loan are subject to the satisfaction (or waiver), in the sole judgment and discretion of Agent, of the following:
(a) Borrower shall have delivered to Agent, not later than 12:59 p.m. (Eastern Standard Time) two (2) Business Days prior to the proposed date for such requested Revolving Advance, a request for advance in the form of Exhibit F hereto (a “Request for Revolving Advance”), and a Borrowing Base Certificate for such Revolving Advance with necessary supporting documentation executed by a Responsible Officer of Borrower, which shall constitute a representation and warranty by Borrower as of the date of such Revolving Advance that the conditions contained in this Section 4.2 have been satisfied;
(b) Borrower shall own or, after payment of the purchase price pursuant to the Purchase and Sale Agreement, will have the unconditional right to purchase from Holdings, the Leases to be financed by such Revolving Advance and the Inventory related to such Leases free and clear of any Liens, encumbrances or other rights of third parties, with respect to any of the Leases or other Collateral sold to Borrower pursuant to the Purchase and Sale Agreement, and Agent shall have received evidence satisfactory to Agent that all such Liens have been released and UCC Financing Statements terminated or partially released and filed;
(c) each of the representations and warranties made by Borrower or any Affiliate of the Borrower in or pursuant to the Loan Documents shall be accurate in all material respects before and after giving effect to the making of such Revolving Advance (except for those representations and warranties made as of a specific date) and no Default or Event of Default shall have occurred or be continuing or would exist after giving effect to the requested Revolving Advance on such date;
(d) immediately after giving effect to the requested Revolving Advance, the aggregate outstanding principal amount of Advances under the Loan shall not exceed the lesser of (i) the Maximum Revolving Loan Amount and (ii) the Borrowing Base;
(e) Agent shall have received all fees, charges and expenses to the extent due and payable to Agent and Lenders on or prior to such date pursuant to the Loan Documents;
(f) there shall not have occurred any Material Adverse Effect; and
(g) Backup Servicer shall have received the Verification Deliverables with respect to each Lease to be pledged pursuant to such Revolving Advance, and shall have issued and delivered to Agent a Verification Certificate (without any exceptions noted thereon unless otherwise waived by Agent) provided for in the Backup Servicing Agreement, all in form and substance acceptable to Agent at its Permitted Discretion.
V. REPRESENTATIONS AND WARRANTIES
Each
Credit Party represents and warrants, as of the Closing Date and as of the date of any Request for Revolving Advance and the making of
each Advance and, solely with respect to Section 5.3, as of immediately prior to any Term Loan
Conversion, the exercise of the Closing Date Warrants and the issuance of the Maximum Warrant Shares upon the exercise
of the Closing Date Warrants, as follows:
5.1 Organization and Authority
Borrower is a limited liability company, duly organized, validly existing and in good standing under the laws of its state of organization. Each Guarantor is a corporation, duly organized, validly existing and in good standing under the laws of its state of organization. Each Credit Party (a) has all requisite power and authority to own its properties and assets (including, without limitation, the Collateral) and to carry on its business as now being conducted and as contemplated in the Loan Documents, and (b) is duly qualified to do business in each jurisdiction in which failure to so qualify could reasonably be likely to have or result in a Material Adverse Effect. Each Credit Party has all requisite power and authority (i) to execute, deliver and perform the Loan Documents to which it is a party, (ii) with respect to Borrower, to acquire the Pledged Leases and other Collateral under the Purchase and Sale Agreement, (iii) to consummate the transactions contemplated under the Loan Documents to which it is a party, and (iv) to grant the Liens with regard to the Collateral pursuant to the Security Documents to which it is a party. Borrower has all requisite power and authority to borrow hereunder. No Credit Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor controlled by such an “investment company.” No transaction contemplated in this Agreement or the other Loan Documents requires compliance with any bulk sales act or similar law.
5.2 Loan Documents
The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party, and the consummation by such parties of the transactions contemplated thereby, (a) have been duly authorized by all requisite action of such parties and have been duly executed
and delivered by such parties; (b) do not violate any provisions of (i) any Applicable Law, (ii) any order of any Governmental Authority binding on any such party or any of their respective properties, or (iii) the limited liability company agreement (or any other equivalent governing agreement or document) of any such party, or any agreement between any such party and its equity owners or among any such equity owners; (c) are not in conflict with, and do not result in a breach or default of or constitute an event of default, or an event, fact, condition or circumstance which, with notice or passage of time, or both, would constitute or result in a conflict, breach, default or event of default under, any indenture, agreement or other instrument to which any such party is a party, or by which the properties or assets of such party are bound, the effect of which could reasonably be expected to be, have or result in a Material Adverse Effect; (d) except as set forth herein or therein, will not result in the creation or imposition of any Lien of any nature upon any of the properties or assets of such party, and (e) except for filings in connection with the perfection of Agent’s Liens, do not require the consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority or any other Person that has not been obtained. When executed and delivered, each of the Loan Documents will constitute the legal, valid and binding obligation of each party signatory thereto (other than Agent and the Lenders), enforceable against such parties in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity (whether in a proceeding at law or in equity). The Purchase and Sale Agreement is the only agreement pursuant to which the Borrower purchases the Pledged Leases and the related Collateral. The Borrower has furnished to the Agent a true, correct and complete copy of the Purchase and Sale Agreement. The purchase by the Borrower under the Purchase and Sale Agreement constitutes a true sale at a fair market valuation enforceable against creditors of Holdings and is not merely a financing or extension of credit.
5.3 Requisite Stockholder Approval
At
the time of (i) any issuance of Conversion Stock upon any Term Loan Conversion, (ii) any exercise
of the Closing Date Warrants and the issuance of Maximum Warrant Shares upon the exercise of the Closing Date Warrants and (iiiii)
if applicable (including if needed in order to comply with the provisions of Exhibit K),
an amendment to the charter to increase the authorized and unissued Common Stock of the Parent Entity to the
Required Reserve Amount (as defined in Exhibit K) plus the amount of provide
that the authorized share capital of the
Parent Entity is sufficient to issue the
Maximum Warrant Shares under the Closing Date Warrants (collectively, the “Requisite Special Stockholder Meeting Items”),
such Requisite Special Stockholder Meeting Items, in each case, shall have been duly authorized by all requisite action of the (x) Parent
Entity, (y) its board of directors and (z) a majority of votes cast by the Parent Entity’s stockholders at the Requisite Special
Stockholder Meeting, in each case, in a manner acceptable to Agent in its Permitted Discretion (such approval of all Requisite Special
Stockholder Meeting Items, the “Requisite Stockholder Approval”); notwithstanding the foregoing, the Closing
Date Warrants shall be exercisable irrespective of the outcome of the Requisite Stockholder Approval. For
the avoidance of doubt, the Requisite Special Stockholder Meeting was
held on August 6, 2025 and the Requisite Stockholder
Approval was obtained at such meeting.
5.4 Subsidiaries, Capitalization and Ownership Interests
Borrower has no Subsidiaries as of the Closing Date. 100% of the outstanding Equity Interest in the Borrower is directly owned (both beneficially and of record) by Holdings. The outstanding ownership or voting interests of Borrower have been duly authorized and validly issued. Schedule 5.4 lists the managers or managing members or directors of each Credit Party as of the Closing Date. Borrower does not (i) own any Investment Property or (ii) own any interest or participate or engage in any joint venture, partnership or similar arrangements with any Person. Borrower will only purchase Leases and other Collateral pursuant to the Purchase and Sale Agreement with Holdings.
5.5 Properties
Borrower is the lawful owner of, and has good title to, each Pledged Lease, free and clear of any Liens (other than the Lien of this Agreement and any Permitted Liens).
5.6 Other Agreements
No Credit Party is (a) a party to any judgment, order or decree or any agreement, document or instrument, or subject to any restriction, which would have a Material Adverse Effect its ability to execute and deliver, or perform under, any Loan Document or to pay the Obligations or (b) in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in any agreement, document or instrument to which it is a party or to which any of its properties or assets are subject, which default, if not remedied within any applicable grace or cure period, could reasonably be expected to be, have or result in a Material Adverse Effect, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under, any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to be, have or result in a Material Adverse Effect.
5.7 Litigation
(a) No Credit Party is a party to any material pending or, to the knowledge of Borrower or Holdings, threatened action, suit, proceeding or investigation related to its respective business that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (b) there is no pending or, to the knowledge of any Credit Party, threatened action, suit, proceeding or investigation against any such Credit Party that could reasonably be expected to prevent or materially delay the consummation by such Credit Party of the transactions contemplated herein, (c) no Credit Party is a party or subject to any order, writ, injunction, judgment or decree of any Governmental Authority and (d) there is no action, suit, proceeding or investigation initiated by any Credit Party currently pending that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.8 Tax Returns; Taxes
Each Credit Party has timely filed or caused to be timely filed all federal, state, local and foreign tax returns which are required to be filed by such Credit Party, has paid or caused to be paid all taxes shown thereon to be due and owing by it, and Borrower has paid or caused to be paid
all property taxes due and owing by it with respect to any Inventory related to Pledged Leases except for (i) any taxes or assessments, the validity of which are being contested in good faith by appropriate proceedings timely instituted and diligently pursued and with respect to which such Credit Party has set aside adequate reserves on its books in accordance with GAAP and which proceedings have not given rise to any Lien or (ii) any taxes or assessments which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.9 Financial Statements and Reports
All financial statements and financial information relating to Borrower, Holdings or Parent Entity that have been or may hereafter be delivered to Agent by Borrower, Holdings or Parent Entity (a) are consistent with the books of account and records of Borrower, Holdings or Parent Entity, (b) have been prepared in accordance with GAAP, on a consistent basis throughout the indicated periods, except that the unaudited financial statements contain no footnotes or year-end adjustments, and (c) present fairly in all material respects the financial condition, assets and liabilities and results of operations of Borrower, Holdings and Parent Entity at the dates and for the relevant periods indicated in accordance with GAAP on a basis consistently applied. Neither Borrower, Holdings nor Parent Entity has any material obligations or liabilities of any kind required to be disclosed therein that are not disclosed in such financial statements, and since the date of the most recent financial statements submitted to Agent pursuant to Section 6.1, there has not occurred any Material Adverse Effect.
5.10 Compliance with Law
Each Credit Party (a) is in compliance with all Applicable Laws, and (b) is not in violation of any order of any Governmental Authority or other board or tribunal, except, in the case of both (a) and (b), where noncompliance or violation could not reasonably be expected to be, have or result in a Material Adverse Effect. No Credit Party has received any written notice that such Credit Party is not in material compliance in any respect with any of the requirements of any of the foregoing. No Credit Party has established or maintains or contributes (or has an obligation to contribute) to, or otherwise has any liability (including any liability as an ERISA Affiliate of another entity) with respect to any “employee benefit plan” that is covered by Title IV of ERISA or Section 412 of the Code. Each Credit Party has maintained in all material respects all records required to be maintained by any applicable Governmental Authority, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. Since its formation, Borrower has not engaged, directly or indirectly, in any business other than the activities set forth herein and in the Purchase and Sale Agreement and the Loan Documents.
5.11 Intellectual Property
Other than as provided on Schedule 5.11, as of the Closing Date, no Credit Party owns any patents or trademarks that are registered with the United States Patent and Trademark Office or any copyrights that are registered with the United States Copyright Office. No Credit Party is in breach of or default under the provisions of any license agreement, domain name registration or other agreement related to intellectual property, nor is there any event, fact, condition or circumstance which breach or default would reasonably be expected to be, have or result in a Material Adverse Effect.
5.12 Licenses and Permits; Labor
Each Credit Party is in compliance with and have all Permits necessary or required by Applicable Law or any Governmental Authority for the operation of their respective businesses as presently conducted and as proposed to be conducted except where noncompliance, violation or lack thereof could not reasonably be expected to be, have or result in a Material Adverse Effect. All Permits necessary or required by Applicable Law or Governmental Authority for the operation of each Credit Party’s businesses are in full force and effect and not in known conflict with the rights of others, except where such conflict or lack of being in full force and effect could not reasonably be expected to be, have or result in a Material Adverse Effect. No Credit Party has been involved in any labor dispute, strike, walkout or union organization which could reasonably be expected to be, have or result in a Material Adverse Effect.
5.13 No Default; Solvency
There does not exist any Default or Event of Default. Each Credit Party is and, after giving effect to the transactions and the Indebtedness contemplated by the Loan Documents, will be solvent and able to meet its obligations and liabilities as they become due, and the assets of the each Credit Party, at a Fair Valuation, exceed the total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Credit Party, and no unreasonably small capital base exists with respect to such Credit Party.
5.14 Disclosure
No Loan Document nor any other agreement, document, certificate, or statement furnished to Agent and Lenders and prepared by or on behalf of any Credit Party in connection with the transactions contemplated by the Loan Documents, nor any representation or warranty made by any Credit Party in any Loan Document, contains any untrue statement of material fact or omits to state any fact necessary to make the factual statements therein taken as a whole not materially misleading in light of the circumstances under which it was furnished. There is no fact known to any Credit Party which has not been disclosed to Agent in writing which could reasonably be expected to be, have or result in a Material Adverse Effect.
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts
No Credit Party (a) has any outstanding Indebtedness, except Indebtedness under the Loan Documents or (b) owns or holds any equity or long-term debt investments in, or have any outstanding advances to or any outstanding guarantees for, the obligations of, or any outstanding borrowings from, any other Person, except as permitted under Section 7.3.
5.16 Affiliated Agreements
Except for the Loan Documents, the Charter and Good Standing Documents of the Borrower and those set forth on Schedule 5.16, (i) there are no existing or proposed agreements, arrangements, understandings or transactions between Borrower, on the one hand, and Borrower’s members, managers, managing members, investors, officers, directors, stockholders, other equity holders, employees, or Affiliates or any members of their respective families, on the other hand, and (ii) to Borrower’s knowledge, none of the employees or officers of the Parent Entity or its
Subsidiaries are directly or indirectly, indebted to or have any direct or indirect ownership or voting interest in any Person with which Borrower has a business relationship or which competes with Borrower (except that any such Person may own Equity Interests in any publicly traded company that may compete with Borrower).
5.17 Insurance
As of the Closing Date, Borrower has in full force and effect such insurance policies as are listed on Schedule 5.17.
5.18 Names; Location of Offices, Records and Collateral; Deposit Accounts and Investment Property
No Credit Party nor any of its predecessors has conducted business under or used any name (whether corporate, partnership or assumed) other than as shown on Schedule 5.18A. Each Credit Party is (or such Credit Party’s predecessors were) the sole owner(s) of all of its names listed on Schedule 5.18A, and any and all business done and invoices issued in such names are such Credit Party’s (or any such predecessors’) sales, business and invoices. Each Credit Party maintains its respective places of business and chief executive offices only at the locations set forth on Schedule 5.18B or, after the Closing Date, as additionally disclosed to Agent in writing, and all Leases of Borrower arise, originate and are located, and all of the Collateral and all books and records in connection therewith or in any way relating thereto or evidencing the Collateral are located and shall be only, in and at such locations (other than (i) Deposit Accounts, and (ii) Collateral in the possession of Agent or the Backup Servicer). All of the Collateral is located only in the continental United States. Schedule 5.18C lists all of Borrower’s Deposit Accounts and Investment Property as of the Closing Date.
5.19 Non-Subordination
Other
than with respect to the payment priorities of the Loans held by the Class A Lenders and the Loans held by the Class B Lenders set forth
herein, noneNone of
the Obligations are subordinated in any way to any other obligations of Borrower, any other Credit Party or to the rights of any other
Person.
5.20 Leases
With respect to each Pledged Lease, Borrower continuously warrants and represents to Agent and Lenders that until the Maturity Date and so long as any of its Obligations remain unpaid: (i) as of the Closing Date and each date any Revolving Advance is made, each of the Pledged Leases set forth in the Borrowing Base Certificate delivered in connection therewith constitutes an Eligible Lease and (ii) in determining which Leases are “Eligible Leases,” Lender may rely upon all statements or representations made by Borrower.
5.21 Servicing
Borrower has entered into the each Servicing Agreement with Servicer pursuant to which Borrower has engaged each Servicer, as servicer and as Borrower’s agent, to monitor, manage, enforce and collect the Pledged Leases and disburse any collections in respect thereof as provided
by the applicable Servicing Agreement, subject to this Agreement. Borrower acknowledges that each Servicer has the requisite knowledge, experience, expertise and capacity to service the Pledged Leases.
5.22 Legal Investments; Use of Proceeds
No Credit Party is engaged in the business of extending credit for the purpose of purchasing or carrying any “margin stock” or “margin security” (within the meaning of Regulations T, U or X issued by the Board of Governors of the Federal Reserve System), and no proceeds of the Loan will be used to purchase or carry any margin stock or margin security or to extend credit to others for the purpose of purchasing or carrying any margin stock or margin security.
5.23 Broker’s or Finder’s Commissions
No broker’s, finder’s or placement fee or commission will be payable to any broker or agent engaged by Borrower or any of its officers, directors or agents with respect to the Loan or the transactions contemplated by this Agreement. Each Credit Party, jointly and severally, agree to indemnify Agent and each Lender and each of their respective Affiliates and hold Agent and each Lender and each of their respective Affiliates harmless from and against any and all claims, demands, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel, but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and expenses of one regulatory counsel and one other firm of outside counsel to Agent and each Lender and each of their respective Affiliates taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional firm of outside counsel to each group of similarly situated Persons), which may be imposed on, incurred by or asserted against Agent, any Lender or any of their respective Affiliates with respect to or arising out of, or in any litigation, proceeding or investigation instituted or conducted by any Person with respect to broker’s, finder’s or placement fees or similar commissions, whether or not payable by such Credit Party or their respective Affiliates, alleged to have been incurred in connection with such transactions, other than any broker’s or finder’s fees payable to Persons engaged by Agent and/or Lenders or their respective Affiliates without the knowledge of the such Credit Party. Agent and each Lender, jointly and severally, agree to indemnify Credit Parties and each of their respective Affiliates and hold Credit Parties and each of their respective Affiliates harmless from and against any and all claims, demands, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel, but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and expenses of one firm of outside counsel to Credit Parties and each of their respective Affiliates taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional firm of outside counsel to each group of similarly situated Persons) which may be imposed on, incurred by or asserted against any Credit Party or any of their respective Affiliates with respect to or arising out of, or in any litigation, proceeding or investigation instituted or conducted by any Person with respect to broker’s, finder’s or placement fees or similar commissions, whether or not payable by the Agent, any Lender or their respective Affiliates, alleged to have been incurred in connection with such transactions, other than any broker’s or
finder’s fees payable to Persons engaged by any Credit Party or their respective Affiliates without the knowledge of the Agent or Lenders.
5.24 Anti-Terrorism; OFAC
(a) (i) Neither Borrower, Holdings nor any Guarantor nor any Person controlling or controlled by Borrower, Holdings or any Guarantor, nor any Person for whom Borrower, Holdings or any Guarantor is acting as agent or nominee in connection with this transaction (“Transaction Persons”) (1) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (2) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such Person in any manner violative of Section 2 of such executive order, or (3) is a Person on the list of Specially Designated Nationals and Blocked Persons or is in violation of the limitations or prohibitions under any other OFAC regulation or executive order.
(b) No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(c) Borrower acknowledges by executing this Agreement that Agent has notified Borrower and each Guarantor that, pursuant to the requirements of the Patriot Act, Agent is required to obtain, verify and record such information as may be necessary to identify Borrower and each Guarantor (including, without limitation, the name and address of Borrower and each Guarantor) in accordance with the Patriot Act.
5.25 Survival
Borrower hereby makes the representations and warranties contained herein with the knowledge and intention that Agent and Lenders are relying and will rely thereon. All such representations and warranties will survive the execution and delivery of this Agreement, the Closing and the making of any and all Advances.
VI. AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees that, until the indefeasible payment in full in cash, of all the Obligations (other than indemnity obligations that are not then due and payable or with respect to which no claim has been made) and termination of this Agreement:
6.1 Financial Statements, Reports and Other Information
(a) Financial Reports. Borrower shall furnish to Agent (i) as soon as available and in any event within thirty (30) calendar days after the end of each calendar month of Parent Entity, unaudited monthly financial statements of Parent Entity and its Subsidiaries on a consolidated basis consisting of a balance sheet and statements of income and cash flows as of the
end of the immediately
preceding calendar month, (ii) as soon as available and in any event within one hundred fifty (150) calendar days after the end of each
fiscal year of Parent Entity, audited annual financial statements of Parent Entity on a consolidated and consolidating basis, including
the notes thereto, consisting of a balance sheet at the end of such completed fiscal year and the related statements of income, retained
earnings, cash flows and owners’ equity for such completed fiscal year, which financial statements shall be prepared and certified
without qualification (except for any qualification pertaining to, or disclosure
of an exception or qualification resulting from, the maturity (or impending maturity) of any Revolving Loan Commitment or any Revolving
Advance made thereunder) by Deloitte & Touche LLP or such other independent certified public accounting firm mutually agreeable
to Agent and Borrower and accompanied by related management letters, if available and (iii) no later than thirty (30) days after the
beginning of Parent Entity’s and Borrower’s fiscal years, a month by month projected operating budget and cash flow of Parent
Entity and its Subsidiaries for such fiscal year (including an income statement for each month and a balance sheet as at the end of the
last month in each fiscal quarter). All such financial statements shall be prepared in accordance with GAAP consistently applied with
prior periods (subject, as to interim statements, to lack of footnotes and year-end adjustments). WithConcurrently
with the delivery of (x) the quarterly financial statements of Parent Entity and
(y) the Monthly Servicing Report, Borrower shall also deliver a compliance certificate of a Responsible Officer of Borrower in
the form satisfactory to Agent stating that (A) such person has reviewed the relevant terms of the Loan Documents and the condition of
Borrower, (B) no Default or Event of Default has occurred or is continuing, or, if any of the foregoing has occurred or is continuing,
specifying the nature and status and period of existence thereof and the steps taken or proposed to be taken with respect thereto and
(C) no Material Adverse Effect has occurred since the last delivery of such monthly financial statements or
Monthly Servicing Report, as applicable.
(b) Servicing Reports and Information; Borrowing Base Certificates; Approved Consultant.
(i) As soon as available, and in any event not later than the fifteenth (15th) of each calendar month or if such day is not a Business Day than on the immediately preceding Business Day (or, upon the request of Agent, at any time following the occurrence and continuance of an Event of Default), Borrower shall cause Servicer to deliver to Agent and Backup Servicer, a Monthly Servicing Report, in computer file form reasonably accessible and usable by Agent and Backup Servicer showing, as of the end of the immediately preceding calendar month, with respect to all Leases, the information contained in the form of Monthly Servicing Report attached hereto as Exhibit C (which Monthly Servicing Report shall include Servicer’s calculation of the Current Lease Balance with respect to each Pledged Lease) and such other matters as Agent may from time to time reasonably request, all prepared by Servicer and certified as to being true, correct and complete in all material respects by the Servicer. Together with the Monthly Servicing Report delivered to Agent as set forth above, Borrower shall deliver to Agent, in a form and substance acceptable to Agent, a monthly roll rate report and first payment default report (each in form and substance and with details and reporting information acceptable to Agent), on the entire portfolio of Leases owned by Borrower.
(ii) As soon as available, and in any event not later than two (2) Business Days prior to each Payment Date (each such date, a “Reporting Date”) (or, upon the request of Agent, at any time following the occurrence and continuance of an Event of Default), Borrower
shall cause Servicer to deliver to Backup Servicer, in computer “data tape” form, all of the loan-level data generated by the Servicer with respect to the Leases, (including, but not limited to, data related to collections, defaults, Servicer’s calculation of the Current Lease Balance with respect to each Pledged Lease, and such other matters as Agent or Backup Servicer may from time to time reasonably request), all prepared by Servicer and certified as to being true, correct and complete in all material respects by the Servicer.
(iii) As soon as available, and in any event not later than the Reporting Date prior to each Payment Date (or, upon the request of Agent, at any time following the occurrence and continuance of an Event of Default), Borrower shall deliver a Borrowing Base Certificate to Agent, without regard to whether any Revolving Advances have been requested in the calendar week in which such Payment Date (or request) occurs.
(iv) The Borrower shall promptly furnish or cause to be furnished to the Agent any other financial information regarding Borrower and/or the Pledged Leases reasonably requested by the Agent (including, from and after the date that is twenty-one (21) days after the Closing Date, to the extent reasonably requested by the Agent from time to time), evidence to the effect that Borrower, and Servicer have caused the portions of the computer files relating to the Pledged Leases pledged to the Agent to be clearly and unambiguously marked to indicate that such Leases constitute part of the Collateral pledged by the Borrower in accordance with the terms of the Loan Documents).
(v) Notwithstanding the foregoing or anything to the contrary contained herein, Borrower and Servicer hereby agree to continue to retain BRG (or another consultant acceptable to Agent in its sole discretion) (an “Approved Consultant”) for purposes of preparing and delivering Borrowing Base Certificates, Monthly Servicing Reports, and all other similar “loan-level data” with respect to the Leases and other Collateral. The scope and duties of the Approved Consultant shall be acceptable to Agent in its sole discretion and the Borrower and Servicer shall continue to engage such Approved Consultant until such time as the Agent determines, in its sole discretion, that the Approved Consultant’s services are no longer appropriate. For the avoidance of doubt, the use of an Approved Consultant by the Borrower and Servicer shall not relieve Borrower or Servicer of any of its obligations and responsibilities hereunder to the Agent and the Borrower and Servicer shall remain obligated and liable for the servicing and administering of the Leases in accordance with this Agreement and the Servicing Agreement without diminution of such obligation or liability by virtue of such consulting arrangement. For the avoidance of doubt, any failure of the Approved Consultant to provide such services to the satisfaction of the Agent (including any breach by the Approved Consultant of its engagement terms) shall not constitute a breach, Default or Event of Default hereunder unless such failure was caused directly by a Credit Party or any other Person controlled by a Credit Party.
(c) Notices. Each Credit Party shall promptly, and in any event within five (5) Business Days after the end of each calendar month notify Agent in writing of (i) any notice any Credit Party or any of their respective Subsidiaries received of any material litigation, claims, offsets, protests or disputes asserted by any Account Lessee with respect to the Pledged Leases, (ii) any pending or threatened legal action, litigation, suit, investigation, arbitration, dispute resolution proceeding or administrative or regulatory proceeding brought or initiated or threatened in writing by or against any Credit Party or otherwise affecting or involving or relating to any
Credit Party or any of its property or assets in an amount in excess of $500,000, (iii) any Default or Event of Default, which notice shall specify the nature and status thereof, the period of existence thereof and what action is proposed to be taken with respect thereto, (iv) any other development, event, fact, circumstance or condition that could reasonably be expected to be, have or result in a Material Adverse Effect, in each case describing the nature and status thereof and the action proposed to be taken with respect thereto, (v) any matter(s) known to any Credit Party and in existence at any one time materially adversely affecting the value, enforceability or collectability of any material portion of the Collateral, (vi) receipt of any material notice, inquiry, investigation, legal action or proceeding or request from any Governmental Authority, (vii) receipt of any notice or document by any Credit Party regarding any lease of real property of Borrower (and such notice shall include a copy of the notice or document), (viii) any lease of real property entered into by any Credit Party after the Closing Date, (ix) the filing, recording or assessment of any federal, state, local or foreign tax lien against the Collateral or any Credit Party which becomes known to such Credit Party, (x) any action taken or, to Borrower’s knowledge, threatened to be taken by any Governmental Authority (or any notice of any of the foregoing) with respect to Borrower which could reasonably be expected to be, have or result in a Material Adverse Effect or with respect to any Collateral, (xi) any change in the corporate name of any Credit Party, and/or (xii) the loss, termination or expiration of any material contract to which such Credit Party is a party or by which its properties or assets are subject or bound.
(d) Notwithstanding the foregoing, Agent may, upon written notice to Parent Entity, temporarily waive the reporting requirements of Parent Entity and its Subsidiaries under this Section 6.1 until such date as indicated by Agent in a subsequent written notice provided to Parent Entity.
6.2 Payment of Obligations
Borrower shall make full and timely indefeasible payment in cash of the principal of and interest on the Loan and all other Obligations when due and payable (other than indemnity obligations that are not then due and payable or with respect to which no claim has been made), provided, however, that to the extent the Agent has indicated in any Allocation Notice that amounts on deposit in the Collateral Account are to be applied as of any applicable Payment Date to the amounts due and owing pursuant to Section 2.4, and such application is actually made on such Payment Date, or in the event Agent, in breach of this Agreement, fails to make such application, Borrower shall be deemed to have made all such payments as of the Payment Date.
6.3 Conduct of Business and Maintenance of Existence and Assets
Each Credit Party shall (a) maintain all of its tangible Collateral used or useful in its business in good repair, working order and condition (normal wear and tear excepted and except as may be disposed of in the ordinary course of business and in accordance with the terms of the Loan Documents), except in each case where the failure to do so individually or in the aggregate could not reasonably be expected to be, have or result in a Material Adverse Effect, (b) maintain and keep in full force and effect its existence and all material Permits and qualifications to do business and good standing in its jurisdiction of formation and each other jurisdiction in which the ownership or lease of property or the nature of its business makes such Permits or qualification necessary and in which failure to maintain such Permits or qualification could reasonably be
expected to be, have or result in a Material Adverse Effect; (c) remain in good standing and maintain operations in all jurisdictions in which currently located, except where the failure to remain in good standing or maintain operations could not reasonably be expected to be, have or result in a Material Adverse Effect, and (d) maintain, comply with and keep in full force and effect its existence and all intellectual property and Permits necessary to conduct its business, except in each case where the failure to maintain, comply with or keep in full force and effect could not reasonably be expected to be, have or result in a Material Adverse Effect.
6.4 Compliance with Legal and Other Obligations
Each Credit Party shall (a) comply with all Applicable Law except where any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (b) pay all taxes, assessments, fees, governmental charges, claims for labor, supplies, rent and all other obligations or liabilities of any kind when due and payable, except in each case liabilities being contested in good faith and against which adequate reserves have been established in accordance with GAAP consistently applied, (c) perform in accordance with its terms each contract, agreement or other arrangement to which it is a party or by which it or any of the Collateral is bound except where any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (d) properly file all reports required to be filed by such Credit Party with any Governmental Authority, except under clauses (a), (b), (c), and/or (d) where the failure to comply, pay, file or perform would not reasonably be expected to be, have or result in a Material Adverse Effect.
6.5 Insurance
Each Credit Party shall keep all of its insurable properties and assets adequately insured in all material respects against losses, damages and hazards as are customarily insured against by businesses of similar size engaging in similar activities or lines of business or owning similar assets or properties and at least the minimum amount required by this Agreement, Applicable Law and any agreement to which any such Person is a party or pursuant to which such Person provides any services; all such insurance policies and coverage levels shall (a) be satisfactory in form and substance to Agent in its Permitted Discretion (it being understood that the insurance policies of the Credit Parties provided to Agent shall be deemed satisfactory to the Agent until the Agent provides notice to the Credit Parties to the contrary), (b) name Agent, for the benefit of itself and the other Lenders, as a loss payee or additional insured thereunder, as applicable, and (c) expressly provide that such insurance policies and coverage levels cannot be altered, amended or modified in any manner which is adverse to Agent and/or Lenders, or canceled or terminated without thirty (30) calendar days prior written notice to Agent, and that they inure to the benefit of Agent and Lenders, notwithstanding any action or omission or negligence of or by any Credit Party, or any insured thereunder.
6.6 True Books
Each Credit Party shall (or, with respect to Borrower, at all times that Servicer is an Affiliate of Borrower, shall cause Servicer to, on its behalf) (a) keep true, complete and accurate (in accordance with GAAP, except for the omission of footnotes and year-end adjustments in interim financial statements) books of record and account in accordance with commercially
reasonable business practices in which true and correct entries are made of all of its dealings and transactions in all material respects; and (b) set up and maintain on its books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes, assessments, charges, levies and claims and with respect to its business.
6.7 Inspection; Periodic Audits; Quarterly Review
Each Credit Party shall permit, and shall cause the Servicer to permit, the representatives of Agent and each Lender, at, in the case of Agent only, the expense of Credit Parties (which expenses must be reasonably incurred), from time to time during normal business hours upon reasonable notice, to (a) visit and inspect Servicer’s offices, Credit Parties’ offices or properties or any other place where Collateral is located to inspect the Collateral and/or to examine and/or audit all of Borrower’s and Servicer’s books of account, records, reports and other papers (provided, however, that at all times, Credit Parties shall be responsible for the costs and expenses of all such visits) (b) make copies and extracts therefrom, and (c) discuss Credit Parties’ business, operations, prospects, properties, assets, liabilities, condition and/or Pledged Leases with its officers and independent public accountants (and by this provision such officers and accountants are authorized to discuss the foregoing); provided, however, so long as an Event of Default has occurred and is continuing, no such notice shall be required; provided, further that, so long as no Event of Default has occurred and is continuing not more than four (4) such visits shall take place annually. Additionally, Borrower shall cause Servicer to permit Agent to have online access to Servicer’s internal electronic reporting system, including without limitation tracking of collections on the Pledged Leases and agings of the same, and summaries for each of the Pledged Leases. Borrower shall cause Servicer’s officers to meet with Agent at least once per quarter, if requested by Agent (which meeting may take place telephonically if requested by Agent), to review the Servicer’s operations, prospects, properties, assets, liabilities, condition and/or Pledged Leases.
6.8 Further Assurances; Post Closing
(a) At Credit Parties’ cost and expense, each Credit Party shall (a) within five (5) Business Days (or such longer period in the case of actions involving third parties as determined by Agent in its Permitted Discretion) after Agent’s written demand, take such further actions, obtain such consents and approvals and shall duly execute and deliver such further agreements, assignments, instructions or documents as Agent may request in its Permitted Discretion in order to ensure the validity and effectiveness of this Agreement and the Loan Documents and the consummation of the transactions contemplated thereby, whether before, at or after the performance and/or consummation of the transactions contemplated hereby or the occurrence and during the continuation of a Default or Event of Default, (b) without limiting and notwithstanding any other provision of any Loan Document, execute and deliver, or cause to be executed and delivered, such agreements and documents, and take or cause to be taken such actions, and otherwise perform, observe and comply with such obligations, as are set forth on Schedule 6.8, and (c) upon the exercise by Agent, any Lender or any of its Affiliates of any power, right, privilege or remedy pursuant to any Loan Document or under Applicable Law or at equity following the occurrence and during the continuance of an Event of Default which requires any consent, approval, registration, qualification or authorization of such Person (including, without limitation, any Governmental Authority), execute and deliver, or cause the execution and delivery
of, all applications, certificates, instruments and other documents that may be so required for such consent, approval, registration, qualification or authorization.
6.9 Payment of Indebtedness
Except as otherwise prescribed in the Loan Documents, each Credit Party shall pay, discharge or otherwise satisfy when due and payable (subject to applicable grace periods and, in the case of trade payables, to ordinary course of payment practices) all of its obligations and liabilities to the extent that the failure to pay, discharge or otherwise satisfy such obligations or liability could reasonably be expected have or result in a Material Adverse Effect, except when the amount or validity thereof is being contested in good faith by appropriate proceedings and such reserves shall have been made in accordance with GAAP consistently applied.
6.10 Other Liens
If Liens with respect to any Credit Party or its assets (other than Permitted Liens) exist, such Credit Party immediately shall take all actions, and execute and deliver all documents and instruments necessary to promptly release and terminate such Liens. Immediately upon discovery of any Lien other than a Permitted Lien, Borrower shall notify Agent.
6.11 Use of Proceeds
Borrower shall use the proceeds from each Advance under the Loan only for (a) the purposes set forth in the recitals to this Agreement, (b) for the purposes set forth in Section 2.4(b) or as otherwise expressly authorized herein or in the other Loan Documents, and (c) to pay other fees, costs and expenses approved by Agent in connection with this Agreement.
6.12 Collateral Documents; Security Interest in Collateral
On demand of Agent, Credit Parties shall (or, at all times that Servicer is an Affiliate of Borrower, shall cause Servicer to) make available to Agent copies of any and all documents, instruments, materials and other items that relate to, secure, evidence, give rise to or generate or otherwise involve Collateral, including, without limitation, the Leases to the extent Credit Parties or Servicer has access to such documents, instruments, materials and other items. Each Credit Party shall (or, at all times that Servicer is an Affiliate of Borrower, shall cause Servicer to) (i) execute, obtain, deliver, file, register and/or record any and all financing statements, continuation statements, stock powers, instruments and other documents, or cause the execution, filing, registration, recording or delivery of any and all of the foregoing, that are necessary or required under law or otherwise requested by Agent, in its Permitted Discretion, to be executed, filed, registered, obtained, delivered or recorded to create, maintain, perfect, preserve, validate or otherwise protect such Credit Party’s interest in the Collateral and the pledge of the Collateral to Agent’s perfected first priority (other than with respect to property or assets covered by Permitted Liens) Lien on the Collateral (and each Credit Party irrevocably grants Agent the right, at Agent’s option, to file any or all of the foregoing), (ii) maintain, or cause to be maintained, at all times, the pledge of the Collateral to Agent and Agent’s perfected first priority (other than with respect to property or assets covered by Permitted Liens) perfected Lien on the Collateral, and (iii) defend the Collateral and Agent’s first priority (other than with respect to property or assets covered by Permitted Liens) perfected Lien thereon against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Agent, and pay all costs and expenses (including, without limitation, in-house documentation and diligence fees and expenses and reasonable attorneys’ fees and expenses) in connection with such defense, which may, at Agent’s discretion, be added to the Obligations. Borrower acknowledges and agrees that Agent is authorized, pursuant to the power of attorney granted to Agent by Borrower pursuant to Section 2.10 of this Agreement, to perform any or all of the obligations or duties of Borrower pursuant to this Section 6.12 following the occurrence and during the continuance of an Event of Default.
6.13 Servicing Agreement; Backup Servicer
(a) Borrower shall enter into a Backup Servicing Agreement as of the Closing Date. From and after the Closing Date, Borrower and Servicer shall be required to provide the Monthly Servicing Report in computer “data tape” form to Backup Servicer and Agent in a manner reasonably acceptable to Agent as described in Section 6.1(b) hereof. Borrower shall cause Servicer to promptly provide Agent with true and complete copies of all written notices concerning defaults, amendments, waivers notice information or other matters that are material to a Pledged Lease sent or received by any Servicer under any Servicing Agreement. Borrower shall cause Servicer to service all Pledged Leases in accordance with, in all material respects, the terms of each Servicing Agreement, Borrower shall comply, in all material respects, with the provisions, terms and conditions set forth in such Servicing Agreement and Borrower shall not terminate any Servicing Agreement without Agent’s prior written consent at its sole discretion.
(b) Borrower agrees not to, and will cause Servicer not to, interfere with Backup Servicer’s performance of its duties under any Backup Servicing Agreement or to take any action that would be inconsistent in any way with the terms of such Backup Servicing Agreement. Borrower covenants and agrees to, and will cause Servicer to, provide any and all information and data requested by Agent (in its Permitted Discretion) to be provided promptly to Backup Servicer in the manner and form so requested by Agent. Upon the occurrence and during the continuance of any Event of Default, Agent shall have the right to immediately substitute Backup Servicer, Agent or an Affiliate of Agent or another third party servicer acceptable to Agent for Servicer in all of Servicer’s roles and functions as contemplated by the Loan Documents and the Servicing Agreements. In connection with any substitution of Backup Servicer, Agent, Affiliate of Agent or another third party servicer for Servicer, Borrower shall (and, at all times that Servicer is an Affiliate of Borrower, shall cause Servicer to) cooperate with Agent and Backup Servicer in connection with such substitution and to take such further actions, obtain such consents and approvals, to deliver such documents and to duly execute and deliver such further agreements, assignments, instructions or documents as each of Agent or Backup Servicer may request in its Permitted Discretion in order to effectuate such substitution, in each case, at no cost or expense to Agent or any Lender.
6.14 [RESERVED]
6.15 Collections; Deposit Accounts
Borrower and Servicer each agree and covenant that it shall:
(a) Instruct or cause all Account Lessees to be instructed to either:
(i) send all Scheduled Payments directly to the Collection Account; or
(ii) in the alternative, make Scheduled Payments by way of pre-authorized debits from a deposit account of such Account Lessee pursuant to a PAC or from a credit card of such Account Lessee pursuant to a Credit Card Account from which Scheduled Payments shall be electronically transferred to the Collection Account.
(b) In the case of funds transfers pursuant to a PAC or Credit Card Account, take, or cause each of the Servicer, the Collection Account Bank and/or the Agent to take, all necessary and appropriate action to ensure that each such pre-authorized debit or credit card payments is credited directly to the Collection Account;
(c) If the Borrower or Servicer shall receive any collections or other proceeds of the Collateral, hold such collections or proceeds in trust for the benefit of the Agent and deposit such collections into the Collection Account within two (2) Business Days after such amounts so received and held by Borrower or Servicer equals or exceeds $25,000; and
(d) Prevent the deposit into the Collection Account or the Collateral Account of any funds other than collections from Leases or other funds to be deposited into the Collection Account or the Collateral Account under this Agreement or the other Loan Documents (provided that, this covenant shall not be breached to the extent that such other funds are inadvertently or mistakenly deposited into the Collection Account or the Collateral Account if Borrower or Servicer promptly requests that such funds be segregated and removed from the Collection Account or the Collateral Account in accordance with Section 2.12(b)).
(e) Notwithstanding anything to the contrary in this Section 6.15, Borrower hereby authorizes Agent, at any time after the occurrence of an Event of Default, to send directions to each Account Lessee to make payments directly to the Collateral Account.
(f) Subject to Schedule 6.8, the Credit Parties shall cause the Agent to have view access to the statements and status of each Deposit Account of the Credit Parties within fourteen (14) days following the Closing Date or, with respect to account number(s) 3302893366 and 330299631 held with Silicon Valley Bank, sixty (60) days following the Closing Date to the extent such account(s) remain(s) open.
6.16 Right of First Refusal
Subject to the last sentence of this paragraph, in addition to the rights granted to Agent and the Lenders pursuant to Section 2.13 hereof, Borrower, Holdings and Parent Entity hereby agree that, if at any time prior to the date that all of the Revolving Advances, all accrued and unpaid, costs, fees and expenses relating to the Revolving Advances, and all accrued and unpaid interest (including any Additional Interest) relating to the Revolving Advances have been indefeasibly paid in full in cash and the Revolving Loan Commitments terminated, Borrower, Holdings or any Subsidiary of Borrower, Holdings or Parent Entity shall have obtained a bona fide third-party offer (the “Third-Party Offer”) (for the avoidance of doubt, a bonafide, fully negotiated and executed term sheet delivered by the applicable lender to Borrower, Holdings or any Subsidiary of Borrower, Holdings or Parent Entity, as applicable, together with a commitment letter, if any, shall qualify as a “Third-Party Offer” hereunder) for any refinancing of the Revolving Advances or any
similar ABL or borrowing base (however described) revolving financing (including in the form of a repurchase agreement transaction) of Leases to be originated, acquired or otherwise held by Holdings, Borrower, Parent Entity or any Subsidiary of Borrower, Holdings or Parent Entity that is formed for the purpose of originating Leases, Borrower, Holdings or Parent Entity shall, in writing within five (5) Business Days of receipt of such offer, promptly inform Agent (such writing to Agent is referred to herein as the “First Refusal Offer”) of such Third-Party Offer and the terms and conditions of such Third-Party Offer (and, if such Third-Party Offer is in writing, shall attach a copy of such Third-Party Offer to such First Refusal Offer) and, in such First Refusal Offer, shall offer to Agent a right of first refusal in respect of such financing or refinancing. Agent’s right of first refusal shall grant Agent the right to, within fifteen (15) days after the receipt of such First Refusal Offer, deliver a writing to Borrower, Holdings and Parent Entity (the “Acceptance”) stating that Agent and Lenders agree to extend such financing on Material Terms which shall be the same or more favorable (taken as a whole) to the applicable borrower than the Material Terms of financing under such Third-Party Offer (as such Material Terms were communicated to Agent by Borrower, Holdings or Parent Entity or such Affiliate), it being agreed and understood that, with respect to any such Third-Party Offer, the (i) aggregate principal amount, (ii) pricing (including, without limitation, interest rate, closing, commitment, structuring, arrangement or similar fees and original issue discount) and payment and prepayment terms and conditions, (iii) term and/or duration, (iv) financial covenants, borrowing base or availability, (v) events of default, (vi) material conditions to closing and borrowing, (vii) operational covenants, including as to debt, liens, investments, prepayments and repayments of other debt, use of proceeds, dividends and distributions, reporting, access to cash, and (viii) collateral and transaction structure (with respect to any financing, such material terms are referred to as “Material Terms”). Upon receipt of the Acceptance by Borrower, Holdings or Parent Entity, Agent and one or more of the Lenders or their respective Affiliates, on the one hand, and Borrower, Holdings, Parent Entity or the applicable Subsidiary, on the other hand, shall, in good faith negotiate an agreement for such financing on the terms set forth in such Acceptance (subject to the satisfaction of appropriate conditions in respect of due diligence, documentation and other customary and commercial conditions precedent set forth in (or incorporated by reference) in the Acceptance). If Agent shall have declined to exercise its right under such First Refusal Offer, or shall have failed to timely respond within fifteen (15) Business Days to such First Refusal Offer or shall have offered a counterproposal to Borrower, Holdings or Parent Entity in respect of such First Refusal Offer, Borrower, Holdings, Parent Entity or such applicable Subsidiary shall be free to close such Third-Party Offer within one hundred twenty (120) days of the date of such First Refusal Offer on terms substantially similar to the terms thereof set forth in such Third-Party Offer (as communicated to Agent). If Borrower, Holdings, Parent Entity or such applicable Subsidiary shall have failed to so close such financing within said one hundred twenty (120) days or if the material terms of such financing are modified from the description of such terms in the Third-Party Offer, then a new right of first refusal for the benefit of Agent with respect to such financing shall immediately arise. Borrower, Holdings and Parent Entity agree to inform any Person making a Third-Party Offer of Agent’s and Lender’s rights under this Section 6.16 in respect thereof. Notwithstanding the foregoing, the rights granted to Agent and the Lenders pursuant this Section 6.16 shall not apply with respect to any Third-Party Offer for a bond issuance, public securitization or a syndicated corporate credit facility. For the avoidance of doubt, any refinancing of the Class A Obligations with a financing similar in nature to the terms of this Agreement shall be subject to a right of first refusal under this Section 6.16.
Borrower and Holdings covenant and agree not to form, or consent to or otherwise acquiesce in the formation of, any Affiliate, or otherwise use any Subsidiary existing on the Closing Date, to originate, acquire or finance any Leases in circumvention of the intent of the covenants, agreements and obligations set forth in this Section 6.16.
6.17 Requisite Special Stockholder Meeting Items.
Each Credit Party hereby agrees to cause the Parent Entity’s board of directors to recommend to the shareholders at the Requisite Special Stockholder Meeting that the stockholders vote in favor of approving the Requisite Special Stockholder Meeting Items.
6.18 Board of Directors; Observer Rights.
Effective as of the Closing Date, Agent (or its designee) shall have the right to designate one (1) representative (who shall initially be Justin Burns) (the “Designee”) to: (a) receive prior written notice of all meetings (both regular and special) of Parent Entity’s or Holdings’ board of directors and each committee thereof (such notice to be delivered or mailed as specified in Section 12.5 at the same time as notice is given to the members of such board and/or committee); (b) be entitled to attend (or, at the option of such representatives, monitor by telephone) all such meetings at the Designee’s sole cost and expense; (c) receive all notices, information and reports which are furnished or made available to the members of such board (solely in their capacity as a “board member”) and/or committee at the same time and in the same manner as the same is furnished or made available to such members; (d) be entitled to participate in all discussions conducted at such meetings; and (e) receive (to the extent and when so provided to the members of any such board) copies of the minutes of all such meetings. If any action is proposed to be taken after the Closing Date by such board and/or committee by written consent in lieu of a meeting, Parent Entity or Holdings, as applicable, will provide a copy of such consent to such Designee, which shall be delivered or mailed as specified in Section 12.5 at the same time as notice is given to the members of such board and/or committee. Parent Entity or Holdings, as applicable, will furnish or cause to be furnished such Designee with a copy of each such written consent promptly after it has become effective. Such Designee shall not constitute a member of such board and/or committee and shall not be entitled to vote on any matters presented at meetings of such board and/or committee or to consent to any matter as to which the consent of any such board and/or committee shall have been requested. The parties hereto agree that the Designee shall have no fiduciary duties or any other duties or responsibilities to Borrower, Parent Entity, Holdings or any of their respective Affiliates. Notwithstanding anything herein to the contrary, Parent Entity and Holdings may exclude the Designee from access to any portion of notices, reports, minutes or other materials or information or from portions of board of director meetings or deliberations (or any committee thereof), if Parent Entity’s or Holdings’ board of directors concludes, acting in good faith based on advice of external counsel, that such exclusion is reasonably necessary: (a) to preserve the attorney-client or work product privilege between Parent Entity, Holdings, Borrower or any of its Affiliates and its external counsel; provided, however, that any such exclusion shall only apply to such portion of such material or meeting which would be required to preserve such privilege and not to any other portion thereof; or (b) to avoid an actual bona fide conflict of interest between Designee, Agent, Lenders or any of their respective Affiliates, on the one hand, and Parent Entity, Holdings, Borrower or any of their respective Affiliates, on the other hand (including any portion of any board materials or meeting related to any transaction in which Designee, Agent, Lenders or any of
their respective Affiliates has any such actual bona fide conflict of interest with Parent Entity, Holdings, Borrower or any of their respective Affiliates); provided, however, that any such exclusion shall only apply to such portion of such material or meeting which would be required to avoid an actual bona fide conflict of interest and not to any other portion thereof. The Designee shall at all times be subject mutatis mutandis to the confidentiality provisions set forth in Sections 12.10(e) and (h) herein.
6.19 Financial Covenants.
(a) Minimum Trailing Three-Month Net Originations. As of the last Business Day of each such calendar month, the then Minimum Trailing Three-Month Net Originations shall not be less than the amount set forth in the table below opposite the applicable calendar month:
| Calendar Month | Minimum Trailing Three-Month Net Originations for such Calendar Month |
| $ | |
| November 2025 | $ |
| December 2025 | $ |
| January 2026 | $75,000,000 |
| February 2026 | $68,000,000 |
| March 2026 | $65,000,000 |
| April 2026 | $68,000,000 |
| May 2026 | $73,000,000 |
| $70,000,000 | |
| July 2026 | $67,000,000 |
| August 2026 | $64,000,000 |
| September 2026 | $65,000,000 |
| $ | |
| November 2026 and each month thereafter | $80,000,000 |
(b) Minimum Liquidity. Beginning with the first such calendar week ending in February 2026,As
of the First Amendment Effective Date and as of the last Business Day of each
such calendar week
on which the aggregate principal balance of the outstanding Revolving Advances is less than the aggregate
amount of all Revolving Loan Commitmentsending thereafter,
Parent Entity shall not permit Liquidity to be less than (as applicable), (i) for any calendar week
ending in February 2026 through and including March 2026, $1,000,000, (ii) for any calendar week ending in April 2026, $1,500,000, (iii)
for any calendar week ending in May 2026 or June 2026, $3,500,000, or (iv) for any calendar week ending in July 2026 and thereafter,
$5,000,000.
(c)
Term Advance Rate. As of the end of each fiscal month and as of the making of each Advance hereunder
(before and after giving effect to such Advance), the Term Advance Rate shall not exceed (i) from the period beginning on the Closing
Date until (and including) August 31, 2025, 135%, (ii) from and after September 1, 2025, until the full completion of all Term Loan Conversions
whereby an Affiliate of Agent is the majority holder of Equity Interests of Parent Entity (and no Term Loans remain outstanding), 140%,
and (iii) upon the full completion of all Term Loan Conversions whereby an Affiliate of Agent is the majority holder of Equity Interests
of Parent Entity (and no Term Loans remain outstanding), 0.00%. If at any time during which there is a Term Advance Rate Reserve Account,
the Term Advance Rate exceeds the applicable rate for any of the foregoing periods, the Borrower may cure such Default by depositing
funds in the Term Advance Rate Reserve Account in an amount necessary to reduce the Term Advance Rate to the maximum permitted rate for
such period (such amount, the “Term Advance Rate Reserve Amount”). So long
as no Default or Event of Default has occurred and is continuing or would result therefrom, Borrower may submit a written request to
the Agent at least two (2) Business Days prior to the proposed distribution, requesting the Agent to approve the transmission from the
Term Advance Rate Reserve Account of all or a portion of the Term Advance Rate Reserve Amount therein as of such date to the Borrower,
which request must be submitted with (i) a Monthly Servicing Report dated as of the date of such distribution and updated with data as
of the date immediately preceding the date of such Monthly Servicing Report, which evidences on a pro forma basis that the Borrower will
be in compliance with the Term Advance Rate after giving effect to such distribution and (ii) a certification that no Default or Event
of Default has occurred or is continuing or will result therefrom, and Borrower shall be in compliance with the covenants set forth in
this Section 6.19 both before and after such requested disbursement of the Term Advance Rate Reserve Amount. Upon satisfaction of such
conditions, the Agent shall direct the account bank to transmit the Term Advance Rate Reserve Amount from the Term Advance Rate Reserve
Account as specified by the Borrower.
Agent
hereby agrees to release the amounts held on deposit in the “Total Advance Rate Reserve Account” (as defined in the Original
Loan Agreement) on the Closing Date.
6.20 [Reserved].
6.21 Federal Securities Laws. Each Credit Party shall promptly notify Agent in writing if any such Credit Party or any of their Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.
6.22 Government Receivables. Take all steps necessary to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or tangible chattel paper connected with any receivable arising out of any contract between any Credit Party and the United States, any state or any department, agency or instrumentality of any of them.
VII. NEGATIVE COVENANTS
Each Credit Party covenants and agrees that, until the indefeasible payment in full in cash, of all the Obligations under the Loan Documents (other than indemnity obligations under the Loan Documents that are not then due and payable or with respect to which no claim has been made) and termination of this Agreement:
7.1 Indebtedness
No Credit Party shall create, incur, assume or suffer to exist any Indebtedness, except Permitted Indebtedness.
7.2 Liens
No Credit Party shall create, incur, assume or suffer to exist any Lien upon, in or against, or pledge of, any of the Collateral, whether now owned or hereafter acquired, except the following (collectively, “Permitted Liens”): (a) Liens under the Loan Documents or otherwise arising in favor of Agent, for the benefit of itself and the other Lenders, (b) Liens on insurance policies and the proceeds thereof securing Permitted Insurance Premium Indebtedness and (c) any Lien or right of set-off granted in favor of any financial institution in respect of Deposit Accounts opened and maintained in the ordinary course of business or pursuant to the requirements of this Agreement covering fees, expenses and overdrafts with respect to such Deposit Accounts; provided, that with respect to any such Deposit Account, other than an Excluded Deposit Account, Agent has a perfected Lien thereon and control thereof, in form, scope and substance satisfactory to Agent in its Permitted Discretion.
7.3 Investments; Investment Property; New Facilities or Collateral; Subsidiaries
No Credit Party shall, directly or indirectly, (a) merge with, purchase, own, hold, invest in or otherwise acquire any obligations or Equity Interests or securities of, or any other interest in, all or substantially all of the assets of, any Person or any joint venture other than Permitted Investments (as defined below), (b) purchase, own, hold, invest in or otherwise acquire any Investment Property (except (i) those set forth on Schedule 5.18C as of the Closing Date), (ii) Permitted Loans and any other investments in a Subsidiary formed by any Credit Party, (iii) investments constituting Permitted Indebtedness, (iv) Deposit Accounts with financial institutions in the ordinary course of business or as required by this Agreement; provided, that with respect to any such Deposit Accounts (other than an Excluded Deposit Account), Agent has a perfected Lien thereon and control thereof, in form, scope and substance satisfactory to Agent in its Permitted Discretion, (v) investments in Cash Equivalents, (vi) accounts payable, and (vii) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business (the investments described in clauses (i) through (vii) being “Permitted Investments”) or (c) make or permit to exist any loan, advances or guarantees to or for the benefit of any Person or assume, guarantee, endorse, contingently agree to purchase or otherwise become liable for or upon or incur any obligation of any Person other than Permitted Investments and Guaranties by, or other
Contingent Obligations of, any Credit Party of Permitted Indebtedness of another Credit Party. No Credit Party shall purchase, lease, own, operate, hold, invest in or otherwise acquire any property or asset or any Collateral that is located outside of the continental United States. Borrower shall not have any Subsidiaries.
Other than as contemplated by Section 2.13(d), no Credit Party shall form any Subsidiary unless (i) such Subsidiary, (x) expressly joins in this Agreement as a borrower and becomes jointly and severally liable for the obligations of Borrower hereunder and under any other agreement between Borrower and Lenders, or (y) becomes a Guarantor with respect to the Obligations and executes a guaranty and security agreement in favor of Agent, and (ii) Agent shall have received all documents, including without limitation, legal opinions and appraisals it may reasonably require to establish compliance with each of the foregoing conditions in connection therewith.
7.4 Dividends; Redemptions; Equity; Compensation
Notwithstanding any provision of any Loan Document, absent the prior written consent of the Agent, no Credit Party shall (i) declare, pay or make any dividend or distribution on any Equity Interests or other securities or ownership interests, (ii) apply any of its funds, property or assets to the acquisition, redemption or other retirement of any Equity Interests or other securities or interests or of any options to purchase or acquire any of the foregoing, (iii) otherwise make any payments, dividends or distributions to any member, manager, managing member, stockholder, director or other equity owner in such Person’s capacity as such, (iv) make any payment of any management, service or related or similar fee to any Affiliate or holder of Equity Interests of Borrower, other than (a) the payment of general operating and compliance costs and expenses (including corporate overhead, legal or similar expenses and customary salary, bonus and other benefits payable to directors, officers, employees, members of management, managers and/or consultants of any Credit Party), in each case, which are reasonable and customary and incurred in the ordinary course of business, plus any reasonable and customary indemnification claims made by directors, officers, members of management, managers, employees or consultants of any Credit Party, in each case, to the extent attributable to the ownership or operations of any Credit Party, (b) the payment of franchise, excise and similar taxes, and other fees, taxes and expenses, required to maintain the organizational existence of any Credit Party, (c) the payment of customary salary, bonus, long-term incentive, severance and other benefits payable to directors, officers, members of management, managers, employees or consultants, as well as applicable employment, social security or similar taxes in connection therewith, to the extent such salary, bonuses, severance and other benefits are attributable to the operations of any Credit Party, (d) the payment of audit and other accounting and reporting expenses of such any Credit Party to the extent attributable to any Credit Party, (e) the payment of insurance premiums to the extent attributable to any Credit Party and (f) for any taxable period for which any Credit Party is a member (or is disregarded as separate from a member) of a consolidated, combined or similar income tax group for U.S. federal and/or applicable state or local income tax purposes (a “Tax Group”) of which a direct or indirect parent of the Borrower is the common parent, additional payments the proceeds of which shall be used by such common parent to pay the portion of any U.S. federal, state or local income taxes of such Tax Group, or any franchise taxes imposed in lieu thereof, for such taxable period that are attributable to the taxable income of the Credit Parties, provided that such payments made by such Credit Party with respect to such period (regardless of when paid) shall not exceed
the aggregate amount of such Taxes that Borrower and its Subsidiaries would have been required to pay with respect to such period if they were a stand-alone corporate taxpayer or Tax Group; provided that, notwithstanding anything to the contrary herein, absent the prior written consent of the Agent in its sole discretion, the aggregate bonus payments payable to the directors, officers and other members of management of the Credit Parties for the fiscal year ending December 31, 2024 shall not exceed $3,000,000 in the aggregate and shall be paid no later than December 31, 2026 (the “2024 Management Bonuses”); provided that, the 2024 Management Bonuses shall be subject to the following restrictions: (x) no more than an aggregate amount not to exceed $500,000 may be paid on or before June 30, 2025, (y) no more than an aggregate amount not to exceed $1,000,000 (inclusive of any amounts paid pursuant to the immediately preceding clause (x)) may be paid on or before June 30, 2026 and (z) no more than an aggregate amount not to exceed $3,000,000 (inclusive of the any amounts paid pursuant to the immediately preceding clauses (x) and (y)) may be paid on or before December 31, 2026.
7.5 Transactions with Affiliates
No Credit Party shall enter into or consummate any transaction of any kind with any of its Affiliates other than (i) the transactions contemplated hereby and by the other Loan Documents, (ii) to the extent not otherwise prohibited under this Agreement, other transactions upon fair and reasonable terms materially no less favorable to such Credit Party than would be obtained in a comparable arms-length transaction with a Person not an Affiliate and (iii) transactions otherwise permitted pursuant to Section 7.4.
7.6 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds; Insurance Policies; Disposition of Collateral; Trade Names
No Credit Party shall (a) except to permit the Parent Entity to issue additional shares, amend, modify, restate or change its certificate of formation, limited liability company agreement or similar charter or governance documents in a manner that would adversely affect the rights of the Agent or Lenders under the Loan Documents, (b) change its state of formation or change its name without thirty (30) calendar days prior written notice to Agent, (c) change its fiscal year, (d) amend, alter, suspend, terminate or make provisional in any material way, any Permit, the suspension, amendment, alteration or termination of which would reasonably be expected to be, have or result in a Material Adverse Effect without the prior written consent of Agent, (e) wind up, liquidate or dissolve (voluntarily or involuntarily), effectuate any Division or commence or suffer any proceedings seeking or that would result in any of the foregoing, (f) use any proceeds of any Loan for “purchasing” or “carrying” “margin stock” as defined in Regulations T, U or X of the Board of Governors of the Federal Reserve System for any use not contemplated or permitted by this Agreement, (g) amend, modify, restate or change any insurance policy in a manner adverse to Agent or Lenders in any material respect, (h) engage, directly or indirectly, in any business other than as set forth herein, (i) establish new or additional trade names without providing not less than thirty (30) days advance written notice to Agent or (j) certificate, or cause to have certificated, any equity ownership interest in Borrower that is not evidenced by a certificate as of the Closing Date that is Collateral subject to this Agreement, without Agent’s prior written consent.
7.7 Transfer of Collateral; Amendment of Pledged Leases
(a) No Credit Party shall sell, lease, transfer, pledge, encumber, assign or otherwise dispose (a “Disposition”) of any Collateral, except:
(i) the repurchase of Leases by Holdings as otherwise provided in Section 2.11,
(ii) the Disposition of surplus, obsolete or worn out property in the ordinary course of business;
(iii) disbursements of cash not otherwise prohibited under this Agreement or any other Loan Document;
(iv) any Disposition by such Person to another Credit Party;
(v) any Disposition permitted under Sections 7.2, 7.3, 7.4 and 7.5;
(vi) any sale of inventory (other than Leases) in the ordinary course of business;
(vii) any sale, trade-in or other Disposition of used equipment for value in the ordinary course of business;
(viii) licenses of technology in the ordinary course of business;
(ix) the surrender, modification, release or waiver of contract rights to the extent not otherwise prohibited under this Agreement.
(b) Except for the purpose of granting payment discounts to Account Lessees in the ordinary course of business consistent in all material respects with the Underwriting Guidelines and Servicing Policy or in connection with the payment in full of such Pledged Lease, Borrower shall not extend, amend, waive or otherwise modify the terms of any Pledged Lease or permit the rescission or cancellation of any Pledged Lease, whether for any reason relating to a negative change in the related Account Lessee’s creditworthiness or inability to make any payment under the Pledged Lease or otherwise, except in accordance with the Underwriting Guidelines and the Servicing Policy.
(c) Except in connection with the payment in full of such Pledged Lease or settlements of a Defaulted Lease in accordance with the Servicing Policy, Borrower shall not terminate or reject any Pledged Lease prior to the end of the term of such Lease, whether such rejection or early termination is made pursuant to an Applicable Law, unless prior to such termination or rejection, such Pledged Lease and any related Collateral have been released from the Lien created by this Agreement.
7.8 Contingent Obligations and Risks
Except for the Loan Documents, the Purchase and Sale Agreement and as otherwise expressly permitted by this Agreement, no Credit Party shall enter into any Contingent Obligations with respect to Indebtedness for borrowed money or assume, guarantee, endorse, contingently agree to purchase or otherwise become liable for or upon or incur any Indebtedness for borrowed money of any Person other than another Credit Party (other than indemnities to officers and directors of such Person to the extent permitted by Applicable Law) or indemnity guarantees in connection with Indebtedness permitted under Section 2.13(d); provided, however, that nothing contained in this Section 7.8 shall prohibit any Credit Party from endorsing checks in the ordinary course of its business.
7.9 Truth of Statements
No Credit Party shall furnish to Agent any certificate or other document prepared by or on behalf of such Credit Party with respect to which the representations and warranties set forth in Section 5.14 would not be true if made at the time such certificate or other document were so furnished to Agent.
7.10 Modifications of Agreements
No Credit Party shall make, or agree to make, any modification, amendment or waiver of any of the terms or provisions of any Material Agreement, without the prior written consent of Agent. Borrower shall not make, or agree to make, any Material Modification with respect to any Lease, without the prior written consent of Agent.
7.11 Anti-Terrorism; OFAC
No Credit Party shall, nor shall any Credit Party permit any of its Subsidiaries to, (a) be or become a Person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079 (2001)), (b) engage in any dealings or transactions prohibited by Section 2 of such executive order, or otherwise be associated with any such Person in any manner violative of Section 2 of such executive order, or (c) otherwise become a Person on the list of Specially Designated Nationals and Blocked Persons in violation of the limitations or prohibitions under any other OFAC regulation or executive order.
7.12 Deposit Accounts and Payment Instructions
(a) No Credit Party shall open a Deposit Account (other than any Excluded Account and those listed on Schedule 5.18C as amended from time to time) that is not subject to an account control agreement in favor of the Agent within thirty (30) days of opening such Deposit Account (provided that, until such account control agreement is made effective, funds on deposit in such Deposit Account may not exceed de minimis amounts) without the prior written consent of Agent (not to be unreasonably withheld).
(b) Borrower shall not make any change in the instructions to any Servicer with respect to the deposits of collections regarding Leases to the Collateral Account in accordance with this Agreement and the applicable Servicing Agreement.
(c) Borrower shall not, and shall cause Servicer to not, make any change in the instructions to any Account Lessee on any Lease with respect to any instructions to such Account Lessees regarding payment to be made to the Collection Account or any Servicer Physical Payment Address.
(d) Borrower shall not, and shall cause Servicer to not, make any change in the standing instructions to Collection Account Bank regarding transfers to be made from the Collection Account to the Collateral Account.
(e) Borrower shall not, and shall cause Servicer to not, make any instructions to the Collection Account Bank to distribute funds from the Collection Account (other the standing instructions regarding transfers to be made from the Collection Account to the Collateral Account referenced in clause (d) above) without the prior written consent of the Agent.
7.13 Servicing Agreement
Borrower shall not:
(a) amend, modify or terminate (or permit or cause Servicer to amend, modify or terminate) any Servicing Agreement without the prior written consent of Agent (which consent may be provided in Agent’s Permitted Discretion), provided, that with respect to termination of any Servicing Agreement or material amendments thereto, Agent’s consent may be granted in Agent’s sole discretion;
(b) except in connection with (i) the replacement of the Servicer by the Backup Servicer or third party servicer acceptable to Agent after the occurrence and during the continuance of an Event of Default and/or (ii) the delegation by the Servicer of certain duties to any of the Persons set forth on Schedule 7.13(b) the delegation by the Servicer to third-party collection agencies the enforcement of Defaulted Leases or the delegation of certain duties to such other Persons, in each case, consistent with the Servicing Policy, if any, as Agent may approve from time to time (which approval may be provided in Agent’s Permitted Discretion), transfer or delegate (or allow Servicer to transfer or delegate) any of its duties or functions under any Servicing Agreement to any Person, or otherwise engage any such Person to perform any such duties or functions for or on behalf of the Servicer or Borrower, provided, that any delegation of duties under any Servicing Agreement by Servicer pursuant to clause (ii) of this Section 7.13(b) shall (x) be terminable without the payment of any fee or penalty upon not more than thirty (30) calendar days prior notice and (y) not relieve Servicer of any of its rights, duties or obligations under the applicable Servicing Agreement and Servicer agrees that it shall remain liable to Agent and the Lenders for any breach in the performance of the same, whether such breach is by the Servicer or its delegate; or
(c) except in connection with the replacement of the Servicer by the Backup Servicer, Agent, an Affiliate of Agent or a third party servicer acceptable to Agent after an Event
of Default, transfer or delegate (or allow the Servicer to transfer or delegate) the duties and functions of the Servicer under any Servicing Agreement to any other Persons.
7.14 ERISA.
No Credit Party shall sponsor, maintain or contribute to any “employee benefit plan” that is covered by Title IV of ERISA or Section 412 of the Code.
7.15 Restrictive Agreements.
No Credit Party will directly or indirectly, enter into, incur or permit to exist any agreement (other than its Charter and Good Standing Documents or, in the case of the Parent Entity, any agreements with its shareholders) that prohibits, restricts or imposes any condition upon (a) the ability of such Credit Party or any such Subsidiary to create, incur or permit any Lien upon any of its assets or properties, whether now owned or hereafter acquired, or (b) the ability of any of the Subsidiaries to pay dividends or other distributions with respect to capital stock, to make or repay loans or advances to such Credit Party or any other Subsidiary or to transfer any of its property or assets to such Credit Party or any other Subsidiary thereof.
7.16 Sale and Leaseback Transactions. No Credit Party will, and no Credit Party will permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred.
7.17 Hedging Transactions. No Credit Party will, and no Credit Party will permit any Subsidiary to, enter into any Hedging Transaction, other than Hedging Transactions entered into in the ordinary course of business to hedge or mitigate risks to which the Credit Parties or any of their Subsidiaries is exposed in the conduct of its business or the management of its liabilities. Solely for the avoidance of doubt, the Credit Parties acknowledge that a Hedging Transaction entered into for speculative purposes or of a speculative nature (which shall be deemed to include any Hedging Transaction under which any Credit Party or any Subsidiary of a Credit Party is or may become obliged to make any payment (a) in connection with the purchase by any third party of any capital stock or any Indebtedness or (b) as a result of changes in the market value of any capital stock or any Indebtedness) is not a Hedging Transaction entered into in the ordinary course of business to hedge or mitigate risks.
7.18 Loans. No Credit Party shall make advances, loans or extensions of credit to any Person (other than another Credit Party). For the avoidance of doubt, this Section 7.18 shall not be construed to prohibit the Leases.
7.19 Borrower Purpose. Borrower shall not engage in any business or activity other than the acquisition, ownership, operation and maintenance of the Leases and the other Collateral, and activities incidental thereto.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an “Event of Default”:
(a) Any Credit Party shall fail to pay any amount on the Obligations or provided for in any Loan Document when due (in all cases, whether on any payment date, at maturity, by reason of acceleration, by notice of intention to prepay, by required prepayment or otherwise) and such failure shall continue or not be cured within a period of two (2) Business Days;
(b) any representation, statement or warranty made by any Credit Party in any Loan Document or in any other certificate, document, report or opinion delivered in conjunction with any Loan Document to which it is a party, shall not be true and correct in all material respects (except to the extent already qualified by materiality, in which case it shall be true and correct in all respects) except those made as of a specific date;
(c) Borrower, any Guarantor or any other party hereto, other than Agent or any Lender, shall be in violation, breach or default of, or shall fail to perform, observe or comply with any covenant, obligation or agreement set forth in this Agreement and such violation, breach or failure (only if reasonably susceptible to being cured) shall not be cured within a period of thirty (30) days after such violation, breach or default or such other applicable period set forth in this Agreement (other than any violation, breach or default in the covenants set forth in Section 6.8(b), Section 6.19 or Article VII of this Agreement or in Article VIII(a) above or the misappropriation of any funds to be delivered to the Collateral Account pursuant to Section 2.3 and applied pursuant to Section 2.4 of this Agreement, for which there shall be no cure period);
(d) Borrower, any Guarantor or any other party thereto, other than Agent, Backup Servicer, any Servicer that is not Holdings or an Affiliate thereof, or any Lender, shall be in violation, breach or default of, or shall fail to perform, observe or comply with any covenant, obligation or agreement set forth in, or any event of default occurs under, any Loan Document other than this Agreement and such violation, breach, default, event of default or failure shall not be cured within the applicable period set forth in the applicable Loan Document and such violation, breach or failure (only if reasonably capable of being cured) shall not be cured within a period of thirty (30) days after such; provided that there shall be no cure period for failure of the Borrower, Holdings or any Servicer that is an Affiliate of Holdings to comply with its obligations under Section 2(e) (Hot Backup Services) of the Backup Servicing Agreement (it being understood that failure of the Backup Servicer to comply with the requirements of Section 2(e) (Hot Backup Services) of the Backup Servicing Agreement shall not constitute a Default or an Event of Default hereunder unless such failure was the direct result of a breach of such provision by the Borrower, Holdings or any Servicer that is an Affiliate of Holdings);
(e) (i) any of the Loan Documents ceases to be in full force and effect (other than in accordance with its terms), or (ii) any Lien created under any Loan Document ceases to constitute a valid first priority (other than with respect to property or assets covered by Permitted Liens) perfected Lien on the Collateral in accordance with the terms thereof, except with respect to Collateral that is released from the Lien of Agent as permitted under the Loan Documents or the Security Documents;
(f) one or more judgments or decrees is rendered against any of Borrower or any Guarantor in an amount in excess of $1,000,000 individually or $1,000,000 in the aggregate (excluding judgments to the extent covered by insurance of such Person), which is/are not satisfied, stayed, vacated or discharged of record within sixty (60) calendar days of being rendered;
(g) (i) any default or breach occurs, which is not cured within any applicable grace period or waived in writing to the satisfaction of Agent, in the payment of any amount with respect to any Indebtedness (other than the Obligations) of any of Borrower, Parent Entity or Holdings in excess of $1,000,000 individually or $1,000,000 in the aggregate, or (ii) any Indebtedness of Borrower, Parent Entity or Holdings in excess of $1,000,000 individually or $1,000,000 in the aggregate is declared to be due and payable and that has been accelerated by the holder of such Indebtedness or is required to be prepaid (other than by a regularly scheduled payment or a payment due on the voluntary termination of a capital lease) prior to the stated maturity thereof;
(h) any of Borrower or any Guarantor shall (i) be unable to pay its debts generally as they become due, (ii) file a petition under any insolvency statute, (iii) make a general assignment for the benefit of its creditors, (iv) commence a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or any substantial part of its property or shall otherwise be dissolved or liquidated, or (v) file a petition seeking reorganization or liquidation or similar relief under any Debtor Relief Law or any other Applicable Law or statute;
(i) (i) a court of competent jurisdiction shall (A) enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of any of Borrower or any Guarantor or the whole or any substantial part of any of Borrower’s or such Guarantor’s properties, which shall continue unstayed and in effect for a period of sixty (60) calendar days, (B) shall approve a petition filed against any of Borrower or any Guarantor seeking reorganization, liquidation or similar relief under the any Debtor Relief Law or any other Applicable Law or statute, which is not dismissed within sixty (60) calendar days or, (C) under the provisions of any Debtor Relief Law or other Applicable Law or statute, assume custody or control of any of Borrower or any Guarantor or of the whole or any substantial part of Borrower’s or any Guarantor’s properties, which is not irrevocably relinquished within sixty (60) calendar days, or (ii) there is commenced against any of Borrower or any Guarantor any proceeding or petition seeking reorganization, liquidation or similar relief under any Debtor Relief Law or any other Applicable Law or statute, which (A) is not unconditionally dismissed within sixty (60) calendar days after the date of commencement, or (B) is with respect to which any of Borrower or any Guarantor takes any action to indicate its approval of or consent;
(j) (i) any Material Adverse Effect occurs or (ii) Borrower or any Guarantor ceases any material portion of its business operations as conducted at the Closing Date, in the case of clause (ii), without the prior written consent of Agent;
(k) Servicer shall fail at any time to use Advensus as a sub-servicer with respect to at least twenty-five percent (25%) of the Pledged Leases defined by the percentage of inbound calls;
(l) so long as any Lender and/or its Affiliates hold any of the Warrants, Parent Entity or any of its Affiliates (i) shall be in violation, breach or default of, or shall fail to perform, observe or comply with any covenant, obligation or agreement (in each case, in any material respect) set forth in the Warrants held by such Lender and/or its Affiliates, or (ii) any event of default occurs under, the Warrants held by such Lender and/or its Affiliates;
(m) the occurrence and continuance of one or more Default Trigger Events;
(n) the occurrence of a First Payment Default Trigger Event:
(o) the occurrence of one or more Level Two Regulatory Trigger Events;
(p) the occurrence of a Specified Regulatory Change;
(q) the occurrence of a Servicer Default;
(r) the occurrence of a Key Man Trigger Event; or
(s) any formal enforcement order or criminal complaint relating to financial crimes or major felonies is brought by a Governmental
Authority against any Credit Party, which has not been dismissed or satisfied or of which the applicable Credit Party has not been found
not guilty within sixty (60) days of the filing of such order or complaint, provided, however, that no Event of
Default under this clause (s) shall be deemed to be continuing if at any time the applicable Credit Party is found not guilty
under such order or complaint; or.
(t)
the occurrence of a Requisite Special Stockholder Meeting Event of Default.
In the case of any such Event of Default, notwithstanding any other provision of any Loan Document, (I) Agent may (and, at the request of Requisite Lenders (x) with respect to any Event of Default occurring under Article VIII(m), may and (y) with respect to any other Event of Default described in this Article VIII, shall), by notice to Borrower (i) terminate the commitment to make Advances hereunder, whereupon the same shall immediately terminate, (ii) substitute immediately Backup Servicer or any other third party servicer acceptable to Agent, in its sole discretion, for Servicer in all of Servicer’s roles and functions as contemplated by the Loan Documents and the Servicing Agreements and any fees, costs and expenses of, for or payable to Backup Servicer or other third party servicer acceptable to Agent, in its sole discretion, shall be at Borrower’s sole cost and expense, (iii) with respect to the Collateral, (A) terminate any Servicing Agreement and service the Collateral, including the right to institute collection, foreclosure and other enforcement actions against the Collateral; (B) enter into modification agreements and make extension agreements with respect to payments and other performances; (C) release Account Lessees and other Persons liable for performance; (D) settle and compromise disputes with respect to payments and performances claimed due, all without notice to Borrower or Guarantors, and all in Agent’s sole discretion and without relieving Borrower or Guarantors from performance of the obligations hereunder; (E) receive, collect, open and read all mail of Borrower, Servicer or Guarantors for the purpose of obtaining all items pertaining to the Collateral and any collateral described in any Loan Document; (F) collect all Scheduled Payments (both voluntary and mandatory), and other amounts of any and every description payable by or on behalf of any Account Lessee pursuant to any Pledged Lease, the related Portfolio Documents, or any other related documents or instruments directly from such Account Lessee; and (G) apply all amounts in or subsequently deposited in the Collection Account and the Collateral Account to the payment of the unpaid Obligations or otherwise as Agent in its sole discretion shall determine; and (iv) declare all or any of the Loan and/or Notes, all interest thereon and all other Obligations to be due and payable immediately (except in the case of an Event of Default under clauses (h) or (i) of this Article VIII in which event all of the foregoing shall automatically and without further act by Agent or Lenders be due
and payable) and Agent’s or Lenders’ obligations hereunder shall terminate, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower and (II) effective immediately upon receipt of notice from Agent (unless specifically prohibited and provided for in Article VII, in which case effective immediately upon an Event of Default without any action of Agent or any Lender), no action permitted to be taken under Article VII hereof may be taken.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 Rights and Remedies
(a) In addition to the acceleration provisions set forth in Article VIII above, upon the occurrence and during the continuation of an Event of Default, Agent shall have the right to (and at the request of Requisite Lenders, shall) exercise any and all rights, options and remedies provided for in any Loan Document, under the UCC or at law or in equity, including, without limitation, the right to (i) apply any property of Borrower held by Agent to reduce the Obligations, (ii) foreclose the Liens created under the Loan Documents, (iii) realize upon, take possession of and/or sell any Collateral, with or without judicial process, (iv) exercise all rights and powers with respect to the Collateral as Borrower might exercise, (v) collect and send notices regarding the Collateral, with or without judicial process, (vi) by its own means or with judicial assistance, enter any premises at which Collateral are located, or render any of the foregoing unusable or dispose of the Collateral on such premises without any liability for rent, storage, utilities, or other sums, and Borrower shall not resist or interfere with such action, (vii) at Borrower’s expense, require that all or any part of the Collateral be assembled and made available to Agent at any place designated by Agent in its sole discretion, (viii) reduce or otherwise change the Maximum Revolving Loan Amount and/or any component of the Maximum Revolving Loan Amount and/or (ix) relinquish or abandon any Collateral or securities pledged or any Lien thereon. Notwithstanding any provision of any Loan Document, Agent, in its sole discretion, shall have the right, at any time that Borrower fails to do so, after an Event of Default, without prior notice, to: (A) obtain insurance covering any of the Collateral to the extent required hereunder; (B) pay for the performance of any of the Obligations; (C) discharge taxes, levies and/or Liens on any of the Collateral that are in violation of any Loan Document; and (D) pay for the maintenance, repair and/or preservation of the Collateral. Such expenses and advances shall be deemed Advances hereunder and shall be added to the Obligations until reimbursed to Agent, for its own account and for the benefit of the other Lenders, and shall be secured by the Collateral, and such payments by Agent, for its own account and for the benefit of the other Lenders, shall not be construed as a waiver by Agent or Lenders of any Event of Default or any other rights or remedies of Agent or Lenders.
(b) Borrower and Holdings each agree that notice received at least ten (10) calendar days before the time of any intended public sale, or the time after which any private sale or other disposition of Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. If permitted by Applicable Law, any perishable Collateral which threatens to speedily decline in value or which is sold on a recognized market may be sold immediately by Lender without prior notice to Borrower or Holdings. At any sale or disposition of Collateral or securities pledged, Agent may (to the extent permitted by Applicable Law) purchase all or any part thereof free from any right of redemption by Borrower which right is
hereby waived and released. Borrower and Holdings each covenant and agree not to interfere with or impose any obstacle to Agent’s exercise of its rights and remedies with respect to the Collateral. In dealing with or disposing of the Collateral or any part thereof, Agent shall not be required to give priority or preference to any item of Collateral or otherwise to marshal assets or to take possession or sell any Collateral with judicial process.
9.2 Application of Proceeds
Notwithstanding any other provision of this Agreement (including, without limitation, Section 2.4 hereof), in addition to any other rights, options and remedies Agent and Lenders have under the Loan Documents, the UCC, at law or in equity, all lease payments, dividends, interest, rents, issues, profits, fees, revenues, income and other proceeds collected or received from collecting, holding, managing, renting, selling, or otherwise disposing of all or any part of the Collateral or any proceeds thereof upon exercise of its remedies hereunder upon the occurrence and continuation of an Event of Default shall be applied in accordance with the provisions of Section 2.4 hereof; provided, that Borrower shall be liable for any deficiency if such proceeds are insufficient to satisfy the Obligations (other than indemnity obligations that are not then due and payable or with respect to which no claim has been made).
9.3 Rights to Appoint Receiver
Without limiting and in addition to any other rights, options and remedies Agent and Lenders have under the Loan Documents, the UCC, at law or in equity, upon the occurrence and continuation of an Event of Default, Agent shall have the right to apply for and have a receiver appointed by a court of competent jurisdiction in any action taken by Agent and/or any Lender to enforce its rights and remedies in order to manage, protect and preserve the Collateral and continue the operation of the business of Borrower and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership including the compensation of the receiver and to the payments as aforesaid until a sale or other disposition of such Collateral shall be finally made and consummated.
9.4 Attorney-in-Fact
Borrower hereby irrevocably appoints Agent as its attorney-in-fact for the limited purpose of taking any action permitted under the Loan Documents that Agent deems necessary or desirable (in Agent’s sole discretion) upon the occurrence and continuation of an Event of Default to protect, foreclose, enforce and realize upon Agent’s Lien in the Collateral, including the execution and delivery of any and all documents or instruments related to the Collateral in Borrower’s name, and said appointment shall create in Agent a power coupled with an interest.
9.5 Rights and Remedies not Exclusive
Agent shall have the right in its sole discretion to determine which rights, Liens and/or remedies Agent and Lenders may at any time pursue, relinquish, subordinate or modify, and such determination will not in any way waive, compromise, modify or affect any of Agent’s or Lenders’ rights, Liens or remedies under any Loan Document, Applicable Law or equity. The enumeration of any rights and remedies in any Loan Document is not intended to be exhaustive, and all rights and remedies of Agent and Lenders described in any Loan Document are cumulative and are not
alternative to or exclusive of any other rights or remedies which Agent and Lenders otherwise may have. The partial or complete exercise of any right or remedy shall not preclude any other further exercise of such or any other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 Waivers
Except as expressly provided for herein, Borrower hereby waives set off, counterclaim, demand, presentment, protest, all defenses with respect to any and all instruments and all notices and demands of any description, and the pleading of any statute of limitations as a defense to any demand under any Loan Document. Borrower hereby waives any and all defenses and counterclaims it may have or could interpose in any action or procedure brought by Agent to obtain an order of court recognizing the assignment of, or Lien of Agent in and to, any Collateral.
10.2 Delay; No Waiver of Defaults
No course of action or dealing, renewal, release or extension of any provision of any Loan Document, or single or partial exercise of any such provision, or delay, failure or omission on Agent’s part in enforcing any such provision shall affect the liability of Borrower or operate as a waiver of such provision or preclude any other or further exercise of such provision. No waiver by any party to any Loan Document of any one or more defaults by any other party in the performance of any of the provisions of any Loan Document shall operate or be construed as a waiver of any future default, whether of a like or different nature, and each such waiver shall be limited solely to the express terms and provisions of such waiver. Notwithstanding any other provision of any Loan Document, by completing the Closing under this Agreement and/or by making Advances, neither the Agent nor any Lender waives any breach of any representation or warranty of under any Loan Document, and all of Agent’s or any Lender’s claims and rights resulting from any such breach or misrepresentation are specifically reserved.
10.3 Jury Waiver
(A) EACH PARTY HEREBY (i) EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND (ii) AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
(b) In the event any such claim or cause of action is brought or filed in any United States federal court sitting in the State of California or in any state court of the State of California, and the
waiver of jury trial set forth in Section 10.3(a) is determined or held to be ineffective or unenforceable, the parties agree that all claims and causes of action shall be resolved by reference to a private judge sitting without a jury, pursuant to California Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the SANTA CLARA County, California. Such proceeding shall be conducted in SANTA CLARA County, California, with California rules of evidence and discovery applicable to such proceeding. In the event Claims or causes of action are to be resolved by judicial reference, any party may seek from any court having jurisdiction thereover any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all claims and causes of action are otherwise subject to resolution by judicial reference.
10.4 Amendment and Waivers
(a) No waiver of any provision of this Agreement or consent to any departure by Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of an Advance shall not be construed as a waiver of any Default or Event of Default, regardless of whether Agent or any Lender may have had notice or knowledge of such Default or Event of Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified (except pursuant to an agreement or agreements in writing entered into by Borrower and the Agent), except for an amendment to increase the Maximum Revolving Loan Amount in accordance with Section 2.14 hereof, such amendment to require the consent of Agent and such Lenders so increasing their Revolving Loan Commitment, or by Borrower and Agent with the consent of the Requisite Lenders, without taking into account the Loans held by Non-Funding Lenders; provided that no such agreement shall:
(i)
increase the Revolving Loan Commitment or Term Loan Commitment of any Lender
without the written consent of such Lender;
(ii) reduce the principal amount of any Loan or reduce the rate of interest thereon (other than a waiver of post-default interest), or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby;
(iii)
postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder,
or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Revolving Loan Commitment
or Term Loan Commitment, without the written consent of each Lender directly affected
thereby,;
(iv) change any of the provisions of this Section or the definition of “Requisite Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;
(v) release any Guarantor from its obligations under a Guaranty without the written consent of each Lender; or
(vi) except as otherwise specifically provided in this Agreement, release all or substantially all of the Collateral, without the written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of Agent hereunder without the prior written consent of Agent.
(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Requisite Lenders, Agent and Borrower (x) to add one or more credit facilities to this Agreement and to permit extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Loan and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Requisite Lenders and Lenders.
(d) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directly affected thereby,” the consent of the necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then Agent or Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided, that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to Agent shall agree, as of such date, to purchase for cash the principal balance of the Loans due to the Non-Consenting Lender pursuant to a Lender Addition Agreement and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (a) of Section 12.2, and (ii) Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by Borrower hereunder to and including the date of termination, including without limitation any indemnity payments due to such Non-Consenting Lender hereunder for which the amount is known.
(e) Notwithstanding anything to the contrary herein Agent may, with the consent of Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.
XI. EFFECTIVE DATE AND TERMINATION
11.1 Effectiveness and Termination
Subject to Agent’s right to accelerate the Loan and terminate the Revolving Loan Commitments and cease making and funding Advances upon the occurrence and during the continuation of any Event of Default, this Agreement shall continue in full force and effect until the earlier of the Maturity Date and the date on which the Revolving Loan Commitments are terminated pursuant to Section 2.5(b). All of the Obligations shall be immediately due and payable upon the earlier of (i) the Maturity Date, (ii) the date on which Agent accelerates the Loan following the occurrence and during the continuance of an Event of Default or (iii) the Prepayment Date stated in the notice of prepayment delivered by Borrower pursuant to Section 2.5(b), as applicable (the “Termination Date”). Notwithstanding any other provision of any Loan Document, no termination of this Agreement shall affect Agent’s or any Lender’s rights or any of the Obligations under the Loan Documents existing as of the effective date of such termination, and the provisions of the Loan Documents shall continue to be fully operative until the Obligations under the Loan Documents (other than indemnity obligations of Borrower under the Loan Documents that are not then due and payable or with respect to which no claim has been made) have been indefeasibly paid in cash in full. The Liens granted to Agent, under the Security Documents and the financing statements filed pursuant thereto and the rights and powers of Agent shall continue in full force and effect until all of the Obligations (other than indemnity obligations of Borrower under the Loan Documents that are not then due and payable or with respect to which no claim has been made) have been fully performed and indefeasibly paid in full in cash.
11.2 Survival
Unless expressly provided herein, all obligations, covenants, agreements, representations, warranties, waivers and indemnities made by Borrower in any Loan Document shall survive the execution and delivery of the Loan Documents, the Closing, the making and funding of the Loan and any termination of this Agreement until all Obligations under the Loan Documents (other than indemnity obligations under the Loan Documents that are not then due and payable or with respect to which no claim has been made) are indefeasibly paid in full in cash. The obligations and provisions of Sections 3.1, 3.2, 3.3, 3.4, 3.6(c), 10.1, 10.3, 11.1, 11.2, 12.1, 12.3, 12.4, 12.7, 12.9, 12.10, 12.11, 12.13 and 13.8 shall survive termination of the Loan Documents and any payment, in full or in part, of the Obligations.
XII. MISCELLANEOUS
12.1 Governing Law; Jurisdiction; Service of Process; Venue
(A) The Loan Documents, pursuant to New York General Obligations Law Section 5-1401, shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its choice of law provisions that would result in the application of the laws of a different jurisdiction.
(B) By execution and delivery of each Loan Document to which it is a party, each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against Borrower or its properties in the courts of any jurisdiction.
(C) Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section 12.1. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(D) Each of the parties hereto waives personal service of process and Agreement irrevocably consents to service of process in the manner provided for notices in Section 12.5. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
12.2 Successors and Assigns; Assignments and Participations
(a) Subject to Sections 12.2(c) and (d), a Lender may at any time assign all or a portion of its rights and delegate all or a portion of its obligations under this Agreement and the other Loan Documents (including all its rights and obligations with respect to the Loan) to one or more Persons other than the Borrower or any Affiliate of the Borrower (subject to the following provisos, each, a “Transferee”), provided, that unless an Event of Default has occurred and is continuing (in which event no such restriction shall apply), no natural person, Non-Funding Lender or Affiliate of a Non-Funding Lender, direct competitor of Borrower or Holdings or any Person who is directly engaged in consumer lease financing to big box retail, or is controlled by a Person which is a direct competitor of Borrower or who is directly engaged in consumer lease financing to big box retail, shall constitute a Transferee hereunder and Borrower shall have a right to consent to any Transferee that is not an Approved Fund of a Lender (each such Person that is precluded
from being a Transferee
pursuant to this proviso, an “Ineligible Transferee”); provided,
further, that, the Conversion Rights of any Lender hereunder shall carry to, and be assignable
to, any Transferee of such Lender in a proportionate assignment of such Lender’s Term Loan under this Agreement and the other Loan
Documents; provided further, that, any Transferee that is not an Affiliate of Blue Owl Alternative
Credit Advisors LLC (a “Non-Affiliate Transferee”) may only exercise the
Conversion Rights at such times and pursuant to the other terms set forth in Exhibit K hereto
if an Event of Default has occurred and is continuing at the time of proposed exercise. Notwithstanding anything to the
contrary in this Agreement, other than restrictions set forth in the definition of “Transferee” and in Section 12.2(k), there
shall be no limitation or restriction on any Lender’s ability to assign, pledge or otherwise transfer any Note or other Obligation.
The Transferee and such Lender shall execute and deliver for acceptance and recording in the Register, a Lender Addition Agreement, which
shall be in form and substance reasonably acceptable to Agent in its Permitted Discretion (“Lender Addition Agreement”).
Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Lender Addition
Agreement, (i) the Transferee thereunder shall be a party hereto and, to the extent provided in such Lender Addition Agreement, have
the same rights, benefits and obligations as it would if it were a Lender hereunder, (ii) the assigning Lender shall be relieved
of its obligations hereunder with respect to its Advances or assigned portion thereof, as the case may be, to the extent that such obligations
shall have been expressly assumed by the Transferee pursuant to such Lender Addition Agreement (and, in the case of a Lender Addition
Agreement covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto but, with respect to matters occurring before such assignment, shall nevertheless continue to
be entitled to the benefits of Sections 12.4 and 12.7). Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of Borrower to the Transferee and that the Transferee shall be considered to be a “Lender”
hereunder. Borrower may not sell, assign or transfer any interest in this Agreement, any of the other Loan Documents, or any of its Obligations,
or any portion thereof, including Borrower’s rights, title, interests, remedies, powers, and duties hereunder or thereunder.
(b) Each Lender may at any time sell participations in all or any part of its rights and obligations under this Agreement and the
other Loan Documents (including all its rights and obligations with respect to the Loan) to one or more Persons acceptable to Agent that
is not a non direct competitor of Borrower or Holdings or any Person who is directly engaged in consumer lease financing to big box retail,
or is controlled by a Person which is a direct competitor of Borrower or who is directly engaged in consumer lease financing to big box
retail, subject to Section 12.2(k) (each, a “Participant” and each Person that is precluded from being a Participant
pursuant to this sentence, an “Ineligible Participant”); provided
that in no event shall any Conversion Rights be subject to sale in a participation other than in a proportionate participation
in a Lender’s Term Loan under this Agreement and the other Loan Documents. In the event of any such sale by a Lender
of a participation to a Participant, (i) such Lender’s obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible for the performance thereof, (iii) such Lender shall remain
the holder of any such Loan (and any Note evidencing such Loan) for all purposes under this Agreement and the other Loan Documents, (iv)
Borrower and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement and the other Loan Documents, and (v) all amounts payable pursuant to Section 6.2 by Borrower hereunder
shall be determined as if such Lender had not sold such participation. Any
agreement pursuant
to which any Lender shall sell any such participation shall provide that such Lender shall retain the sole right and responsibility to
exercise such Lender’s rights and enforce Borrower’s obligations hereunder, including the right to consent to any amendment,
supplement, modification or waiver of any provision of this Agreement or any of the other Loan Documents,
and in all cases any such participation shall be non-voting with respect to the exercise of the Conversion Right unless an Event of Default
has occurred and is continuing; provided, that such participation agreement may provide that such Lender will
not agree, without the consent of the Participant, to any amendment, supplement, modification or waiver relating to: (A) any reduction
in the principal amount, interest rate or fees or premium payments payable to Lenders with respect to any Loan in which such holder participates,
(B) any extension of the Maturity Date or of the scheduled date of expiration of any Revolving Loan Commitment or any reinstatement of
any terminated Revolving Loan Commitment, (C) any release of all or substantially all of the Collateral (other than in accordance with
the terms of this Agreement or the Loan Documents), (D) any amendment or modification to the priority of payments or pro rata treatment
of payments in connection with the application of any amounts due in respect of the Loan (including, without limitation, as set forth
in Section 2.4 hereof), (E) discharging any Credit Party from its respective payment obligations in respect of the Loan except
as otherwise may be provided in the Loan and Security Agreement or the other Loan Documents, (F) increasing any fees payable to Agent
under this Agreement, (G) waiving any Event of Default arising as a result of a Change of Control or Servicer Default or (H) amending
or modifying any of Section 7.4 or 7.13 of this Agreement. Borrower hereby acknowledges and agrees that the Participant under each participation
shall, solely for the purposes of Sections 12.4 and 12.7 of this Agreement be considered to be a “Lender” hereunder.
Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which
it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest
in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that
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 (x) 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 and (y)
that each Lender must notify the Agent of the date and the amount of such participation. 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 Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
(c) Agent shall maintain at its address referred to in Section 12.5 a copy of each Lender Addition Agreement delivered to it and a written or electronic register (the “Register”) for the recordation of the names and addresses of the Lenders and the Advances made by, and the principal amount of the Loan owing to, and the Notes evidencing such Loan owned by, each Lender from time to time. Notwithstanding anything in this Agreement to the contrary, Borrower and the Agent shall treat each Person whose name is recorded in the Register as the owner of the Loan, the Notes and the Advances recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) Notwithstanding anything in this Agreement to the contrary, no assignment under Section 12.2(a) of any rights or obligations under or in respect of the Loan or the Notes evidencing such Loan shall be effective unless and until Agent shall have recorded the assignment pursuant to Section 12.2(c). Upon its receipt of a Lender Addition Agreement executed by an assigning Lender and a Transferee, Agent shall (i) promptly accept such Lender Addition Agreement and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give prompt notice of such acceptance and recordation to the Lender and Borrower. On or prior to such effective date, the assigning Lender shall surrender any outstanding Notes held by it, all or a portion of which are being assigned, and Borrower, at its own expense, shall, upon the request of Agent by the assigning Lender or the Transferee, as applicable, execute and deliver to Agent, within five (5) Business Days of any request, new Notes to reflect the interest held by the assigning Lender and its Transferee.
(e) Except as otherwise provided in this Section 12.2 Agent shall not, as between Borrower and Agent, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loan or other Obligations owed to Agent and Lenders. Agent may furnish any information concerning Borrower in the possession of Agent from time to time to assignees and participants (including prospective assignees and participants), subject to confidentiality requirements hereunder.
(f) Notwithstanding any other provision set forth in this Agreement, Agent and each Lender may at any time create a security interest in all or any portion of its rights under this Agreement, including, without limitation, the Loan owing to it and the Notes held by it and (solely with respect to the Agent) the other Loan Documents and Collateral.
(g) Borrower agrees to use commercially reasonable efforts to assist Agent and each Lender in assigning or selling participations in all or any part of any Loan made by any Lender to another Person identified by such Lender.
(h) Notwithstanding anything in the Loan Documents to the contrary, (i) Agent and its Affiliates shall not be required to execute and deliver a Lender Addition Agreement in connection with any transfer, assignment or participation transaction involving its Affiliates or lenders, in each case, who, unless an Event of Default has occurred and is continuing, are not Ineligible Transferees, (ii) no lender to or funding or financing source of Agent or its Affiliates shall be considered a Transferee, (iii) there shall be no limitation or restriction on Agent’s ability to assign (except to any Ineligible Transferee at such time as no Event of Default has occurred and is continuing), participate or otherwise transfer any Loan Document to any such Affiliate or lender or funding or financing source, (iv) there shall be no limitation or restriction on such Affiliates’ or lenders’ or financing or funding sources’ ability to assign, participate or otherwise transfer any Loan Document, Loan, Note or Obligation (or any of its rights thereunder or interest therein) and (v) no notice shall be required to be delivered to Borrower in connection with any assignment, participation or other transfer described in this Section 12.2(g); provided, however, Agent shall continue to be liable as a “Lender” under the Loan Documents unless such Affiliate or lender or funding or financing source executes a Lender Addition Agreement and thereby becomes a “Lender.”
(i) The Loan Documents shall inure to the benefit of Agent, Lenders, Transferee, Participant (to the extent expressly provided herein
only) and all future holders of the Notes, the Obligations and/or any of the Collateral, and each of their respective successors and
permitted assigns. Each Loan Document shall be binding upon the Persons other than Agent that are parties thereto and their respective
successors and assigns, and no such Person may assign, delegate or transfer any Loan Document or any of its rights or obligations thereunder
without the prior written consent of Agent. No rights are intended to be created under any Loan Document for the benefit of any third
party donee, creditor or incidental beneficiary of Borrower. Nothing contained in any Loan Document shall be construed as a delegation
to Agent of any other Person’s duty of performance. BORROWER ACKNOWLEDGES AND AGREES THAT AGENT AT ANY TIME AND FROM TIME TO TIME
MAY (I) DIVIDE AND REISSUE (WITHOUT SUBSTANTIVE CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION) THE NOTES, AND/OR (II) SELL, ASSIGN
OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE OBLIGATIONS
AND/OR THE COLLATERAL TO OTHER PERSONS, IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED HEREIN. Each Transferee and Participant shall
have all of the rights, obligations and benefits with respect to the Obligations, Notes, Collateral and/or Loan Documents held by it
as fully as if the original holder thereof; provided, that, notwithstanding anything to the contrary in any Loan Document, Borrower
shall not be obligated to pay under this Agreement to any Transferee or Participant any sum in excess of the sum which it would have
been obligated to pay to Agent had such participation not been effected. Agent may disclose to any Transferee or Participant all information,
reports, financial statements, certificates and documents obtained under any provision of any Loan Document; provided, that Transferees
and Participants shall be subject to the confidentiality provisions contained herein that are applicable to Agent. Notwithstanding
anything to the contrary in the foregoing, the Conversion Rights of any Lender hereunder shall carry to, and be assignable to, any Transferee
of such Lender in a proportionate assignment of such Lender’s Term Loan under this Agreement and the other Loan Documents; provided
that, a Non-Affiliate Transferee may only exercise the Conversion Rights at such times and pursuant to the other terms set forth
in Exhibit K hereto if an Event of Default has occurred and is continuing at the time of proposed
exercise.
(j) Any Lender may assign or pledge all or any portion of the Loans or Notes held by it to any Federal Reserve Bank or the United States Treasury as collateral security to secure obligations of such Lender, including without limitation, any assignment or pledge 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, that any payment in respect of such assigned Loans or Notes made by Borrower to or for the account of the assigning or pledging Lender in accordance with the terms of this Agreement shall satisfy Borrower’s obligations hereunder in respect to such assigned Loans or Notes to the extent of such payment. No such assignment shall release the assigning Lender from its obligations hereunder.
(k)
BY ITS EXTENSION OF A TERM LOAN HEREUNDER, EACH CLASS B LENDER UNDERSTANDS AND AGREES THE TERM LOANS, AND THE SHARES OF COMMON STOCK,
IF ANY, ISSUED UPON CONVERSION OF A TERM LOAN, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT NOR REGISTERED OR QUALIFIED UNDER ANY
OTHER APPLICABLE LAW. NOTWITHSTANDING ANYTHING IN THE LOAN DOCUMENTS TO THE CONTRARY, NO TRANSFER OF A
TERM LOAN (INCLUDING
ANY SALE OF A PARTICIPATION IN RESPECT THEREOF) SHALL BE EFFECTIVE UNLESS IN COMPLIANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OR AN AVAILABLE EXEMPTION THEREFROM AND OTHER APPLICABLE LAW. PRIOR TO ANY SUCH TRANSFER, THE PARENT ENTITY RESERVES
THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO
DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE
LAW. NOTWITHSTANDING THE FOREGOING OR ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE PROVISIONS AND REQUIREMENTS UNDER THIS
CLAUSE (K) AS IT RELATES TO THE SECURITIES ACT AND OTHER APPLICABLE LAW SHALL NOT PROVIDE THE BORROWER, PARENT ENTITY, OR ANY OF THEIR
AFFILIATES ANY ADDITIONAL CONSENT RIGHT OR RIGHT TO OBJECT TO ANY TRANSFEREE, ASSIGNEE OR PARTICIPANT IN THE TERM LOANS THAT IS NOT ALREADY
SET FORTH IN SECTION 12.2(A) OR (B), AS APPLICABLE.
12.3 Application of Payments
To the extent that any payment made or received with respect to the Obligations is subsequently invalidated, determined to be fraudulent or preferential, set aside, defeased or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other Person under any Debtor Relief Law, common law or equitable cause or any other law, then the Obligations intended to be satisfied by such payment shall be revived and shall continue as if such payment had not been received by Agent and the Liens created hereby shall be revived automatically without any action on the part of any party hereto and shall continue as if such payment had not been received by Agent. Any payments with respect to the Obligations received shall be credited and applied in accordance with Section 2.4.
12.4 Indemnity
Borrower shall indemnify Agent, each Lender, each Transferee, each Participant, their respective Affiliates, managers, members, officers, employees, agents, representatives, successors, assigns, accountants and attorneys (collectively, the “Indemnified Persons”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel, but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and expenses of one regulatory counsel to such Indemnified Person and one other firm of outside counsel to such Indemnified Person taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional firm of outside counsel to each group of similarly situated Indemnified Person) which are incurred or actually paid by any Indemnified Person with respect to or arising out of, or in any litigation, proceeding or investigation instituted or conducted by any Person with respect to any aspect of, or any transaction contemplated by, or any matter related to, any act of or omission by Borrower or any of its Affiliates, officers, directors and agents relating to the Loan, this Agreement or any other Loan Document, except to the extent resulting or arising from the applicable Indemnified Person’s own gross negligence or willful misconduct. Agent agrees to give Borrower reasonable notice of any event of which Agent becomes aware for which indemnification may be required under this
Section 12.4 (provided, that the failure of Agent to give such notice shall not affect the obligation of Borrower or any other Person pursuant to this Section 12.4 unless materially prejudiced thereby) and Agent may elect (but is not obligated) to direct the defense thereof; provided, that the selection of counsel shall be subject to Borrower’s consent, which consent shall not be unreasonably withheld or delayed, and Borrower shall be entitled to participate in the defense of any matter for which indemnification may be required under this Section 12.4 and to employ counsel at its own expense to assist in the handling of such matter. Any Indemnified Person may, in its reasonable discretion, take such actions as it deems necessary and appropriate to investigate, defend or settle any event or take other remedial or corrective actions with respect thereto as may be necessary for the protection of such Indemnified Person or the Collateral, subject to Borrower’s prior approval of any settlement, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, if any insurer agrees to undertake the defense of an event (an “Insured Event”), Agent agrees not to exercise its right to select counsel to defend the event if that would cause Borrower’s insurer to deny coverage; provided, however, that Lender reserves the right to retain counsel to represent any Indemnified Person with respect to an Insured Event at its sole cost and expense. To the extent that Agent obtains recovery from a third party other than an Indemnified Person of any of the amounts that Borrower has paid to Lender pursuant to the indemnity set forth in this Section 12.4, then Agent shall promptly pay to Borrower the amount of such recovery. Without limiting any of the foregoing, (a) Borrower indemnifies the Indemnified Persons for all claims for brokerage fees or commissions (other than claims of a broker with whom such Indemnified Person has directly contracted in writing) and (b) Agent indemnifies the Borrower for all claims for brokerage fees or commissions (other than the claims of a broker with whom Borrower or any of its Affiliates has directly contracted in writing), in each case, which may be made in connection with respect to any aspect of, or any transaction contemplated by or referred to in, or any matter related to, any Loan Document or any agreement, document or transaction contemplated thereby.
12.5 Notice
Any notice or request under any Loan Document shall be given to the applicable party to this Agreement at such party’s address set forth beneath its signature on the signature page to this Agreement, or at such other address as such party may hereafter specify in a notice given in the manner required under this Section 12.5. Any notice or request hereunder shall be given only by, and shall be deemed to have been received upon (each, a “Receipt”): (i) registered or certified mail, return receipt requested, on the date on which such received as indicated in such return receipt, (ii) delivery by a nationally recognized overnight courier, one (1) Business Day after deposit with such courier, or (iii) facsimile or electronic transmission, in each case upon telephone or further electronic communication from the recipient acknowledging receipt (whether automatic or manual from recipient), as applicable.
12.6 Severability; Captions; Counterparts; Facsimile Signatures
If any provision of any Loan Document is adjudicated to be invalid under Applicable Laws or regulations, such provision shall be inapplicable to the extent of such invalidity without affecting the validity or enforceability of the remainder of the Loan Documents which shall be given effect so far as possible. The captions in the Loan Documents are intended for convenience and reference only and shall not affect the meaning or interpretation of the Loan Documents. The Loan Documents may be executed in one or more counterparts (which taken together, as
applicable, shall constitute one and the same instrument) and by facsimile transmission, which facsimile signatures shall be considered original executed counterparts. Each party to this Agreement agrees that it will be bound by its own facsimile signature and that it accepts the facsimile signature of each other party.
12.7 Expenses
Borrower shall pay, whether or not the Closing occurs, all out-of-pocket fees, costs and expenses incurred or actually paid by Agent, any Lender, and/or its Affiliates, including, without limitation, documentation and diligence fees and expenses prior to and following the Closing, all search, audit, appraisal, recording, professional and filing fees and expenses and all other charges and expenses (including, without limitation, UCC and judgment and tax lien searches and UCC filings and fees for post-Closing UCC and judgment and tax lien searches and wire transfer fees and audit expenses), and reasonable external attorneys’ fees and expenses (including, without limitation, reasonable fees and disbursements of counsel, but limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and expenses of one regulatory counsel to such Indemnified Person and one other firm of outside counsel to such Indemnified Person taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional firm of outside counsel to each group of similarly situated Indemnified Person), (i) in any effort to enforce, protect or collect payment of any Obligation or to enforce any Loan Document or any related agreement, document or instrument, (ii) in connection with entering into, negotiating, preparing, reviewing and executing the Loan Documents and/or any related agreements, documents or instruments, (iii) arising in any way out of administration of the Obligations or the taking or refraining from taking by Agent of any action requested by Borrower, (iv) in connection with instituting, maintaining, preserving, enforcing and/or foreclosing on Agent’s Liens in any of the Collateral or securities pledged under the Loan Documents, whether through judicial proceedings or otherwise, (v) in defending or prosecuting any actions, claims or proceedings arising out of or relating to Agent’s or any Lender’s transactions with Borrower, (vi) in seeking, obtaining or receiving any advice with respect to its rights and obligations under any Loan Document and any related agreement, document or instrument, (vii) arising out of or relating to any Default or Event of Default or occurring thereafter or as a result thereof, (viii) in connection with all actions, visits, audits and inspections undertaken by Agent or its Affiliates pursuant to the Loan Documents, and/or (ix) in connection with any modification, restatement, supplement, amendment, waiver or extension of any Loan Document and/or any related agreement, document or instrument. All of the foregoing shall be charged to Borrower’s account and shall be part of the Obligations. Without limiting the forgoing, Borrower shall pay all Taxes (other than Taxes based upon or measured by Agent’s income or revenues or any personal property tax), if any, in connection with the issuance of any Note and the filing and/or recording of any documents and/or financing statements.
12.8 Entire Agreement
This Agreement and the other Loan Documents to which Borrower is a party constitute the entire agreement between Borrower, Agent and Lenders with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings (including but not limited to the term sheet dated on or about January 29, 2019), if any, relating to the subject matter hereof or thereof. Any promises, representations, warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by Borrower, Agent and Requisite Lenders, as appropriate. Except as set forth in and subject to Section 10.4, no provision of any Loan Document may be changed, modified, amended, restated, waived, supplemented, discharged, canceled or terminated orally or by any course of dealing or in any other manner other than by an agreement in writing signed by Borrower, Agent and Requisite Lenders, provided, that no consent or agreement by Borrower shall be required to amend, modify, change, restate, waive, supplement, discharge, cancel or terminate any provision of Article XIII, so long as no additional duties are required to be assumed by Borrower and there is no adverse effect on Borrower or its rights or duties under this Agreement or any other Loan Document. Each party hereto acknowledges that it has been advised by counsel in connection with the negotiation and execution of this Agreement and is not relying upon oral representations or statements inconsistent with the terms and provisions hereof. The schedules attached hereto may be amended or supplemented by Borrower upon delivery to Agent of such amendments or supplements and, except as expressly provided otherwise in this Agreement, the written approval thereof by Agent.
12.9 Approvals and Duties
Unless expressly provided herein to the contrary, any approval, consent, waiver or satisfaction of Agent with respect to any matter that is subject of any Loan Document may be granted or withheld by Agent, as applicable, in its sole and absolute discretion. Agent shall have no responsibility for or obligation or duty with respect to any of the Collateral or any matter or proceeding arising out of or relating thereto, including, without limitation, any obligation or duty to collect any sums due in respect thereof or to protect or preserve any rights pertaining thereto.
12.10 Publicity
(a) Borrower agrees, and agrees to cause each of its Affiliates, (i) not to transmit or disclose provision of any Loan Document to any Person (other than to the advisors, managers, directors, officers and employees of the Borrower, Holdings and Parent Entity on a need-to-know basis) without Agent’s prior written consent, (ii) to inform all Persons of the confidential nature of the Loan Documents and to direct them not to disclose the same to any other Person and to require each such Person (other than to the advisors, managers, directors, officers and employees of the Borrower, Holdings and Parent Entity) of them to be bound by these provisions. Borrower agrees to submit to Agent and Agent reserves the right to review and approve all materials that Borrower or any of its Affiliates prepares to Persons other than Borrower, Holdings and Parent Entity and their Affiliates and their respective advisors, managers, directors, officers and employees that contain Agent’s or any Lender’s name or describe or refer to any Loan Document, any of the terms thereof or any of the transactions contemplated thereby; provided, that Borrower and its Affiliates shall have the right to disclose the Loan Documents to:
(i) Agent, Lenders and their respective Affiliates;
(ii) such Person’s investors and prospective investors, rating agencies and their respective directors, officers, trustees, partners, members, managers, employees, agents, advisors, representatives, attorneys, equity owners, professional consultants, portfolio management services and rating agencies (in each case, provided that such Person agrees to be bound by this Section 12.10);
(iii) any Governmental Authority to which the Borrower, Holdings or Parent Entity is subject at the request or pursuant to any requirement of such Governmental Authority, or in connection with an examination of Borrower, Holdings or Parent Entity by any such Governmental Authority; and
(iv) any Person (A) to the extent required by applicable law, (B) in response to any subpoena or other legal process or informal investigative demand, (C) in connection with any litigation, or (D) in connection with the actual or potential exercise or enforcement of any right or remedy under any Loan Document.
(b) The obligations of Borrower, Holdings or Parent Entity and their respective Affiliates under this Section 12.10 shall supersede and replace any other confidentiality obligations to the Agent and Lenders with respect to the Loan Documents agreed to by Borrower, Holdings or Parent Entity or any of their respective Affiliates.
(c) Borrower shall not, and shall not permit any of its Affiliates to, use Agent’s or any Lender’s name (or the name of any of Agent’s, or any Lender’s Affiliates) in connection with any of its business operations, including without limitation, advertising, marketing or press releases or such other similar purposes, without Agent’s prior written consent. Nothing contained in any Loan Document is intended to permit or authorize Borrower or any of its Affiliates to contract on behalf of Agent or any Lender.
(d) Borrower hereby agrees that Agent or any Affiliate of Agent may (i) disclose a general description of transactions arising under the Loan Documents for advertising, marketing or other similar purposes and (ii) use Borrower’s or any Borrower Party’s name, logo or other indicia germane to such party in connection with such advertising, marketing or other similar purposes.
(e) Lenders and Agent shall exercise commercially reasonable efforts to maintain in confidence, in accordance with its customary procedures for handling confidential information, all written non-public information of a Borrower Party that any Borrower Party furnishes on a confidential basis (“Confidential Information”), other than any such Confidential Information that becomes generally available to the public or becomes available to Lender or Agent from a source other than Borrower, Holdings, Parent Entity or any of their respective Affiliates (collectively, the “Borrower Parties”) that is not known to such recipient to be subject to confidentiality obligations; provided, that each Lender and Agent and their respective Affiliates shall have the right to disclose Confidential Information, in each case, provided that such Person agrees to be bound by this Section 12.10, to:
(i) Borrower or its Affiliates;
(ii) such Person’s Affiliates;
(iii) such Person’s or such Person’s Affiliates’ lenders, funding or financing sources;
(iv) such Person’s or such Person’s Affiliates’ directors, officers, trustees, partners, members, managers, employees, agents, advisors, representatives,
attorneys, equity owners, professional consultants, portfolio management services and rating agencies;
(v) any Person to whom Agent or a Lender offers or proposes to offer to sell, assign or transfer the Loan or any part thereof or any interest or participation therein (other than an Ineligible Transferee);
(vi) any Person that provides statistical analysis and/or information services to a Lender or Agent or any of their respective Affiliates;
(vii) any Governmental Authority to which any Lender or Agent is subject at the request or pursuant to any requirement of such Governmental Authority, or in connection with an examination of any Lender or Agent by any such Governmental Authority; and
(viii) any Person (A) to the extent required by applicable law, (B) in response to any subpoena or other legal process or informal investigative demand, (C) in connection with any litigation, or (D) in connection with the actual or potential exercise or enforcement of any right or remedy under any Loan Document.
In addition, each of the Lenders and Agent agrees (i) to use commercially reasonable efforts to insure that no material non-public information provided to it by or on behalf of any Borrower Party will be utilized by such Lender or the Agent or any of their respective affiliates, agents, advisors or representatives to trade any securities of the Parent Entity (or its successors) and (ii) not to use, or cause any of its respective affiliates, agents, advisors or representatives to use, any material non-public information provided to it by or on behalf of any Borrower Party to trade any securities of the Parent Entity (or its successors).
(f) The obligations of Lenders and Agent and their respective Affiliates under this Section 12.10 shall supersede and replace any other confidentiality obligations agreed to by any Lender or Agent or any of their respective Affiliates.
(g) Notwithstanding anything herein to the contrary, each party to this Agreement may disclose without limitation the tax treatment and tax structure of the transactions contemplated by this Agreement.
(h) Any disclosure by Agent or Lenders of any of a Borrower Parties’ Confidential Information pursuant to applicable federal, state or local law, regulation or a valid order issued by a court or governmental agency of competent jurisdiction (a “Legal Order”) shall be subject to the terms of this paragraph. Prior to making any such disclosure, Agent or Lenders shall make commercially reasonable efforts to provide the Borrower Parties with prompt written notice of such compelled disclosure so that the Borrower Parties may seek a protective order or other remedy and reasonable assistance in opposing such disclosure or seeking a protective order or other limitations on disclosure. If, after providing such notice and assistance as required herein, Agent or Lenders remain subject to a Legal Order to disclose any Confidential Information, Agent or such Lender shall disclose, and, if applicable, shall require its representatives or other persons to whom such Legal Order is directed to disclose, no more than that portion of the Confidential Information which, on the advice of Agent’s or such Lender’s legal counsel, such Legal Order
specifically compels and shall use commercially reasonable efforts to obtain assurances from the applicable court or agency that such Confidential Information will be afforded confidential treatment.
12.11 Release of Collateral
So long as no Default or Event of Default has occurred and is continuing, upon request of Borrower, Agent shall release any Lien granted to or held by Agent upon any Collateral being sold or disposed of in compliance with the provisions of the Loan Documents, as determined by Agent in its sole discretion. Subject to Section 12.3, promptly following indefeasible payment in full in cash of all Obligations (other than indemnity obligations under the Loan Documents that are not then due and payable or with respect to which no claim has been made) and the termination of this Agreement, the Liens created hereby shall terminate and Agent shall execute and deliver such documents, at Borrower’s expense, as are necessary to release Agent’s Liens in the Collateral and shall return or cause the return of or consent to the return of the Collateral to Borrower; provided, however, that the parties agree that, notwithstanding any such termination or release or the execution, delivery or filing of any such documents or the return of any Collateral, if and to the extent that any such payment made or received with respect to the Obligations is subsequently invalidated, determined to be fraudulent or preferential, set aside, defeased or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other Person under any Debtor Relief Law, common law or equitable cause or any other law, then the Obligations intended to be satisfied by such payment shall be revived and shall continue as if such payment had not been received by Agent and the Liens created hereby shall be revived automatically without any action on the part of any party hereto and shall continue as if such payment had not been received by Agent. Agent shall not be deemed to have made any representation or warranty with respect to any Collateral so delivered except that such Collateral is free and clear, on the date of such delivery, of any and all Liens arising from such Person’s own acts. Section 12.9 shall not be applicable to any actions required to be taken by the Agent under this Section.
12.12 Treatment of Fees
The parties hereto agree that all fees due and payable by the Borrower under this Agreement, including, without limitation, pursuant to Article III hereof, shall be deemed to be and shall be treated as interest in respect of the outstanding principal amount of the Loan; provided, however, that nothing in this Section 12.12 shall in any way modify or reduce the obligations of the Borrower under Sections 2.2 or 3.2 of this Agreement.
12.13 Release; Cooperation
(a) Borrower hereby acknowledges and agrees that as of the date hereof it has no defense, counterclaim, offset, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of its liability to repay the obligations or to seek affirmative relief or damages of any kind or nature from Agent or any Lender. To the extent permitted by applicable law, Borrower hereby voluntarily and knowingly releases and forever discharges Agent and each Lender and each of their respective predecessors, agents, employees, affiliates, attorneys, successors and assigns (collectively, the “Released Parties”) from all Claims whatsoever, whether known or unknown, anticipated or unanticipated,
suspected or unsuspected, fixed, contingent or conditional, or at law or in equity, in any case to the extent originating on or before the date this Agreement is executed that Borrower may now or hereafter have against the Released Parties, if any, irrespective of whether any such claims arise out of contract, tort, violation of law or regulations, or otherwise, and that arise from any of the Loans, the exercise of any rights and remedies under this Agreement or any of the other Loan Documents, and/or the negotiation for and execution of this Agreement, including, without limitation, any contracting for, charging, taking, reserving, collecting or receiving interest in excess of the highest lawful rate applicable. Borrower acknowledges that the foregoing release is a material inducement to each Lender’s decision to extend to Borrower the financial accommodations hereunder and has been relied upon by such Lender in agreeing to make the Loan. Borrower hereby further specifically waives any rights that it may have under Section 1542 of the California Civil Code (to the extent applicable), which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR,” and further waives any similar rights under applicable laws.
(b) In any litigation, arbitration or other dispute resolution proceeding relating to any Loan Document, Borrower waives any and all defenses, objections and counterclaims it may have or could interpose with respect to (i) any of its directors, officers, employees or agents being deemed to be employees or managing agents of Borrower for purposes of all applicable law or court rules regarding the production of witnesses by notice for testimony (whether in a deposition, at trial or otherwise), (ii) Agent’s or any other Lender’s counsel examining any such individuals as if under cross-examination and using any discovery deposition of any of them as if it were an evidence deposition, and (iii) using all commercially reasonable efforts to produce in any such dispute resolution proceeding, at the time and in the manner requested by Agent or such other Lender, all Persons, documents (whether in tangible, electronic or other form) and other things under its control and relating to the dispute.
12.14 Amendment and Restatement; Acknowledgements; No Termination; Reaffirmations; References; Conditional Waiver.
(a) Amendment and Restatement. Effective on the Closing Date, this Agreement amends and restates the Original Loan Agreement in its entirety. The Obligations (as defined in the Original Loan Agreement) of the Borrower (the “Original Loan Agreement Obligations”) that remain unpaid and outstanding on the date hereof shall, without duplication, constitute Obligations and shall continue as outstanding under, and shall be governed by, this Agreement and the other Loan Documents. The Obligations shall continue to be (x) secured by the Collateral (including the Collateral (as defined in the Original Loan Agreement)), the Collateral (as defined in the Payment Guaranty) and all other collateral pledged by the Credit Parties under the applicable Loan Documents.
(b) Acknowledgements.
(i) Borrower hereby acknowledges and confirms that pursuant to the Original Loan Agreement it assigned, pledged, and granted to the Agent a continuing Lien in and to the “Collateral” (as defined in the Original Loan Agreement) (the “Existing
Security Interest”) to secure the Original Loan Agreement Obligations, and hereby reaffirms and confirms the Existing Security Interest.
(ii) The parties hereto acknowledge, confirm and agree that, without further action by any party hereto, (i) the Existing Security Interest shall be deemed to be granted in favor of the Agent hereunder; and (ii) such Existing Security Interest (A) shall be deemed to, and shall continue to, and shall be deemed to continue to, secure the Obligations and (B) shall continue without interruption to secure all Obligations now or hereafter outstanding and that such Existing Security Interest is valid, enforceable and subsisting.
(c) No Termination. This Agreement and the other Loan Documents, whether executed and delivered in connection herewith or otherwise, are not intended to, do not, and shall not in any circumstance be deemed to, (i) terminate, extinguish, release or discharge any Lien pledged, assigned and granted by the applicable Credit Parties securing any of the Original Loan Agreement Obligations, (ii) constitute a novation, satisfaction, extinguishment, payment, reborrowing or termination of any Original Loan Agreement Obligations that remain outstanding as of the Closing Date or (iii) operate as a waiver of any right, power, privilege or remedy of any party under any Loan Document.
(d) Reaffirmation. As of the Closing Date, each Credit Party hereby confirms and reaffirms all its respective obligations under this Agreement and the other Loan Documents which it is a party (including all Obligations).
(e) References. Effective as of the Closing Date, all references to the Original Loan Agreement in any Loan Document (other
than this Agreement) or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and
the provisions hereof. It is understood and agreed that the Original Loan Agreement is being amended, restated and replaced in its entirety
by entry into this Agreement on the Closing Date and the Original CreditLoan
Agreement (including all exhibits and schedules attached thereto) shall thereafter be of no further force and effect, except to evidence
(i) the incurrence by the Borrower of the “Obligations” (under and as defined in the Original CreditLoan
Agreement), whether or not such “Obligations” are contingent as of the Closing Date and (ii) the representations and warranties
made by the Credit Parties prior to the Closing Date (which representations and warranties shall not be superseded or rendered ineffective
by this Agreement as they pertain to the period prior to the Closing Date).
(f)
Conditional Waiver. In connection with that certain Limited Waiver and Amendment Agreement,
dated May 14, 2025, that certain Limited Waiver and Amendment Agreement, dated June 3, 2025 and that certain Limited Waiver and Amendment
Agreement, dated June 9, 2025 (collectively, the “Limited Waiver”), by and
among Borrower, Holdings, Parent Entity, the Lenders and Agent, the
Agent and the Lenders party thereto (constituting the “Requisite
Lenders”) temporarily and conditionally waived one or more Events of Default under (and as defined in) the Original Loan Agreement,
as described in the Limited Waiver as the “Existing Defaults” (the “Waiver
Defaults”). Subject to the terms and conditions hereof (including, without limitation, the satisfaction
of the waiver conditions set forth below), the Agent and the Lenders hereby agree to waive the Waiver Defaults and any other Event of
Default under (and as defined
in)
the Original Loan Agreement that exists as of the Closing Date resulting from (i) any Borrowing Base Certificate delivered under (and
as defined in) the Original Loan Agreement containing any untrue statement(s) of material fact(s) or omitting to state any facts necessary
to make the factual statements therein taken as a whole not materially misleading in light of the circumstances under which it was furnished,
(ii) any failure to comply with the provisions of Section 6.19 of the Original Loan Agreement, (iii) the occurrence of any First Payment
Default Trigger Event, (iv) the occurrence of any Default Trigger Event, (v) any failure to comply with the provisions of Section 2.3
of the Original Loan Agreement, Section 2.12 of the Original Loan Agreement or any other “cash management” or similar provision
of the Original Loan Agreement, (vi) any Required Loan Overadvance Principal Payment under (and as defined in) the Original Loan Agreement
not being timely repaid, or (vii) any representation, statement or warranty made, or deemed to have been made, by delivery of any Borrowing
Base Certificate or any Request for Revolving Advance (or similar document) not being true and correct in all material respects or any
such Borrowing Base Certificate or Request for Revolving Advance (or similar document) being modified and/or unsigned (collectively,
the “Existing Defaults”) as of, and for all times after, the Closing Date;
provided that the continuing effectiveness of the waiver set forth herein is subject to the occurrence
of the following conditions (collectively, the “Waiver Conditions”): (x)
the Requisite Special Stockholder Meeting occurs and (y) the Requisite Stockholder Approval occurs, in each case, on or before September
1, 2025. For the avoidance of doubt, the parties
hereto agree that if, either (i) any Waiver Condition is not satisfied as set forth above as of 5:00 p.m. (New York City time) on September
1, 2025 or (ii) there is an affirmative rejection by the Company or its board of directors of, or the requisite stockholders through
a formalized vote affirmatively reject, any of the Requisite Special Stockholder Meeting Items, then, in either case (the events described
in clauses (i) and (ii), each a “Requisite Special Stockholder
Meeting Event of Default”),
(x) the waiver set forth in this Section 12.14(f) shall immediately terminate, (y) the Existing Defaults shall immediately constitute
Events of Default under this Agreement and an Event of Default shall be deemed to have occurred under Article VIII(t) hereof, and (z)
the Agent and the Lenders may exercise any of the rights and remedies available to any or all of the Lenders or Agent against any or
all of the Credit Parties under the applicable Loan Documents (to the extent set forth therein, and subject to the terms thereof) or
applicable law during the continuance of an Event of Default. For the avoidance of doubt, upon the satisfaction of the Waiver Conditions
and so long as no Requisite Special Stockholder Meeting Event of Default has occurred on or prior to September 1, 2025, the Agent and
the Lenders hereby agree that the Existing Defaults shall be permanently waived. The waiver set forth herein is a limited, one-time waiver
and shall not constitute or be construed to be a waiver as to the Credit Parties’ future compliance with the Loan Documents or
any other representation, warranty or covenant contained in this Agreement or the other Loan Documents.
XIII. AGENT PROVISIONS; SETTLEMENT
13.1 Agent
(a) Appointment. Each Lender hereby designates and appoints Midtown Madison Management LLC as the administrative agent, payment agent and collateral agent under this Agreement and the other Loan Documents, and each Lender hereby irrevocably authorizes Midtown Madison Management LLC, as Agent for such Lender, to take such action or to refrain from taking such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are delegated to Agent by the
terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Agent agrees to act as such on the conditions contained in this Article XIII. The provisions of this Article XIII are solely for the benefit of Agent and Lenders, and Borrower shall have no rights as third-party beneficiaries of any of the provisions of this Article XIII other than the second sentence of Section 13.1(h)(iii). Agent may perform any of its duties hereunder, or under the Loan Documents, by or through its agents, employees or sub-agents.
(b) Nature of Duties. In performing its functions and duties under this Agreement, Agent is acting solely on behalf of Lenders, and its duties are administrative in nature, and does not assume and shall not be deemed to have assumed, any obligation toward or relationship of agency or trust with or for Lenders, other than as expressly set forth herein and in the other Loan Documents, or Borrower. Agent shall have no duties, obligations or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. Each Lender shall make its own independent investigation of the financial condition and affairs of Borrower in connection with the extension of credit hereunder and shall make its own appraisal of the creditworthiness of Borrower. Except for information, notices, reports and other documents expressly required to be furnished to Lenders by Agent hereunder or given to Agent for the account of or with copies for Lenders, Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the Closing Date or at any time or times thereafter. If Agent seeks the consent or approval of any Lenders to the taking or refraining from taking any action hereunder, then Agent shall send prior written notice thereof to each Lender. Agent shall promptly notify each Lender in writing any time that the applicable percentage of Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of its officers, directors, managers, members, equity owners, employees, attorneys or agents shall be liable to any Lender for any action lawfully taken or omitted by them hereunder or under any of the other Loan Documents, or in connection herewith or therewith; provided that the foregoing shall not prevent Agent from being be liable to the extent of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction on a final and nonappealable basis. Notwithstanding the foregoing, Agent shall be obligated on the terms set forth herein for performance of its express duties and obligations hereunder. Agent shall not be liable for any apportionment or distribution of payments made by it in good faith, and if any such apportionment or distribution is subsequently determined to have been made in error, the sole recourse of any Lender to whom payment was due but not made shall be to recover from the other Lenders any payment in excess of the amount to which they are determined to be entitled (and such other Lenders hereby agree promptly to return to such Lender any such erroneous payments received by them). In performing its functions and duties hereunder, Agent shall exercise the same care which it would in dealing with loans for its own account. Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties made by Borrower herein or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any of the other Loan Documents or the transactions contemplated thereby, or for the financial condition of Borrower. Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions, or conditions of this
Agreement or any of the Loan Documents or the financial condition of Borrower, or the existence or possible existence of any Default or Event of Default. Agent may at any time request instructions from Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents Agent is permitted or required to take or to grant, and Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any Person for refraining from taking any action or withholding any approval under any of the Loan Documents until it shall have received such instructions from the applicable percentage of Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the applicable percentage of Lenders and, notwithstanding the instructions of Lenders, Agent shall have no obligation to take any action if it, in good faith, believes that such action exposes Agent or any of its officers, directors, managers, members, equity owners, employees, attorneys or agents to any personal liability unless Agent receives an indemnification satisfactory to it from Lenders with respect to such action.
(d) Reliance. Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message or other communication (including any writing, telex, telecopy or telegram) believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of legal counsel, independent accountants and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not (i) jointly or (ii) jointly and severally, agrees to reimburse and indemnify and hold harmless Agent and its officers, directors, managers, members, equity owners, employees, attorneys and agents (to the extent not reimbursed by Borrower), ratably according to their respective Pro Rata Share in effect on the date on which indemnification is sought under this subsection of the total outstanding Obligations under the Loan Documents (or, if indemnification is sought after the date upon which the Loans shall have been paid in full, ratably in accordance with their Pro Rata Share immediately prior to such date of the total outstanding Obligations), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent or any of its officers, directors, managers, members, equity owners, employees, attorneys or agents in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by Agent under this Agreement or any of the other Loan Documents; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements to the extent resulting from Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction on a final and non-appealable basis. The obligations of Lenders under this Article XIII shall survive the payment in full of the Obligations and the termination of this Agreement.
(f) Agent in its Individual Capacity. With respect to the Loans made by it, if any, Midtown Madison Management LLC and its successors as the Agent shall have, and may exercise, the same rights and powers under the Loan Documents, and is subject to the same
obligations and liabilities, as and to the extent set forth in the Loan Documents, as any other Lender. The terms “Lenders” or “Requisite Lenders” or any similar terms shall include Agent in its individual capacity as a Lender. Agent and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of lending, banking, trust, financial advisory or other business with, Borrower or any Subsidiary or Affiliate of Borrower as if it were not acting as Agent pursuant hereto.
(g) Successor Agent.
(i) Resignation. Agent may resign from the performance of all or part of its functions and duties hereunder at any time by giving at least thirty (30) calendar days’ prior written notice to Borrower and Lenders. Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such notice of resignation pursuant to clause (g)(i) of this Section 13.1, Requisite Lenders shall appoint a successor Agent which is not an Ineligible Transferee. If a successor Agent shall not have been so appointed within said thirty (30) calendar day period referenced in clause (g)(i) above, the retiring Agent, upon notice to Borrower, may, on behalf of Lenders, appoint a successor Agent which is not an Ineligible Transferee, who shall serve as Agent until such time as Requisite Lenders appoint a successor Agent as provided above. If no successor Agent has been appointed pursuant to the foregoing within said thirty (30) calendar day period, the resignation shall become effective and Requisite Lenders thereafter shall perform all the duties of Agent hereunder, until such time, if any, as Requisite Lenders appoint a successor Agent as provided above.
(iii) Successor Agent. Upon the acceptance of any appointment as Agent under the Loan Documents by a successor Agent which is not an Ineligible Transferee, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and, upon the earlier of such acceptance or the effective date of the retiring Agent’s resignation, the retiring Agent shall be discharged from its duties and obligations under the Loan Documents, provided that any indemnity rights or other rights in favor of such retiring Agent shall continue after and survive such resignation and succession. After any retiring Agent’s resignation as Agent under the Loan Documents, the provisions of this Article XIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any action taken by Agent or the Requisite Lenders (or, where required by the express terms of this Agreement, a greater number of Lenders) in accordance with the provisions of this Agreement or of the other Loan Documents relating to the Collateral, and the exercise by Agent or the Requisite Lenders (or, where so required, such greater number of Lenders) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall
be authorized and binding upon all of Lenders and Agent. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive right and authority to (i) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection herewith and with the Loan Documents in connection with the Collateral; (ii) execute and deliver each Loan Document relating to the Collateral and accept delivery of each such agreement delivered by the Borrower or any Guarantor; (iii) act as collateral agent for Lenders for purposes of the perfection of all security interests and Liens created by such agreements and all other purposes stated therein; (iv) manage, supervise and otherwise deal with the Collateral; (v) take such action as is necessary or desirable to maintain the perfection and priority of the security interests and Liens created or purported to be created by the Loan Documents relating to the Collateral; and (vi) except as may be otherwise specifically restricted by the terms hereof or of any other Loan Document, exercise all right and remedies given to such Agent and Lenders with respect to the Collateral under the Loan Documents relating thereto, Applicable Law or otherwise.
(ii) Release of Collateral. Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent, for the benefit the of Lenders, upon any Collateral covered by the Loan Documents (A) upon termination of this Agreement and the indefeasible payment in full in cash of all Obligations under the Loan Documents (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted); (B) constituting Collateral being sold or disposed of if Borrower certifies to Agent that the sale or disposition is made in compliance with the provisions of the Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry); or (C) constituting Collateral leased to Borrower under a lease which has expired or been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by Borrower to be, renewed or extended.
(iii) Confirmation of Authority; Execution of Releases. Without in any manner limiting Agent’s authority to act without any specific or further authorization or consent by Lenders (as set forth in Section 13.1(h)(i) and (ii)), each Lender agrees to confirm in writing, upon request by Borrower, the authority to release any property covered by this Agreement or the Loan Documents conferred upon Agent under Section 13.1(h)(ii). So long as no Event of Default exists, upon receipt by Agent of confirmation from the requisite percentage of Lenders of its authority to release any particular item or types of Collateral covered by this Agreement or the other Loan Documents, and upon at least five (5) Business Days’ prior written request by Borrower, Agent shall (and hereby is irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Agent, for the benefit itself and the Lenders, herein or pursuant hereto upon such Collateral; provided, however, that (A) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty (other than that such Collateral is free and clear, on the date of such delivery, of any and all Liens arising from such Person’s own acts), and (B) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any Subsidiary of Borrower in respect of) all interests retained by Borrower or any Subsidiary of Borrower, including,
without limitation, the proceeds of any sale, all of which shall continue to constitute part of the Collateral covered by this Agreement or the Loan Documents.
(iv) Absence of Duty. Agent shall have no obligation whatsoever to any Lender or any other Person to assure that the Collateral covered by this Agreement or the other Loan Documents exists or is owned by Borrower or is cared for, protected or insured or has been encumbered or that the Liens granted to Agent, on behalf of the Lenders, herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected, enforced or maintained or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Section 13.1(h) or in any of the Loan Documents; it being understood and agreed that in respect of the Collateral covered by this Agreement or the other Loan Documents, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its discretion, given Agent’s own interest in Collateral covered by this Agreement or the Loan Documents as one of Lenders and Agent shall have no duty or liability whatsoever to any of the other Lenders; provided, that Agent shall exercise the same care which it would in dealing with loans for its own account.
(i) Agency for Perfection. Each Lender hereby appoints Agent as agent for the purpose of perfecting Lenders’ security interest in Collateral which, in accordance with Article 9 of the UCC in any applicable jurisdiction, can be perfected only by possession. Should any Lender (other than Agent) obtain possession of any such Collateral, such Lender shall hold such Collateral for purposes of perfecting a security interest therein for the benefit of the Lenders, notify Agent thereof and, promptly upon Agent’s request therefor, deliver such Collateral to Agent or otherwise act in respect thereof in accordance with Agent’s instructions.
(j) Exercise of Remedies. Except as set forth in Section 13.4, each Lender agrees that it will not have any right individually to enforce or seek to enforce this Agreement or any other Loan Document or to realize upon any Collateral security for the Loans or other Obligations; it being understood and agreed that such rights and remedies may be exercised only by Agent in accordance with the terms of the Loan Documents.
13.2 Lender Consent
(a) In the event Agent requests the consent of a Lender and does not receive a written denial thereof within five (5) Business Days after such Lender’s receipt of such request, then such Lender will be deemed to have given such consent so long as such request contained a notice stating that such failure to respond within five (5) Business Days would be deemed to be a consent by such Lender.
(b) In the event Agent requests the consent of a Lender in a situation where such Lender’s consent would be required and such consent is denied, then Agent may, at its option, require such Lender to assign its interest in the Loans to Agent for a price equal to the then outstanding principal amount thereof due such Lender plus accrued and unpaid interest and fees due such Lender, which principal, interest and fees will be paid to the Lender when collected from Borrower. In the event that Agent elects to require any Lender to assign its interest to Agent
pursuant to this Section 13.2 Agent will so notify such Lender in writing within forty-five (45) days following such Lender’s denial, and such Lender will assign its interest to Agent no later than five (5) calendar days following receipt of such notice.
13.3 Set-off and Sharing of Payments
In addition to any rights and remedies now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default, each Lender is hereby authorized by Borrower at any time or from time to time, to the fullest extent permitted by law, with the prior written consent of Agent and without notice to Borrower or any other Person other than Agent (such notice being hereby expressly waived) to set off and to appropriate and to apply any and all (a) balances (general or special, time or demand, provisional or final) held by such Lender at any of its offices for the account of Borrower (regardless of whether such balances are then due to Borrower ), and (b) other Collateral at any time held or owing by such Lender to or for the credit or for the account of Borrower, against and on account of any of the Obligations which are not paid when due; provided, that no Lender or any such holder shall exercise any such right without prior written notice to Agent. Any Lender that has exercised its right to set-off or otherwise has received any payment on account of the Obligations shall, to the extent the amount of any such set off or payment exceeds its Pro Rata Share of payments obtained by all of the Lenders on account of such Obligations, purchase for cash (and the other Lenders or holders of the Loans shall sell) participations in each such other Lender’s or holder’s Pro Rata Share of Obligations as would be necessary to cause such Lender to share such excess with each other Lenders or holders in accordance with their respective Pro Rata Shares; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such purchasing Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery. Borrower agrees, to the fullest extent permitted by law, that (y) any Lender or holder may exercise its right to set-off with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such excess to other Lenders and holders, and (z) any Lender so purchasing a participation in the Loans made or other Obligations held by other Lenders may exercise all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans and other Obligations in the amount of such participation.
13.4 Disbursement of Funds
(a) Agent may, on behalf of Lenders, disburse funds to Borrower for the Revolving Advance requested or any other Advance. Each Lender shall reimburse Agent on demand for its Pro Rata Share of all funds disbursed on its behalf by Agent, or if Agent so requests, each Lender shall remit to Agent its Pro Rata Share of any Advance before Agent disburses such Advance to or on account of Borrower. If Agent so elects to require that funds be made available prior to disbursement to Borrower, Agent shall advise each Lender by telephone, telex or telecopy of the amount of such Lender’s Pro Rata Share of such Advance no later than one (1) Business Day prior to the funding date applicable thereto, and each such Lender shall pay Agent such Lender’s Pro Rata Share of such requested Loan, in same day funds, by wire transfer to Agent’s account not later than 2:00 p.m. (New York City time). If Agent shall have disbursed funds to Borrower on behalf of any Lender and such Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower, and Borrower shall
immediately repay such amount to Agent. Any repayment by Borrower required pursuant to this Section 13.4 shall be without premium or penalty. Nothing in this Section 13.4 or elsewhere in this Agreement or the other Loan Documents, including, without limitation, the provisions of Section 13.5, shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.
(b) As a matter of administrative convenience, as requested from time to time by a Lender, Agent may, either directly, or through one or more of its Affiliates, on behalf of one or more Lenders, disburse funds to Borrower for an Advance that is otherwise required to be funded pursuant to Section 2.1(a)(ii) by such Lender by advancing the amount thereof on behalf of such Lender (on terms to be agreed upon between Agent and such Lender (each such advance, an “Agent Advance”)). With respect to each Agent Advance, Agent or its Affiliate(s) shall have, subject to the agreed upon terms related to such Agent Advance, the right to set off against the amounts of any payments or distributions to be made to such Lender hereunder, the entire amount of such Agent Advance, together with any agreed upon interest or fees thereon, until such Agent Advance is paid in full. For the avoidance of doubt, nothing in this Section 13.4, or elsewhere in this Agreement or the other Loan Documents, including, without limitation, the provisions of this Section 13.4, shall be deemed to require Agent or its Affiliates to advance funds on behalf of any Lender, whether in the form of an Agent Advance, or otherwise, or to relieve any Lender from such Lender’s obligation to fulfill its commitments hereunder, or to prejudice any rights that Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.
13.5 Settlements; Payments; and Information
(a) Advances; Payments; Interest and Fee Payments.
(i) The amount of the outstanding Loan may fluctuate from day to day through Agent’s disbursement of funds to or on account of, and receipt of funds from, Borrower. In order to minimize the frequency of transfers of funds between Agent and each Lender, notwithstanding terms to the contrary set forth in Section 13.4, Advances and repayments thereof may be settled according to the procedures described in Sections 13.5(a)(ii) and 13.5(a)(iii). Notwithstanding these procedures, each Lender’s obligation to fund its Pro Rata Share of any Advances made by Agent to or on account of Borrower will commence on the date such Advances are made by Agent. Nothing contained in this Agreement shall obligate a Lender to make an Advance at any time any Default or Event of Default exists. All such payments will be made by such Lender without set-off, counterclaim or deduction of any kind.
(ii) Once each week, or more frequently (including daily), if Agent so elects (each such day being a “Settlement Date”), Agent will advise each Lender by 1:00 p.m. (New York City time) on a Business Day by telephone, telex or telecopy of the amount of each such Lender’s Pro Rata Share of the outstanding Advances. In the event payments are necessary to adjust the amount of such Lender’s share of the Advances to such Lender’s Pro Rata Share of the Advances, the party from which such payment is due will pay the
other party, in same day funds, by wire transfer to the other’s account not later than 2:00 p.m. (New York City time) on the Business Day following the Settlement Date.
(iii) On the fifteenth (15th) calendar day of each month (or, if such day shall not be a Business Day, on the next Business Day following such day) (the “Interest Settlement Date”), Agent will advise each Lender by telephone or facsimile of the amount of interest and fees charged to and collected from Borrower from and including the prior Interest Settlement Date (but excluding such current Interest Settlement Date) in respect of the Loans. Provided that such Lender has made all payments required to be made by it under this Agreement and provided that Lender has not received its Pro Rata Share of interest and fees directly from Borrower, Agent will pay to such Lender, by wire transfer to such Lender’s account (as specified by such Lender on Schedule A of this Agreement as amended by such Lender from time to time after the date hereof pursuant to the notice provisions contained herein or in the applicable Lender Addition Agreement) not later than 2:00 p.m. (New York City time) on the next Business Day following the Interest Settlement Date, such Lender’s share of such interest and fees.
(b) Availability of Lenders’ Pro Rata Share.
(i) Unless Agent has been notified by a Lender prior to any proposed funding date of such Lender’s intention not to fund its Pro Rata Share of an Advance, Agent may assume that such Lender will make such amount available to Agent on the proposed funding date or the Business Day following the next Settlement Date, as applicable; provided, however, nothing contained in this Agreement shall obligate a Lender to make an Advance at any time any Default or Event of Default exists. If such amount is not, in fact, made available to Agent by such Lender when due, Agent will be entitled to recover such amount on demand from such Lender without set-off, counterclaim or deduction of any kind.
(ii) Nothing contained in this Section 13.5(b) will be deemed to relieve a Lender of its obligation to fulfill its commitments or to prejudice any rights Agent or Borrower may have against such Lender as a result of any default by such Lender under this Agreement.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from Borrower and such related payment is not received by Agent, then Agent will be entitled to recover such amount from such Lender without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by Agent under this Agreement must be returned to Borrower or paid to any other Person pursuant to any Debtor Relief Law or otherwise, then, notwithstanding any other term or condition of this Agreement, Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion of such
amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to Borrower or such other Person, without set-off, counterclaim or deduction of any kind.
13.6 Dissemination of Information
Upon request by a Lender, Agent will distribute promptly to such Lender, unless previously provided by Borrower to such Lender, copies of all notices, schedules, reports, projections, financial statements, agreements and other material and information, including, without limitation, financial and reporting information received from Borrower or generated by a third party (and excluding only internal information generated by Midtown Madison Management LLC for its own use as a Lender or as Agent and any attorney-client privileged communications or work product), as provided for in this Agreement and the other Loan Documents as received by Agent. Agent shall not be liable to any of the Lenders for any failure to comply with its obligations under this Section 13.6, except to the extent that such failure is attributed to Agent’s gross negligence or willful misconduct and results in demonstrable damages to such Lender as determined, in each case, by a court of competent jurisdiction on a final and non-appealable basis.
13.7 Non-Funding Lender
(a) The failure of any Lender to make any Advance (the “Non-Funding Lender”) on the date specified therefor shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make such Advance, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance or make any other payment required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” for any voting or consent rights under or with respect to any Loan Document. In the event that any Lender (other than a Non-Funding Lender) shall fund such Non-Funding Lender’s Pro Rata Share of such Advance, in accordance with such Lender’s Pro Rata Share (any such funding Lender, a “Funding Lender”), then such Non-Funding Lender agrees immediately to pay to each Funding Lender the amount so funded by such Funding Lender, with interest thereon, for each day from and including the date such amount was funded by such Funding Lender to, but excluding, the date of payment to each such Funding Lender, at the rate per annum equal to Adjusted Term SOFR plus three percent (3.0%). If, at a later date, such Non-Funding Lender pays the amount of its failed Pro Rata Share of the applicable Advance to the Funding Lenders, together with interest as provided above, then such amount attributable to principal shall constitute such Non-Funding Lender’s funding of its Pro Rata Share of the applicable Advance. The failure of any Lender to fund its Pro Rata Share of any Advance shall not relieve any other Lender of its obligation to fund its Pro Rata Share of such Advance.
(b) Non-Funding Lender Commitment Assignment. An Other Lender who is not then an Affiliate of a Non-Funding Lender shall have the right, but not the obligation, to acquire and assume its Pro Rata Share of a Non-Funding Lender’s then remaining Revolving Loan Commitment. Immediately upon receiving written notice from such Other Lender that it desires to acquire its Pro Rata Share of such Non-Funding Lender’s then remaining Revolving Loan Commitment, the Non-Funding Lender shall assign, in accordance with this Agreement, all or part,
as the case may be, of its Revolving Loan Commitment and other rights and obligations under this Agreement and all other Loan Documents to such Other Lender.
If no Other Lender elects to acquire and assume its Pro Rata Share of such Non-Funding Lender’s then remaining Revolving Loan Commitment as set forth in the immediately preceding paragraph within thirty (30) calendar days of such Non-Funding Lender becoming an Non-Funding Lender, then the Borrower may, by notice (a “Replacement Notice”) in writing to the Agent and the Non-Funding Lender, (i) request such Non-Funding Lender to cooperate with the Borrower in obtaining a Replacement Lender for such Non-Funding Lender (each a “Replacement Lender”); or (ii) propose a Replacement Lender. If a Replacement Lender shall be accepted by the Agent who, at the time of determination, is neither an Non-Funding Lender nor an Affiliate of an Non-Funding Lender or an Ineligible Transferee, then such Non-Funding Lender shall assign its then remaining Revolving Loan Commitment and other rights and obligations related to unfunded Revolving Loan Commitments and under this Agreement and all other Loan Documents to such Replacement Lender.
In either case, following the consummation of the assignment and assumption of the Non-Funding Lender’s remaining Revolving Loan Commitment pursuant to one of the two immediately preceding paragraphs in this Section 13.7, any remaining Revolving Loan Commitment of such Non-Funding Lender shall not terminate, but shall be reduced proportionately to reflect any such assignments and assumptions, and such Non-Funding Lender shall continue to be a “Lender” hereunder with its Revolving Loan Commitment and Pro Rata Share eliminated to reflect such assignments and assumptions. Upon the effective date of such assignment(s) and assumption(s) such Replacement Lender shall, if not already a Lender, become a “Lender” for all purposes under this Agreement and the other Loan Documents. The assignment and assumption contemplated by this paragraph shall modify the ownership of obligations related to unfunded Revolving Loan Commitments only and shall not modify the Non-Funding Lender’s rights and obligations, including, without limitation, all indemnity obligations hereunder, with respect to Advances previously funded.
13.8 Taxes
(a) Subject to Section 13.8(g), any and all payments by or on account of any obligations of Borrower to each Lender or Agent under this Agreement or any other Loan Document shall be made free and clear of, and without deduction or withholding for, any and all Taxes, excluding, in the case of each Lender and Agent, (i) such Taxes (including income taxes or franchise taxes) as are imposed on or measured by the net income (however denominated), overall receipts or total capital of such Lender or Agent, respectively, by the jurisdiction in which such Lender or Agent, as the case may be, is organized or maintains a Lending Office or any political subdivision thereof, (ii) such Taxes that are branch profits Taxes imposed by the United States of America, (iii) such Taxes as are imposed by reason of Agent’s or such Lender’s place of organization or lending office or other present or former connection between Agent or such Lender and the jurisdiction imposing such Tax (other than such connections arising from Agent or such Lender 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) (such connections described in this clause (iii), other than those connections set forth
in the parenthetical, being referred to herein as “Unrelated Connections”) and (iv) such Taxes expressly described in clauses (i)-(iv) of Section 13.8(g) hereof (all such excluded Taxes described in the foregoing clauses (i)-(iv) above being referred to as “Excluded Taxes” and such Taxes, levies, imposts, deductions, charges, withholdings and liabilities described above in this Section 13.8(a) other than Excluded Taxes being referred to as “Indemnified Taxes” for the purposes of this Agreement).
(b) In addition, Borrower shall pay to the relevant Governmental Authority any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document, except any such Taxes that are imposed as a result of Unrelated Connections and with respect to an assignment(hereinafter referred to as “Other Taxes”).
(c) Borrower shall indemnify and hold harmless each Lender and Agent for the full amount of any and all Indemnified Taxes or Other Taxes (including any Indemnified Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 13.8) paid or payable by such Lender or Agent and any liability (other than any penalties, interest, additions, and expenses that accrue both after the 120th day after the receipt by Agent or such Lender of written notice of the assertion of such Indemnified Taxes or Other Taxes and before the date that Agent or such Lender provides Borrower with a certificate relating thereto pursuant to Section 13.8(l)) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant Governmental Authority. Payments under this indemnification shall be made within 10 days from the date any Lender or Agent makes written demand therefor.
(d) If Borrower shall be required by Applicable Law to deduct or withhold any Indemnified Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or Agent, then:
(i) the sum payable shall be increased to the extent necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 13.8), such Lender or Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made;
(ii) Borrower shall make such deductions; and
(iii) Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law.
(e) Borrower shall furnish to Agent (and the applicable Lender) a receipt evidencing payment by Borrower of Indemnified Taxes or Other Taxes to a Governmental Authority promptly, but in any event within ten (10) Business Days, after obtaining such receipt, or other evidence of payment satisfactory to Agent (and the applicable Lender) within ten (10) Business Days after the date of any payment by Borrower of Indemnified Taxes or Other Taxes to a Governmental Authority.
(f) Each Lender that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States (or any jurisdiction thereof), or any estate or trust that is subject to United States federal income taxation regardless of the source of its income or is otherwise a “foreign person” within the meaning of Treasury Regulation Section 1.1441-1(c) (a “Non-U.S. Lender”) shall deliver to Borrower and Agent (or, in the case of an assignment that is not disclosed to Borrower in accordance with the provisions of Section 12.2, solely to the assigning Lender and Agent and not to Borrower) two (2) copies of each applicable U.S. Internal Revenue Service Form W-8BEN, Form W-8BEN-E, Form W-8IMY or Form W-8ECI, or any subsequent versions thereof or successors thereto or other forms prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from United States federal withholding Tax on all payments by Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement. In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. In addition to properly completing and duly executing Forms W-8BEN, W-8BEN-E or W-8IMY (or any subsequent versions thereof or successor thereto), if such Non-U.S. Lender is claiming an exemption from withholding of United States Federal income tax under Section 871(h) or 881(c) of the Code, such Lender hereby represents and warrants that (A) it is not a “bank” within the meaning of Section 881(c) of the Code, (B) it is not subject to regulatory or other legal requirements as a bank in any jurisdiction, (C) it has not been treated as a bank for purposes of any Tax, securities law or other filing or submission made to any governmental securities law or other legal requirements, (D) it is not a “10 percent shareholder” within the meaning of Section 871(h)(3)(B) of the Code of Borrower, (E) it is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code and (F) none of the interest arising from this Agreement constitutes contingent interest within the meaning of Section 871(h)(4) or Section 881(c)(4) of the Code and such Non-U.S. Lender agrees that it shall provide Agent, and Agent shall provide to Borrower (or, in the case of an assignment that is not disclosed to Borrower in accordance with the provisions of Section 12.2, solely to the assigning Lender and Agent and not to Borrower), with prompt notice at any time after becoming a Lender hereunder that it can no longer make the foregoing representations and warranties. If a payment made to a Non-U.S. Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA, such Lender shall deliver to the Borrower and Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by Applicable Law and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. (Solely for purposes of the foregoing sentence, FACTA shall include all amendments to FACTA after the date of this Agreement.) Each Non-U.S. Lender shall promptly notify Borrower (or, in the case of an assignment that is not disclosed to Borrower in accordance with the provisions of Section 12.2, solely to the assigning Lender and Agent and not to Borrower) at any time it determines that it is no longer in a position to provide any previously delivered form or certificate (or any other form of certification adopted by the U.S.
taxing authorities for such purpose). Notwithstanding any other provision of this section, a Non-U.S. Lender shall not be required to deliver any form pursuant to this subsection (other than Form W-8BEN, Form W-8BEN-E, Form W-8IMY or Form W-8ECI, or any subsequent versions thereof or successors thereto, as applicable) if, in the Lender’s reasonable judgment, such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Each Lender who makes an assignment pursuant to Section 12.2 shall indemnify and agree to hold Agent, Borrower and the other Lenders harmless from and against any United States federal withholding Tax, interest and penalties that would not have been imposed but for (i) the failure of the Affiliate that received such assignment under Section 12.2 to comply with this Section 13.8(f) or (ii) the failure of such Lender to withhold and pay such tax at the proper rate in the event such Affiliate does not comply with this Section 13.8(f) (or complies with Section 13.8(f) but delivers forms indicating it is entitled to a reduced rate of such tax). Any Lender that is a U.S. Lender shall deliver to Borrower and Agent (i) a properly prepared and duly executed U.S. Internal Revenue Service Form W-9, or any subsequent versions thereof or successors thereto, certifying that such Lender is entitled to receive any and all payments under this Agreement and each other Loan Document free and clear from withholding of United States federal income taxes and (ii) upon Borrower’s reasonable request, such other reasonable documentation as will enable Borrower and/or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Each Person that shall become a Participant pursuant to Section 12.2 shall, on or before the date of the effectiveness of the related transfer, be required to provide all of the forms, certifications and statements required pursuant to this Section 13.8(f) and Section 13.8(h), and shall make the representations and warranties set forth in clauses (A) – (F) above, provided that the obligations of such Participant, pursuant to this Section 13.8(f) and Section 13.8(h), shall be determined as if such Participant were a Lender except that such Participant shall furnish all such required forms, certifications and statements to the Lender from which the related participation shall have been purchased.
(g) Borrower will not be required to pay any additional amounts in respect of United States federal withholding or income Tax pursuant to Section 13.8(d) to any Lender or Agent or to indemnify any Lender or Agent pursuant to Section 13.8(c) to the extent that (i) the obligation to pay such additional amounts would not have arisen but for a failure by such Lender to comply with its obligations under Section 13.8(f) for any reason; (ii) with respect to a Lender, the obligation to withhold amounts with respect to the United States federal withholding Tax existed on the date such Lender became a party to this Agreement or, with respect to payments to a lending office newly designated by a Lender (a “New Lending Office”), the date such Lender designated such New Lending Office with respect to the applicable Loan; provided that this clause (ii) shall not apply to the extent the additional amounts any Lender (or Transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (ii)) do not exceed the additional amounts that the Person making the transfer, or Lender (or Transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such transfer or designation; (iii) such Lender is claiming an exemption from withholding of United States Federal income Tax under Sections 871(h) or 881(c) of the Code but is unable at any time to make the representations and warranties set forth in clauses (A) – (F) of Section 13.8(f) or (iv) any withholding Taxes imposed under FATCA.
(h) Each Non-U.S. Lender agrees to provide Borrower and the Agent, upon the reasonable request of Borrower, such other forms or documents as may be reasonably required under Applicable Law in order to establish an exemption from or eligibility for a reduction in the rate or imposition of Taxes or Other Taxes. If, at any time, Borrower requests any Lender to deliver any such additional forms or other documentation, then Borrower shall, on demand of such Lender through Agent, reimburse such Lender for any out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) reasonably incurred by such Lender in the preparation or delivery of such forms or other documentation.
(i) If Borrower is required to pay additional amounts to or for the account of any Lender or Agent pursuant to this Section 13.8, then such Lender or Agent shall use its reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested by Borrower or to designate a Lending Office from a different jurisdiction (if such a Lending Office exists) so as to eliminate or reduce any such additional payments by Borrower which may accrue in the future if such filing or changes in the reasonable judgment of such Lender or Agent, would not require such Lender to disclose information such Lender deems confidential and is not otherwise disadvantageous to such Lender or Agent.
(j) If Agent or a Lender, in its reasonable judgment, receives a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section 13.8, it shall promptly pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section 13.8 with respect to the Taxes or Other Taxes giving rise to such refund) and any interest paid by the relevant Governmental Authority with respect to such refund, provided, that Borrower, upon the request of Agent or such Lender, shall repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent or such Lender in the event Agent or such Lender is required to repay the applicable refund to such Governmental Authority.
(k) Notwithstanding anything herein to the contrary, if Agent is required by law to deduct or withhold any Taxes or Other Taxes or any other Taxes from or in respect of any sum payable to any Lender by Borrower or Agent, the Agent shall not be required to make any gross-up payment to or in respect of such Lender, except to the extent that a corresponding gross-up payment is actually received by Agent from Borrower.
(l) Any Lender claiming reimbursement or compensation pursuant to this Section 13.8 shall deliver to Borrower (with a copy to Agent) a certificate setting forth in reasonable detail the amount payable to such Lender hereunder and such certificate shall be conclusive and binding on Borrower in the absence of manifest error.
(m) The Term Loans (as defined in this Agreement immediately prior to giving effect to the First Amendment) are intended to be treated as issued together with the Closing Date Warrants as part of an “investment unit” as described in Section 1273(c)(2) of the Code. Pursuant to Treasury Regulation Section 1.1273-2(h), for U.S. federal, state and local income tax purposes, the issue price of such investment unit will be allocated between the Term Loans (as defined in this Agreement immediately prior to giving effect to the First Amendment) made pursuant to this Agreement and the Closing Date Warrants based on their respective relative fair market values
and the fair market value of the Closing Date Warrants shall be the last reported sale price of the Maximum Warrant Shares on the Nasdaq Stock Market on the Closing Date. No party shall take any position on a tax return, report or declaration inconsistent with the above intended tax treatment, unless otherwise required by Applicable Law.
The agreements and obligations of Borrower in this Section 13.8 shall survive the payment of all other Obligations.
13.9 Patriot Act
Each Lender that is subject to the requirements of the Patriot Act and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Agent and each Lender to identify Borrower in accordance with the Patriot Act. Borrower shall, promptly following a request by Agent or any Lender, provide all documentation and other information that Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” an anti-money laundering rules and regulations, including the Patriot Act.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, each of the parties has duly executed this Amended and Restated Loan and Security Agreement as of the date first written above.
| BORROWER: | ||
| KATAPULT SPV-1 LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
| HOLDINGS: | ||
| KATAPULT GROUP, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| PARENT ENTITY: | ||
| Katapult Holdings, Inc. | ||
| By: | ||
| Name: | ||
| Title: | ||
Address for all Credit Parties:
5360 Legacy Dr. Bldg 2, Suite 135 Plano, TX 75024 Attention: Wes Twomey Email: wes@katapult.com | ||
| AGENT: | ||
| MIDTOWN MADISON MANAGEMENT LLC | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
Address:
Midtown Madison Management LLC
399 Park Avenue, 37th Floor
New York, NY 10022
Attention: Justin Burns
Email: Justin.Burns@blueowl.com
With a copy to:
Blue Owl Alternative Credit Advisors LLC
399 Park Avenue, 37th Floor
New York, NY 10022
Attention: Steven Segaloff
e-mail: segaloff@blueowl.com; legal@blueowl.com
and:
Holland & Knight LLP
One Arts Plaza, 1722 Routh Street, Suite 1500
Dallas, Texas 75201
Attention: Matthew Fontane
Phone: 214-964-9454
Email: matthew.fontane@hklaw.com
| CLASS A-1 LENDERS: | ||
| BLUE OWL ASSET Income Fund IV LP | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
| BLUE OWL ASSET Income Fund (Cayman) IV LP | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
| BLUE OWL Asset Income Fund V LP | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
| BLUE OWL Asset Income Fund (Cayman) V LP | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
| CLASS A-2 LENDERS: | ||
| BLUE OWL Asset Income Fund V LP | ||
| By: | ||
| Name: | ||
| Title: | Authorized Signatory | |
CLASS B LENDERS:
BLUE OWL Special Opportunities Fund VII LP
By:
Name:
Title: Authorized Signatory
BLUE
OWL Special Opportunities Fund (CAYMAN) VII LP
By:
Name:
Title: Authorized Signatory
BLUE OWL ASSET
INCOME FUND IV LP
By:
Name:
Title: Authorized Signatory
BLUE OWL ASSET
INCOME FUND (CAYMAN) IV LP
By:
Name:
Title: Authorized Signatory
BLUE OWL ASSET
INCOME FUND V LP
By:
Name:
Title: Authorized Signatory
BLUE OWL ASSET
INCOME FUND (CAYMAN) V LP
By:
Name:
Title: Authorized Signatory
Exhibit 10.2
Execution Version
SERIES A INVESTMENT AGREEMENT
dated as of November 3, 2025
by and between
Katapult Holdings, Inc.
and
HHCF Series 21 Sub, LLC
| Page | ||
| Article I PURCHASE; CLOSING | 1 | |
| 1.1 | Purchase; Use of Proceeds | 1 |
| 1.2 | Closing | 2 |
| 1.3 | Closing Conditions | 2 |
| Article II REPRESENTATIONS AND WARRANTIES | 3 | |
| 2.1 | Representations and Warranties of the Company | 3 |
| 2.2 | Representations and Warranties of the Purchaser | 12 |
| Article III COVENANTS | 14 | |
| 3.1 | Authorized Common Stock | 14 |
| 3.2 | Nasdaq Listing Application | 14 |
| 3.3 | Information Rights | 14 |
| 3.4 | Resigning Directors | 15 |
| 3.5 | Controlling Stockholder Transactions | 15 |
| 3.6 | Nondisparagement | 15 |
| Article IV ADDITIONAL AGREEMENTS | 16 | |
| 4.1 | Transfer Restrictions | 16 |
| 4.2 | Legend | 17 |
| 4.3 | Tax Matters | 17 |
| 4.4 | Survival | 17 |
| Article V MISCELLANEOUS | 18 | |
| 5.1 | Amendment; Waiver | 18 |
| 5.2 | Counterparts; Electronic Transmission | 18 |
| 5.3 | Governing Law | 18 |
| 5.4 | Notices | 19 |
| 5.5 | Entire Agreement | 20 |
| 5.6 | Assignment | 20 |
| 5.7 | Fees and Expenses | 20 |
| 5.8 | Interpretation | 20 |
| 5.9 | Captions | 21 |
| 5.10 | Severability | 21 |
| 5.11 | Third Party Beneficiaries | 21 |
| 5.12 | Public Announcements | 21 |
| 5.13 | Specific Performance | 22 |
| 5.14 | Definitions | 22 |
- i -
LIST OF EXHIBITS
| Exhibit A: | Form of Series A Certificate of Designations |
| Exhibit B: | Form of Support Agreement |
| Exhibit C: | List of Supporting Stockholders |
| Exhibit D: | Form of Warrant Acquisition Agreement |
| Exhibit E: | Form of Series A Registration Rights Agreement |
| Exhibit F: | Form of Director Nomination Agreement |
- ii -
This SERIES A INVESTMENT AGREEMENT, dated as of November 3, 2025 (this “Agreement”), by and between Katapult Holdings, Inc., a Delaware corporation (the “Company”), and HHCF Series 21 Sub, LLC, a Delaware limited liability company or its Affiliates (as defined herein) (collectively, the “Purchaser”). Capitalized terms used herein are defined in Section 5.14 or as otherwise defined elsewhere in this Agreement, unless the context clearly indicates otherwise.
RECITALS:
WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, 35,000 shares of its convertible preferred stock, par value $0.0001 per share, designated as “Series A Convertible Preferred Stock” (the “Preferred Stock”), having the terms set forth in the Certificate of Designations (the “Certificate of Designations”) in the form attached hereto as Exhibit A, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the Purchaser’s willingness to enter into this Agreement, (i) the Company has obtained and delivered to the Purchaser support agreements substantially in the form attached hereto as Exhibit B (the “Series A Support Agreements”), executed by each Stockholder identified on Exhibit C (the “Supporting Stockholders”) and (ii) Blue Owl and the Purchaser have entered into a Warrant Acquisition Agreement substantially in the form attached hereto as Exhibit D (the “Warrant Acquisition Agreement”).
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
Article
I
PURCHASE; CLOSING
1.1 Purchase; Use of Proceeds. On the terms and subject to the conditions herein, on the Closing Date, the Company agrees to sell and issue to the Purchaser, and the Purchaser agrees to purchase from the Company 35,000 shares of Preferred Stock (the “Shares”), free and clear of any Liens (other than restrictions arising under applicable securities Laws), at a purchase price of $1,000 per Share (the “Per Share Price”). The aggregate purchase price for the Shares shall be equal to $35,000,000 (the number of Shares multiplied by the Per Share Price) (the “Purchase Price”). Any use of proceeds shall be subject to prior approval of the board of directors of the Company (the “Board of Directors”) following the Closing and, for the avoidance of doubt, such approval shall be by the Board of Directors that includes any directors designated by the Purchaser pursuant to the Nomination Agreement. All proceeds not specifically allocated for uses on the Closing Date shall be deposited into a segregated account of the Company, and any disbursements from such account shall require approval of the Company’s Chief Financial Officer and prior written notice to the directors of the Company designated by the Purchaser pursuant to the
Nomination Agreement. The Company will use the proceeds for general corporate purposes and repayment of the term loans outstanding as of the Closing under the Credit Agreement.
1.2 Closing.
(a) The closing of the purchase and sale of the Shares (the “Closing”) shall occur simultaneously with the execution and delivery hereof and on the date hereof (the “Closing Date”). On the Closing Date, actions set forth in Sections 1.2(b), 1.2(c) and 1.3 shall also occur:
(b) At the Closing:
(1) the Company will deliver, or cause to be delivered, to the Purchaser (i) evidence of the issuance of the Shares in the name of the Purchaser by book entry on the stock ledger of the Company, (ii) the executed Series A Registration Rights Agreement, in the form attached hereto as Exhibit E (the “Series A Registration Rights Agreement”) hereto, (iii) the executed Director Nomination Agreement, in the form attached hereto as Exhibit F (the “Nomination Agreement”), (iv) the executed Resignation Letters and (iv) all other documents, instruments and writings required to be delivered by the Company to the Purchaser pursuant to this Agreement; and
(2) the Purchaser will deliver or cause to be delivered (i) to a bank account designated by the Company in writing on or prior to the Closing Date, the Purchase Price by wire transfer of immediately available funds, (ii) the executed Series A Registration Rights Agreement, (iii) the executed Nomination Agreement, and (iv) all other documents, instruments and writings required to be delivered by the Purchaser to the Company pursuant to this Agreement.
(c) All deliveries at the Closing will be deemed to occur simultaneously.
1.3 Closing Conditions.
(a) The Support Agreements shall remain in full force and effect;
(b) the Company shall have filed the Certificate of Designations with the Secretary of State of the state of Delaware on or prior to the Closing, which shall continue to be in full force and effect as of the Closing;
(c) Prior to the Closing, the Company shall submit to The Nasdaq Stock Market LLC (“Nasdaq”) a listing application for the Company’s Common Stock (the “Nasdaq Listing Application”) for the listing of the shares of the Company’s Common Stock underlying the Shares;
(d) Each of Brian Hirsch, Chris Masto and Jane J. Thompson has resigned effective as of the Closing; and
(e) Each of Philip Key Bartow III and Jeffrey Rubin has been appointed as Class I Directors to the Board of Directors effective as of the Closing and Derek Medlin has been appointed to the Board of Directors as a Class III Director effective as of the Closing.
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Article
II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. Except as set forth (x) in SEC Documents (as defined below) filed prior to the date of this Agreement, excluding any disclosures set forth in any risk factor section, any disclosure in any section relating to forward-looking statements or any other disclosures included in any such form, report, schedule, statement or other document to the extent they are predictive, cautionary or forward-looking in nature or constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or (y) in a correspondingly identified schedule attached hereto (provided that any such disclosure shall be deemed to be disclosed with respect to each other representation and warranty to which the relevance of such exception is reasonably apparent on the face of such disclosure), the Company represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date), that:
(a) Organization and Authority.
(1) The Company (i) is a corporation duly organized and validly existing under the laws of the state of Delaware, (ii) has all requisite corporate power and authority to own its properties and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except, in the case of this clause (iii), where failure to be so qualified or in good standing, individually or in the aggregate, has not and would not reasonably be expected to have a Company Material Adverse Effect. True and accurate copies of the (A) the Second Amended and Restated Certificate of Incorporation of the Company (as amended by that certain Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated July 27, 2023, and as further amended or modified from time to time prior to the date hereof, the “Certificate of Incorporation”) and the Second Amended and Restated Bylaws of the Company (as amended or modified from time to time prior to the date hereof, the “Bylaws”), each as in effect, have been made available to the Purchaser prior to the date hereof.
(2) Each of the Company’s Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the “SEC”)) are set forth on Exhibit 21.1 to its most recent Annual Report on Form 10-K, and the Company owns, directly or indirectly, 100% of the outstanding equity securities of such subsidiaries. Each of the Company’s Significant Subsidiaries (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) has all requisite corporate or other applicable entity power and authority to own its properties and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified or in good standing, except, in the case of this clause (iii), where failure to be so qualified, individually or in the aggregate, has not and would not reasonably be expected to have a Company Material Adverse Effect.
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(b) Capitalization.
(1) The authorized capital stock of the Company consists of 250,000,000 shares of Common Stock, par value $0.0001 per share (the “Common Stock”), and 25,000,000 shares of Preferred Stock. As of the close of business on October 31, 2025, (i) 4,589,310 shares Common Stock were issued and outstanding, (ii) no shares of Preferred Stock were issued, (iii) 255,189 shares of Common Stock were subject to outstanding Company Options, (iv) no shares of Common Stock were subject to outstanding Company PSUs (assuming satisfaction of performance goals for incomplete periods at the maximum level), (v) 157,224 shares of Common Stock were subject to outstanding Company RSUs, (vi) 1,159,564 shares of Common Stock were subject to outstanding Company Warrants and (vii) no shares of Common Stock held in treasury. Since October 31, 2025, no other shares of Common Stock have been issued other than shares of Common Stock issued in respect of the exercise of Company Options or settlement of Company RSUs or Company PSUs in the ordinary course of business.
(2) All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable, and are not subject to and were not issued in violation of any preemptive or similar right, purchase option, call or right of first refusal or similar right. Except as set forth in Section 2.1(b)(1), the Company has not issued any securities or right to purchase securities of the Company (including any options, warrants or other rights, agreements, arrangements or commitments of any character or any securities convertible into or exchangeable for any capital stock or other Equity Interests of the Company). Except as provided in the Transaction Documents or the Series B Transaction Documents, there are no outstanding contractual obligations of the Company or any of its Subsidiaries (i) restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the sale, issuance, repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (iv) requiring the registration for sale of, or (v) granting any preemptive or antidilutive right, with respect to any shares of capital stock of, or other Equity Interests in, the Company or any of the Company Subsidiaries. The Company does not have outstanding shareholder purchase rights or “poison pill” or any similar arrangement in effect.
(3) None of the Company or any of the Company Subsidiaries hold an Equity Interest in any Person other than Equity Interests in other Company Subsidiaries. Each outstanding share of capital stock of or other Equity Interest in each Company Subsidiary is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by the Company or one or more of its wholly-owned Subsidiaries free and clear of all Liens. There are no options, warrants or other rights, agreements, arrangements or commitments of any character to which any Company Subsidiary is a party or by which any Company Subsidiary is bound relating to the issued or unissued capital stock or other Equity Interests of such Company Subsidiary, or securities convertible into or exchangeable for such capital stock or other Equity Interests, or obligating any Company Subsidiary to issue or sell any shares of its capital stock or other Equity Interests, or securities convertible into or exchangeable for such capital stock of, or other Equity Interests in, such Company Subsidiary. None of the Company or any Company Subsidiary is a party to any shareholders’ agreement, voting trust agreement or
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other similar agreement or understanding relating to any shares of the Company’s or any Company Subsidiary’s capital stock or other Equity Interests or any other agreement relating to the disposition, voting or dividends with respect to any Equity Interest of the Company or a Company Subsidiary. No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into or exchangeable for, securities having the right to vote) on any matters on which the shareholders of the Company may vote are issued.
(c) Authorization.
(1) The Company has the corporate power and authority to enter into this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors. This Agreement has been, and (as of the Closing) the other Transaction Documents will be, duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchaser, this Agreement is, and (as of the Closing) each of the other Transaction Documents will be, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). The Certificate of Designations sets forth the rights, preferences and priorities of the Preferred Stock, and the holders of the Preferred Stock have the rights set forth in the Certificate of Designations. Except as would not reasonably be expected to have a Company Material Adverse Effect, no other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement or the other Transaction Documents, the performance by it of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or thereby.
(2) Neither the execution and delivery by the Company of this Agreement or the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof (including the rights of the Shares to convert into shares of Common Stock), will (i) require notice, consent or approval pursuant to, violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under any of the terms, conditions or provisions of (A) the Certificate of Incorporation or the Bylaws or the certificate of incorporation, charter, bylaws or other governing instrument of any Company Subsidiary or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which it may be bound, or to which the Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (ii) violate any law, statute, ordinance, rule, regulation, permit, franchise or any judgment, ruling, order,
5
writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties or assets, except for, in the case of clauses (i) and (ii) for such violations, conflicts and breaches as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(3) Other than (i) the securities or blue sky laws of the various states, (ii) the filing of one or more required reports, proxy statements, forms, and other documents with the SEC, (iii) pursuant to any law or regulation applicable to the filing of the Certificate of Designations with the Secretary of State of the State of Delaware and (iv) the listing on the Nasdaq of the shares of Common Stock issuable upon the conversion of the Shares, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of any Governmental Entity or stock exchange, nor expiration or termination of any statutory waiting period, is necessary for the execution and delivery by the Company of this Agreement or the other Transaction Documents or the consummation by the Company of the transactions contemplated by this Agreement or the other Transaction Documents.
(d) Sale of Securities. Assuming the accuracy of the Purchaser’s representations in Section 2.2, the offer and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations promulgated thereunder. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D as promulgated by the SEC under the Securities Act) in connection with the offer or sale of any of the Shares. Neither the Company nor its Subsidiaries nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any Company security, under circumstances that would adversely affect reliance by the Company on Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Shares under the Securities Act.
(e) Status of Securities. The Shares to be issued pursuant to this Agreement and the shares of Common Stock to be issued upon conversion of the Shares have been duly authorized by all necessary corporate action of the Company. When issued and sold against receipt of the consideration therefor as provided in this Agreement or the Certificate of Designations, the Shares will be validly issued, fully paid and nonassessable, will not be subject to preemptive or similar rights under Delaware Law or under the Certificate of Incorporation or the Bylaws, and will effectively vest in the Purchaser good title to all such securities, free and clear of all Liens, except restrictions imposed by the Securities Act and any applicable state, foreign or other securities laws. Upon any conversion of any Shares into shares of Common Stock pursuant to the terms of the Certificate of Designations, such shares of Common Stock issued upon such conversion will be validly issued, fully paid and nonassessable, and will not be subject to preemptive rights under Delaware Law or under the Certificate of Incorporation or the Bylaws, and will effectively vest in the Purchaser good title to all such securities, free and clear of all Liens, except restrictions imposed by the Securities Act and any applicable state, foreign or other securities laws. The shares of Common Stock to be issued upon any conversion of the Shares have been duly reserved for such issuance.
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(f) SEC Documents; Financial Statements.
(1) The Company has filed, on a timely basis, all required reports, proxy statements, forms, and other documents with the SEC since September 30, 2022 (collectively, the “SEC Documents”), except for late filings, all of which were subsequently filed. Each of the SEC Documents, as of its respective filing date complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and, except to the extent that information contained in any SEC Document has been revised or superseded by a later filed SEC Document filed and publicly available prior to the date of this Agreement, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(2) The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information (both financial and non-financial) relating to the Company, including its consolidated Subsidiaries, is made known to the individuals responsible for the preparation of the Company’s filings with the SEC and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the Board of Director’s audit committee (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.
(3) There is no transaction, arrangement or other relationship between the Company and/or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its SEC Documents and is not so disclosed.
(4) Except as disclosed in the SEC Documents, the financial statements of the Company and its consolidated Subsidiaries included in the SEC Documents (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, in each case as of the date such SEC Document was filed, and (ii) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
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consolidated results of their operations and cash flows of the Company and its consolidated Subsidiaries for the periods then ended (subject, in the case of unaudited quarterly statements, to the absence of footnote disclosures and normal year-end audit adjustments).
(g) Brokers and Finders. Except for Guggenheim Securities, LLC (“Guggenheim”) pursuant to (i) that certain engagement letter dated September 11, 2024 between the Company and Guggenheim and (ii) that certain engagement letter dated March 24, 2025 between the Company and Guggenheim, the fees and expenses of which will be paid by the Company, neither the Company nor its Subsidiaries or any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.
(h) Litigation. There is no action, suit, proceeding or investigation pending or, to the Knowledge of the Company, threatened (including “cease and desist” letters or invitations to take patent license) against, nor any outstanding judgment, order, writ or decree against, the Company or any of its Subsidiaries or any of their respective assets before or by any Governmental Entity, which individually or in the aggregate has had, or, would reasonably be expected to have (including for this purpose, assuming an adverse determination of any such matter), a Company Material Adverse Effect. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree of any Governmental Entity.
(i) Indebtedness. Except as set forth in the SEC Documents and after giving effect to waivers obtained on or prior to the date hereof, neither the Company nor any of its Subsidiaries is, immediately prior to the execution and delivery of this Agreement, in default in the payment of any material indebtedness or in default under any agreement relating to its material indebtedness.
(j) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the Knowledge of the Company is reasonably likely to, have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received as of the date of this Agreement any notification that the SEC is contemplating terminating such registration.
(k) Taxes. Except as set forth in the SEC Documents, the Company and each Company Subsidiary has filed all tax returns that are required to be filed or has requested extensions thereof and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except (i) for any such assessment, fine or penalty that is currently being contested in good faith or (ii) where such failure to file or pay would not have a Company Material Adverse Effect.
(l) Employee Relations. No material labor dispute exists or, to the Company’s Knowledge, is threatened with respect to any of the employees of the Company or any of its Subsidiaries which would have or would reasonably be expected to result in a Material Adverse Effect. None of the Company’s or any Subsidiary’s employees is a member of a labor union that
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relates to such employee’s relationship with the Company, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement. To the Company’s Knowledge, no executive officer or member of management of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, and to the Company’s Knowledge, the continued employment of each such executive officer or key employee does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters, except, in each case, matters that, individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect. The Company is in compliance in all material respects with all U.S. federal, state, and local Laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours. Any Employee Plans that are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code have received or are otherwise entitled to rely upon determination or opinion letters from the Internal Revenue Service to the effect that such plans are qualified under Section 401(a) of the Code and the related trusts are exempt from federal income Taxes under Section 501(a) of the Code, respectively, and nothing has occurred that would reasonably be expected to materially adversely affect the qualification of such Employee Plan or the tax exempt status of the related trust. No labor problem or dispute with the employees of the Company or any Company Subsidiary exists or, to the knowledge of the Company, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, contractors or customers, that could have a Company Material Adverse Effect
(m) Licenses. The Company and each Company Subsidiary possess all licenses, certificates, permits and other authorizations issued by all applicable authorities necessary to conduct its business, except in each case, the lack of which would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect, and neither the Company nor any Company Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Company Material Adverse Effect.
(n) Intellectual Property. Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company Subsidiary owns, possesses, licenses or has other rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of their business as now conducted, (ii) to the Company’s knowledge, there is no infringement by third parties of any Intellectual Property owned by the Company or any Company Subsidiaries; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s or any Company Subsidiaries’ rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned by the Company or any Company Subsidiaries, and the Company is unaware of any facts which would form a reasonable basis for
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any such claim; and (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any Company Subsidiary infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any other fact which would form a reasonable basis for any such claim.
(o) Data Privacy. Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company Subsidiary have complied and are presently in compliance with all of their internal and external privacy policies, contractual obligations, applicable laws, statutes, judgments, orders, rules and regulations of any court or arbitrator or other governmental or regulatory authority and any other binding legal obligations, in each case, relating to the collection, use, transfer, import, export, storage, protection, disposal and disclosure by the Company and each Company Subsidiary of personal data or personally identifiable information (“Data Security Obligations”, and such data, “Data”); (ii) neither the Company nor any Company Subsidiary has received any written notification of or complaint regarding and, to the Company’s knowledge, there are no other facts that, individually or in the aggregate, would reasonably indicate the Company’s non-compliance with any Data Security Obligation; and (iii) there is no action, suit or proceeding by or before any court or governmental agency, authority or body pending or, to the Company’s knowledge, threatened alleging in writing the Company’s non-compliance with any Data Security Obligations.
(p) Cybersecurity. The Company and each Company Subsidiary have taken commercially reasonable technical and organizational measures designed to protect the information technology systems and Data used in connection with the operation of their business. Without limiting the foregoing, the Company and each Company Subsidiary have used commercially reasonable efforts to establish and maintain, and have established, maintained, implemented and complied with, commercially reasonable information technology, information security, cyber security and data protection controls, policies and procedures designed to protect against and prevent unauthorized access to or acquisition of Data used in connection with the operation of the their business (“Breach”). To the Company’s knowledge, there has been no such Breach, and neither the Company nor any Company Subsidiary has been notified in writing of and has no knowledge of any event or condition that would reasonably be expected to result in, any such Breach.
(q) Bribery and Anti-Money Laundering Laws. Each of the Company, each Company Subsidiary and any of their respective officers, directors, supervisors, managers, agents, or employees are and have at all times been in compliance in all material respects with and its participation in the offering will not violate: (A) anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or any other law, rule or regulation of similar purposes and scope or (B) anti-money laundering laws, including, but not limited to, applicable federal, state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including, without limitation, Title 18 US. Code sections 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the
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Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder.
(r) XBRL. The interactive data in eXtensible Business Reporting Language included in the SEC Documents fairly presents the information called for in all material respects and has been prepared in accordance with the SEC’s rules and guidelines applicable thereto.
(s) Absence of Changes. Since December 31, 2024, except as set forth in a subsequent SEC Document filed prior to the date hereof or as contemplated by the Transaction Documents, or in connection with the filing of the Certificate of Designations, there has not been any other change, development, occurrence or event that has had or would reasonably be expected to have a Company Material Adverse Effect.
(t) Compliance with Environmental Laws. Since January 1, 2022, the Company and each Company Subsidiary has complied with all applicable federal, state, local or foreign Law relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (“Environmental Laws”), which compliance includes the possession by the Company of all permits and other governmental authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof, except for any failure to be in compliance that, individually or in the aggregate, would not result in or reasonably be expected to result in a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received since January 1, 2022, any written notice or other communication (in writing or otherwise), whether from a Governmental Entity, citizens group, employee or otherwise, that alleges that the Company or any Company Subsidiary is not in compliance with any Environmental Law, and, to the Company’s Knowledge, there are no circumstances that may prevent or interfere with the Company’s or any Company Subsidiary compliance with any Environmental Law in the future, except where such failure to comply would not reasonably be expected to have a Company Material Adverse Effect. To the Company’s Knowledge: (i) no current or prior owner of any property leased or controlled by the Company or any Company Subsidiaries has received, since January 1, 2022, any written notice or other communication relating to property owned or leased at any time by the Company or any Company Subsidiary, whether from a Governmental Entity, citizens group, employee or otherwise, that alleges that such current or prior owner or the Company or any of its Subsidiaries is not in compliance with or violated any Environmental Law relating to such property and neither the Company nor any Company Subsidiary has any material liability under any Environmental Law.
(u) No Additional Representations. Except for the representations and warranties made by the Company in this Section 2.1, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or any Subsidiaries or their respective businesses, operations, assets, liabilities, employees, Employee Plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other Person
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makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to the Company or any of its Subsidiaries or their respective business, or (ii) any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any certificate delivered pursuant hereto, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for fraud.
2.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date), that:
(a) Organization and Authority. The Purchaser (i) is duly organized, validly existing and in good standing under the laws of the state of Delaware, (ii) has all requisite limited liability company power and authority to own its properties and assets and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except, in the case of this clause (iii), where failure to be so qualified has not and would not reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis and (iv) is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D.
(b) Authorization.
(1) The Purchaser has the limited liability company power and authority to enter into this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Purchaser and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Purchaser. This Agreement has been, and (as of the Closing) the other Transaction Documents will be, duly and validly executed and delivered by the Purchaser and assuming due authorization, execution and delivery by the Company, this Agreement is, and (as of the Closing) each of the other Transaction Documents will be, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other organizational proceedings are necessary for the execution and delivery by the Purchaser of this Agreement or the other Transaction Documents, the performance by it of its obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby.
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(2) Neither the execution, delivery and performance by the Purchaser of this Agreement or the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Purchaser with any of the provisions hereof or thereof, will (i) require notice, consent or approval pursuant to, violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any material Lien upon any of the properties or assets of the Purchaser under any of the terms, conditions or provisions of (A) its organizational documents or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Purchaser is a party or by which it may be bound, or to which the Purchaser or any of the properties or assets of the Purchaser may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any law, statute, ordinance, rule or regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Purchaser or any of their respective properties or assets except in the case of clause (i)(B) and (ii) for such violations, conflicts and breaches as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement or have a material adverse effect on the Purchaser’s ability to fully perform its respective covenants and obligations under this Agreement.
(3) Other than (i) the securities or blue sky laws of the various states and (ii) the filing of a Schedule 13D, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the execution, delivery and performance by the Purchaser of this Agreement or the other Transaction Documents or the consummation by the Purchaser of the transactions contemplated by this Agreement or the other Transaction Documents.
(c) Financial Capability. At the Closing, the Purchaser will have access to available funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement and otherwise has the financial capability to pay and perform its obligations under this Agreement by immediately available funds on hand, including all cash or other sources of immediately available funds necessary consummate the Closing on the terms and conditions contemplated by this Agreement. The Purchaser’s obligations under this Agreement are not subject to any conditions regarding the Purchaser’s ability to obtain financing and the Purchaser is not aware of any reason why the funds sufficient to fulfill its obligations under Article I (including paying the Purchase Price) will not be available on the Closing Date.
(d) Brokers and Finders. Neither the Purchaser nor its Affiliates or any of their respective officers, directors, employees or agents has employed any broker or finder for which the Company will incur any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees in connection with this Agreement or the transactions contemplated hereby.
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Article
III
COVENANTS
3.1 Authorized Common Stock. At any time that any Shares are outstanding, the Company shall from time to time take all lawful action within its control to cause the authorized share capital of the Company to include a number of authorized but unissued shares of Common Stock equal to the number of shares of Common Stock issuable upon the conversion of all Shares then issued and outstanding. All shares of Common Stock delivered upon conversion of the Shares shall be newly issued shares or shares held in treasury by the Company, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and free and clear of any Liens (other than Liens created by the Purchaser or restrictions on Transfer arising under applicable securities Laws).
3.2 Nasdaq Listing Application. The Nasdaq Listing Application shall have been submitted. From the Closing, the Company shall use its commercially reasonable efforts to maintain its existing listing on Nasdaq.
3.3 Information Rights. For so long as the Purchaser or its Affiliates hold any Shares, the Company shall provide the Purchaser with:
(a) quarterly financial statements as soon as reasonably practicable after they become available but no later than forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Company files its quarterly report on Form 10-Q for the applicable fiscal quarter with the SEC; and
(b) audited (by a nationally recognized accounting firm) annual financial statements as soon as reasonably practicable after they become available but no later than ninety (90) days after the end of each fiscal year of the Company; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Company files its annual report on Form 10-K for the applicable fiscal year with the SEC,
in each case, prepared in accordance with GAAP as in effect from time to time, which such financial statements shall include the consolidated balance sheets of the Company and its Subsidiaries and the related consolidated statements of operations, income, changes in shareholders’ equity and cash flows. In addition, so long as the Purchaser and its Affiliates hold any Shares, the Company shall provide the Purchaser with copies of all reports, certifications and other information as and when provided to the lenders of the Company and its Subsidiaries, and subject to reasonable restrictions imposed by the Company to comply with antitrust and other applicable Laws, the Company shall permit the Purchaser or its Affiliates or any authorized representatives designated by the Purchaser or its Affiliates reasonable access to visit and inspect any of the properties of the Company or any of its Subsidiaries, including its and their books of accounting and other records, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at such reasonable times and as often as the Purchaser or its Affiliates may reasonably request. Any investigation pursuant to this Section 3.3
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shall be conducted during normal business hours and in such manner as not to interfere unreasonably with the conduct of the Company and its Subsidiaries.
3.4 Resigning Directors. The Company shall cause each of Brian Hirsch, Chris Masto and Jane J. Thompson to deliver written resignation as members of the Board of Directors effective as of the Closing, in forms reasonably satisfactory to the Purchaser (the “Resignation Letters”).
3.5 Controlling Stockholder Transactions. Until the date that is two (2) years following the Closing Date (the “Restriction End Date”), each party hereto (including, for the avoidance of doubt, through one or more of their respective Affiliates, successors, assigns and Permitted Transferees) shall not, directly or indirectly, consummate a “controlling stockholder transaction” (as such transaction is defined in Section 144(e)(3) of the Delaware General Corporation Law (the “DGCL”)) involving the Company or one or more of its subsidiaries, or cause the Company or one or more of its subsidiaries to consummate a “controlling stockholder transaction” unless (i) if such “controlling stockholder transaction” is not a “going private transaction” (as defined in Section 144(e)(6) of the DGCL), the “controlling stockholder transaction” is approved in accordance with Section 144(b) of the DGCL or (ii) if such “controlling stockholder transaction” is a “going private transaction”, the “controlling stockholder transaction” is approved in accordance with Section 144(c) of the DGCL. For the purposes of this Section 3.5, the determination of whether an act or transaction is a “controlling stockholder transaction” or a “going private transaction” shall be made by the affirmative vote of a majority of the directors then-serving on the Board of Directors (with each of such directors being an express intended third party beneficiary of this paragraph) in good faith consultation with the Company’s outside counsel. In addition to any restrictions on Transfer set out in Article IV, until the Restriction End Date, the Purchaser shall not Transfer any Share or any share of Common Stock issued upon conversion of any Share unless the transferee thereof agrees in writing for the benefit of the Company (in form and substance reasonably satisfactory to the Board of Directors) with the transferor or transferee) to be bound by the terms of this Section 3.5. Any attempted Transfer in violation of this Section 3.5 shall be null and void ab initio and the Company shall not be required to give any effect thereto. Section 4.1(c) shall apply to the restriction on Transfer set forth in this Section 3.5 mutatis mutandis except that foreclosure upon, or exercise of any rights with respect to, a Lien or pledge contemplated thereby shall be deemed a Transfer for purposes of this Section 3.5. This Section 3.5 shall not be amended, waived or terminated without the prior written consent of a majority of the directors who are “disinterested directors” (as defined in Section 144 of the DGCL) with respect to such decision.
3.6 Nondisparagement. The Company hereby covenants and agrees that it shall not, directly or indirectly, make or solicit or encourage others to make or solicit any negative comments or otherwise disparaging remarks concerning the Purchaser or its officers, directors, members, managers, shareholders or employees, or any of their respective affiliates. The Purchaser agrees not to make negative comments or otherwise disparage the Company or its officers, directors, members, managers, shareholders or employees or any of their respective affiliates. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).
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Article
IV
ADDITIONAL AGREEMENTS
4.1 Transfer Restrictions.
(a) Until the earlier of (x) twelve (12) months following the Closing, and (y) the occurrence of a transaction resulting in a Fundamental Change of Control (as defined in the Certificate of Designations), the Purchaser shall not Transfer any Share or any share of Common Stock issued upon conversion of any Share except as otherwise permitted pursuant to the terms and conditions of this Agreement, including Section 4.1(b).
(b) Notwithstanding anything to the contrary in Section 4.1(a), the Purchaser shall be permitted to Transfer all or any portion of its Shares, or shares of Common Stock issued upon conversion of any Shares at any time under the following circumstances:
(1) Transfers to any Permitted Transferee, but only if such Permitted Transferee agrees in writing for the benefit of the Company (in form and substance reasonably satisfactory to the Company and with a copy thereof to be furnished to the Company) to be bound by the terms of this Section 4.1 with respect to the Shares of shares of Common Stock issuable upon conversion thereof;
(2) Transfers pursuant to an amalgamation, merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction entered into by the Company or any transaction resulting in a Fundamental Change of Control; or
(3) Transfers that have been approved or ratified in writing by the Board of Directors.
(c) Notwithstanding anything to the contrary in this Agreement or otherwise, “Transfer” shall not include, and this Section 4.1 shall not prohibit, (i) any Lien on or pledge of pledge on any Share or of any share of Common Stock issued upon conversion thereof, or any exercise of remedies with respect to any of the foregoing to secure indebtedness of the Purchaser or any of its Affiliates; or (ii) any pledge of equity interests in the Purchaser or its parent entities, or any back leverage financing secured by such equity interests.
(d) Any attempted Transfer in violation of this Section 4.1 shall be null and void ab initio and the Company shall not be required to give any effect thereto.
(e) Notwithstanding anything herein to the contrary, the provisions of this Section 4.1, and any Transfer restrictions on any Shares or shares of Common Stock then-existing as a result of this Section 4.1, shall automatically terminate and be of no further force or effect upon the conversion of any Shares into shares of Common Stock by the Company pursuant to Section 10(c) of the terms of the Certificate of Designations.
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4.2 Legend.
(a) The Purchaser agrees that all certificates or other instruments representing the Shares subject to this Agreement (or the shares of Common Stock issuable upon conversion thereof) will bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.
(b) Upon request of the Purchaser (or any Permitted Transferee), upon (i) termination of the provisions of Section 4.1 pursuant to the terms of Section 4.1(e) or (ii) receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws, the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for any Shares to be transferred in accordance with the terms hereof. The Purchaser acknowledges that the Shares have not been registered under the Securities Act or under any state securities laws and agrees that it will not sell or otherwise dispose of any of the Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act, any other applicable securities laws.
4.3 Tax Matters. The Company and the Purchaser shall each pay 50% of any and all documentary, stamp and similar issue or transfer tax due on (a) the issuance of the Shares or (b) the issuance of shares of Common Stock upon conversion of the Shares. However, in the case of conversion of Shares, the Company shall not be required to pay any tax or duty that may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock or Preferred Stock in a name other than that of the holder of the shares to be converted, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.
4.4 Survival. Except in the case of fraud, the representations and warranties of the parties contained in Article II hereof shall not survive, and shall terminate automatically as of, the
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Closing. All other covenants and agreements of the parties contained herein shall survive the Closing in accordance with their terms.
Article
V
MISCELLANEOUS
5.1 Amendment; Waiver. No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in writing and signed by an officer of a duly authorized representative of such party. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law. No waiver of any party to this Agreement will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
5.2 Counterparts; Electronic Transmission. This Agreement, and any amendments hereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act or any state laws based on the Uniform Electronic Transactions Act. Neither party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission as a defense to the formation of a contract and each such party forever and irrevocably waives any such defense. This Agreement may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on each party hereto.
5.3 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the state of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Delaware. Any dispute relating hereto shall be heard first in the Delaware Court of Chancery, and, if applicable, in any state or federal court located in of Delaware in which appeal from the Court of Chancery may validly be taken under the laws of the State of Delaware (each a “Chosen Court” and
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collectively, the “Chosen Courts”), and the parties agree to the exclusive jurisdiction and venue of the Chosen Courts. Such Persons further agree that any proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby or by any matters related to the foregoing (the “Applicable Matters”) shall be brought exclusively in a Chosen Court, and that any proceeding arising out of this Agreement or any other Applicable Matter shall be deemed to have arisen from a transaction of business in the state of Delaware, and each of the foregoing Persons hereby irrevocably consents to the jurisdiction of such Chosen Courts in any such proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that such Person may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such Chosen Court or that any such proceeding brought in any such Chosen Court has been brought in an inconvenient forum. Such Persons further covenant not to bring a proceeding with respect to the Applicable Matters (or that could affect any Applicable Matter) other than in such Chosen Court and not to challenge or enforce in another jurisdiction a judgment of such Chosen Court. Process in any such proceeding may be served on any Person with respect to such Applicable Matters anywhere in the world, whether within or without the jurisdiction of any such Chosen Court. Without limiting the foregoing, each such Person agrees that service of process on such party as provided in Section 5.4 shall be deemed effective service of process on such Person. AS SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.
5.4 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be either personally delivered, or sent by certified mail, return receipt requested, or sent by reputable overnight courier service (charges prepaid) to the parties at the applicable address set forth below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally or sent by telecopier or electronic mail (provided confirmation of transmission is received), three (3) days after deposit in the U.S. mail and one (1) day after deposit with a reputable overnight courier service.
| (a) | If to Purchaser: |
HHCF Series 21 Sub, LLC
88 West Mound Street
Columbus, OH 43215
Attn: Separately Supplied
E-mail: Separately Supplied
19
with a copy to (which copy alone
shall not constitute notice):
Troutman Pepper Locke LLP
600 Peachtree Street, N.E.
Suite 3000
Atlanta, GA 30308
Attn: Separately Supplied
E-mail: Separately Supplied
| (b) | If to the Company: |
Katapult Holdings, Inc.
5360 Legacy Drive, Building 2,
Plano, TX 75024
Attn: Separately Supplied
E-mail: Separately Supplied
with a copy to (which copy alone shall not constitute notice):
Davis Polk & Wardwell LLP
450 Lexington Ave
New York, NY 10017
Attention: Separately Supplied
Email: Separately Supplied
5.5 Entire Agreement. This Agreement (including the Exhibits hereto and the documents and instruments referred to in this Agreement), constitutes the entire agreement among the parties and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and transactions contemplated hereby.
5.6 Assignment. Neither this Agreement, nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other party, provided, however, that (a) the Purchaser may assign its rights, interests and obligations under this Agreement, in whole or in part, to one or more Permitted Transferees, and (b) in the event of such assignment, the assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned; provided that no such assignment will relieve the Purchaser of its obligations hereunder prior to the Closing.
5.7 Fees and Expenses. At the Closing, the Company shall pay the reasonable fees and expenses of Troutman Pepper Locke LLP, the counsel for the Purchaser, provided that the aggregate amount of such fees and expenses to be paid by the Company shall not exceed $250,000.
5.8 Interpretation. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. All article, section, paragraph or clause references not attributed to a particular
20
document shall be references to such parts of this Agreement, and all exhibit, annex, letter and schedule references not attributed to a particular document shall be references to such exhibits, annexes, letters and schedules to this Agreement. In addition, the following terms are ascribed the following meanings:
(a) the word “or” is not exclusive;
(b) the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;
(c) the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and
(d) the term “business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in Chicago, Illinois generally are authorized or required by law or other governmental action to close.
5.9 Captions. The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.
5.10 Severability. If any provision of this Agreement or the application thereof to any Person (including the officers and directors of the parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.
5.11 Third Party Beneficiaries. Except as expressly set forth herein, nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person other than the parties hereto (and their permitted assigns), any benefit, right or remedies.
5.12 Public Announcements. Subject to each party’s disclosure obligations imposed by law or regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor the Purchaser will make any such news release or public disclosure without first consulting with the other, and, in each case, also receiving the other’s consent (which shall not be unreasonably withheld or delayed) and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure. Notwithstanding the forgoing, this Section 5.12 shall not apply to any press release or other public statement made by the Company or the Purchaser (a) which is consistent with prior disclosure and does not contain any information relating to the transactions that has not been previously announced or made public in accordance with the terms of this
21
Agreement or (b) is made to its auditors, attorneys, accountants, financial advisors, limited partners or other Permitted Transferees.
5.13 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, without the necessity of posting bond or other undertaking, the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity, and in the event that any action or suit is brought in equity to enforce the provisions of this Agreement, and no party will allege, and each party hereby waives, the defense or counterclaim that there is an adequate remedy at law.
5.14 Definitions.
(a) As used herein, the following terms have the meanings ascribed thereto below:
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person; provided, however, that the Company, any of its Subsidiaries, or any of the Company’s other controlled Affiliates, in each case, will not be deemed to be Affiliates of the Purchaser for purposes of this Agreement. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Code” means the United Stated Internal Revenue Code of 1986, as amended.
“Company Material Adverse Effect” means, with respect to the Company, any Effect that, individually or taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, is or is reasonably likely to be materially adverse to the business, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event shall any of the following individually or taken together, be deemed to constitute, or be taken into account in determining whether a Company Material Adverse Effect has occurred or is expected to occur: (i) changes in global, foreign, national or regional economic, financial, regulatory; political (including results of elections or gerrymandering) or geopolitical conditions or events in general, in each case, in the U.S. or elsewhere in the world, or any escalation or worsening of any of the foregoing, or any action taken by any Governmental Entity in response to any of the foregoing; (ii) conditions generally affecting the industries in which the Company or the Company’s Subsidiaries participate or the United States or global economy as a whole, to the extent that such conditions do not have a materially disproportionate impact on the Company and the Company’s Subsidiaries taken as a whole relative to other similarly situated companies of comparable size in the industries in which the Company and the Company’s Subsidiaries participate (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred, and then only to the extent not otherwise excluded by the other exceptions in this definition); (iii) any failure by the Company or the Company’s Subsidiaries to meet internal or published projections or forecasts
22
or third party revenue or earnings predictions for any period ending on or after the date of this Agreement (it being understood, however, that any Effect underlying any such failure to meet projections, forecasts or predictions may, to the extent applicable and not otherwise excluded by the other exceptions in this definition, may be taken into account in determining whether a Company Material Adverse Effect has occurred); (iv) any change in the price or trading volume of shares of equity securities or any other publicly traded securities of the Company, or any change or prospective change in the credit rating of the Company or the Company’s Subsidiaries (provided, however, that the underlying causes of such change may, to the extent applicable and not otherwise excluded by the other exceptions in this definition, be considered in determining whether there has been a Company Material Adverse Effect); (v) changes in the financial, banking, credit, commodity, currency, capital or securities markets, or changes in interest rates or exchange rates, in the United States or any other country in the world; (vi) the negotiation, execution, delivery, announcement or performance of the obligations under this Agreement or the Transaction Documents or the announcement, pendency or anticipated consummation of the transactions contemplated by this Agreement or the Transaction Documents, including the customers, suppliers, distributors, partners, licensors, providers, employees or others having relationships with Company; (vii) the effect of seasonal changes and patterns on the financial condition, business, assets, liabilities or results of operations of the Company or the Company’s Subsidiaries; (viii) litigation brought by securityholders or debtholders arising from or relating to this Agreement, the Transaction Documents or the transactions contemplated thereby; (ix) any computer, Internet, network or system hacking, mal-ware or malicious code, unauthorized access to any computer, network, system or data, cybersecurity incident, data breach, cyber terrorism, cyber-attack, cybersecurity breach or ransom-ware (or ransom-ware attack or ransom-ware incident) affecting or impacting, or outage of or termination by a web hosting platform providing service to, the Company or the Company’s Subsidiaries; (x) any hurricane, tornado, cyclone, tsunami, flood, volcanic eruption, earthquake, nuclear incident, foreign or domestic social protest or social unrest, riots, weather conditions, power outages or electrical black-outs, mudslides, wild fires, casualty events or other natural or man-made disaster, act of God, force majeure event, natural disaster, any public health event (including any epidemic, pandemic, or disease outbreak (including the COVID-19 virus)), or any acts of terrorism, sabotage, military action, act of war or war (whether or not declared, including any escalation or worsening thereof or any regime change or breakup of a country as a result thereof, and including the current dispute between the Russian Federation and Ukraine and in Israel and Gaza), declaration of martial law, rebellion, insurrection or national emergency; (xi) any specific action taken at the written request of the Purchaser or expressly required by this Agreement, or any failure to take any specific action expressly prohibited by this Agreement or the Transaction Documents; (xii) executive orders, public statements or announcements by or on behalf of the U.S. President or the U.S. White House, tariffs, anti-dumping actions, trade policies, trade disputes, agreements or initiatives or any “trade war” or similar actions, or any U.S. government shutdown, continuing resolution, or budget reduction (including due to the inability of Congress to clear any appropriation or the Department of Government Efficiency); or (xiii) any changes (after the date of this Agreement) in GAAP or applicable Laws or interpretations thereof.
“Company Options” means outstanding options to purchase shares of Common Stock granted by the Company.
“Company PSUs” means outstanding performance stock units of the Company.
23
“Company RSUs” means outstanding restricted stock units of the Company.
“Company Subsidiary” means any Subsidiary of the Company.
“Company Warrants” means outstanding warrants to purchase Common Stock granted by the Company.
“Credit Agreement” means that certain Amended and Restated Loan and Security Agreement, dated as of June 12, 2025, by and among Katapult SPV-1 LLC, a Delaware limited liability company, the Company, Midtown Madison Management, LLC, a Delaware limited liability company, the lenders party thereto from time to time (as amended, amended and restated, supplemented, revised, or otherwise modified from time to time).
“Effect” means any change, event, effect, development or circumstance.
“Employee Plan” means (i) any employee pension benefit plan (as defined in Section 3(2)(A) of ERISA) maintained for employees of the Company or of any member of a “controlled group,” as such term is defined in Section 414 of the Code, of which the Company or any of its Subsidiaries is a part, or any such employee pension benefit plan to which the Company or any of its Subsidiaries is required to contribute on behalf of its employees, and any other employee benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to ERISA; or (ii) any compensation or other benefit plan, policy, program, agreement or arrangement, including any employment, change in control, bonus, equity-based compensation, retention or other similar agreement, that the Company or any of its Subsidiaries, maintains, sponsors, is a party to, or as to which the Company or any of its Subsidiaries otherwise has any material obligation or material liability in respect of its employees; in each case, excluding any compensation or benefit arrangement maintained by a Governmental Entity.
“Equity Interest” means any share, capital stock, partnership, limited liability company, member or similar equity interest in any Person, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable into or for any such share, capital stock, partnership, limited liability company, member or similar equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.
“Governmental Entity” means any court, administrative or regulatory agency or commission or other governmental or arbitral body or authority or instrumentality, including any state-controlled or owned corporation or enterprise, in each case whether federal, state, local or foreign, and any applicable industry self-regulatory organization.
“Knowledge of the Company” means the actual knowledge after reasonable inquiry of one or more of the Company’s chief executive officer, chief financial officer, and general counsel.
“Law” means any applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, rule,
24
regulation, ruling or other legally binding requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien, charge or other restriction of any kind, whether based on common law, statute or contract.
“Permitted Transferee” means, with respect to any Person, (i) any Affiliate of such Person, (ii) any successor entity of such Person, (iii) with respect to any Person that is an investment fund, vehicle or similar entity, any other investment fund, vehicle or similar entity of which such Person or an Affiliate, advisor or manager of such Person serves as the general partner, manager or advisor, or any successor entity of the foregoing or (iv) to limited partners of, or Affiliates of limited partners of, the Purchaser or any of its parallel or feeder funds.
“Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
“Pre-Closing Period” means the period commencing on the date hereof and terminating on the earlier to occur of (a) the Closing and (b) the termination of this Agreement in accordance with the provisions hereof.
“Regulation D” means the provisions of Regulation D promulgated under the Securities Act.
“Series B Certificate of Designations” means that certain Certificate of Designations of the Company establishing the Series B Convertible Preferred Stock.
“Series B Convertible Preferred Stock” means the series of stock of the Company titled the “Series B Convertible Preferred Stock” designated pursuant to that certain Series B Certificate of Designations.
“Series B Registration Rights Agreement” means that certain Registration Rights Agreement dated as of November 3, 2025, by and among the Company and the holders of Series B Convertible Preferred Stock of the Company set forth on Schedule 1 thereto.
“Support Agreements” mean those certain Support Agreements dated as of November 3, 2025, by and between the Company and each of the officers and directors of the Company.
“Series B Transaction Documents” means the Series B Certificate of Designations, the Series B Registration Rights Agreement and the Support Agreements.
“Stockholder” means a holder of Common Stock or Preferred Stock.
“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (i) of which such Person or a Subsidiary of such Person is a general partner or (ii) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or Persons performing similar functions with respect
25
to such Person, is directly or indirectly owned by such Person and/or one or more subsidiaries thereof.
“Transaction Documents” means this Agreement, the Series A Certificate of Designations, the Series A Registration Rights Agreement, the Nomination Agreement, the Series A Support Agreements and the Warrant Acquisition Agreement.
“Transfer” by any Person means, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, any securities owned by such Person or of any interest (including any voting interest) in any securities owned by such Person.
(b) As used herein, the following terms are defined in the Section of this Agreement set forth after such term below:
| Term | Location of Definition |
| Agreement | Preamble |
| Applicable Matters | 5.3 |
| Board of Directors | 2.1(c)(1) |
| Bylaws | 2.1(c)(2) |
| Certificate of Incorporation | 2.1(c)(2) |
| Chosen Court | 5.3 |
| Closing | 1.2(a) |
| Closing Date | 1.2(a) |
| Common Stock | 2.1(b)(1) |
| Company | Preamble |
| Exchange Act | 2.1 |
| GAAP | 2.1(f)(4) |
| Nasdaq | 1.3(c) |
| Nasdaq Listing Application | 1.3(c) |
| Nomination Agreement | 1.2(b)(1) |
| Per Share Price | 1.1 |
| Preferred Stock | Recitals |
| Purchase Price | 1.1 |
| Purchaser | Preamble |
| Resignation Letters | 3.4 |
| Series A Certificate of Designations | Recitals |
| Series A Registration Rights Agreement | 1.2(b)(1) |
| Series A Support Agreements | Recitals |
| SEC | 2.1(a)(2) |
| SEC Documents | 2.1(f)(1) |
| Shares | 1.1 |
| Supporting Stockholders | Recitals |
| Warrant Acquisition Agreement | Recitals |
*****
[Signature Page Follows]
26
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.
| KATAPULT HOLDINGS, INC. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | CEO | |
| HHCF SERIES 21 SUB, LLC | ||
| By: | /s/ John Detwiler | |
| Name: | John Detwiler | |
| Title: | Authorized Signatory | |
EXHIBIT A
Form of Series A Certificate of Designations
[See Attached]
EXHIBIT B
Form of Support Agreement
[See Attached]
EXHIBIT C
Supporting Stockholders
[See Attached]
EXHIBIT D
Form of Warrant Acquisition Agreement
[See Attached]
EXHIBIT E
Form of Series A Registration Rights Agreement
[See Attached]
EXHIBIT F
Form of Director Nomination Agreement
[See Attached]
Exhibit 10.3
Execution Version
SERIES B INVESTMENT AGREEMENT
dated as of November 3, 2025
by and between
Katapult Holdings, Inc.
and
HHCF Series 21 Sub, LLC
| Page | ||
| Article I PURCHASE; CLOSING | 1 | |
| 1.1 | Purchase; Use of Proceeds | 1 |
| 1.2 | Closing | 2 |
| 1.3 | Closing Conditions | 2 |
| Article II REPRESENTATIONS AND WARRANTIES | 3 | |
| 2.1 | Representations and Warranties of the Company | 3 |
| 2.2 | Representations and Warranties of the Purchaser | 12 |
| Article III COVENANTS | 14 | |
| 3.1 | Authorized Common Stock | 14 |
| 3.2 | Nasdaq Listing Application | 14 |
| 3.3 | Information Rights | 14 |
| 3.4 | Resigning Directors | 15 |
| 3.5 | Controlling Stockholder Transactions | 15 |
| 3.6 | Nondisparagement | 15 |
| Article IV ADDITIONAL AGREEMENTS | 16 | |
| 4.1 | Transfer Restrictions | 16 |
| 4.2 | Legend | 17 |
| 4.3 | Tax Matters | 17 |
| 4.4 | Survival | 17 |
| Article V MISCELLANEOUS | 18 | |
| 5.1 | Amendment; Waiver | 18 |
| 5.2 | Counterparts; Electronic Transmission | 18 |
| 5.3 | Governing Law | 18 |
| 5.4 | Notices | 19 |
| 5.5 | Entire Agreement | 20 |
| 5.6 | Assignment | 20 |
| 5.7 | Fees and Expenses | 20 |
| 5.8 | Interpretation | 20 |
| 5.9 | Captions | 21 |
| 5.10 | Severability | 21 |
| 5.11 | Third Party Beneficiaries | 21 |
| 5.12 | Public Announcements | 21 |
| 5.13 | Specific Performance | 22 |
| 5.14 | Definitions. | 22 |
- i -
LIST OF EXHIBITS
| Exhibit A: | Form of Series B Certificate of Designations |
| Exhibit B: | Form of Support Agreement |
| Exhibit C: | List of Supporting Stockholders |
| Exhibit D: | Form of Series B Registration Rights Agreement |
| Exhibit E: | Form of Director Nomination Agreement |
- ii -
This SERIES B INVESTMENT AGREEMENT, dated as of November 3, 2025 (this “Agreement”), by and between Katapult Holdings, Inc., a Delaware corporation (the “Company”), and HHCF Series 21 Sub, LLC, a Delaware limited liability company or its Affiliates (as defined herein) (collectively, the “Purchaser”). Capitalized terms used herein are defined in Section 5.14(a) or as otherwise defined elsewhere in this Agreement, unless the context clearly indicates otherwise.
RECITALS:
WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, 30,000 shares of its convertible preferred stock, par value $0.0001 per share, designated as “Series B Convertible Preferred Stock” (the “Preferred Stock”), having the terms set forth in the Certificate of Designations (the “Certificate of Designations”) in the form attached hereto as Exhibit A, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the Purchaser’s willingness to enter into this Agreement, the Company has obtained and delivered to the Purchaser support agreements substantially in the form attached hereto as Exhibit B (the “Series B Support Agreements”), executed by each Stockholder identified on Exhibit C (the “Supporting Stockholders”).
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
Article
I
PURCHASE; CLOSING
1.1 Purchase; Use of Proceeds. On the terms and subject to the conditions herein, on the Closing Date, the Company agrees to sell and issue to the Purchaser, and the Purchaser agrees to purchase from the Company 30,000 shares of Preferred Stock (the “Shares”), free and clear of any Liens (other than restrictions arising under applicable securities Laws), at a purchase price of $1,000 per Share (the “Per Share Price”). The aggregate purchase price for the Shares shall be equal to $30,000,000 (the number of Shares multiplied by the Per Share Price) (the “Purchase Price”). Any use of proceeds shall be subject to prior approval of the board of directors of the Company (the “Board of Directors”) following the Closing and, for the avoidance of doubt, such approval shall be by the Board of Directors that includes any directors designated by the Purchaser pursuant to the Nomination Agreement. All proceeds not specifically allocated for uses on the Closing Date shall be deposited into a segregated account of the Company, and any disbursements from such account shall require approval of the Company’s Chief Financial Officer and prior written notice to the directors of the Company designated by the Purchaser pursuant to the
Nomination Agreement. The Company will use the proceeds for general corporate purposes and repayment of approximately $10 million of outstanding indebtedness under the Credit Agreement.
1.2 Closing.
(a) The closing of the purchase and sale of the Shares (the “Closing”) shall occur simultaneously with the execution and delivery hereof and on the date hereof (the “Closing Date”). On the Closing Date, actions set in forth Sections 1.2(b), 1.2(c) and 1.3 shall also occur:
(b) At the Closing:
(1) the Company will deliver, or cause to be delivered, to the Purchaser (i) evidence of the issuance of the Shares in the name of the Purchaser by book entry on the stock ledger of the Company, (ii) the executed Series B Registration Rights Agreement, in the form attached hereto as Exhibit D (the “Series B Registration Rights Agreement”) hereto, (iii) the executed Director Nomination Agreement, in the form attached hereto as Exhibit E (the “Nomination Agreement”), (iv) the executed Resignation Letters and (iv) all other documents, instruments and writings required to be delivered by the Company to the Purchaser pursuant to this Agreement; and
(2) the Purchaser will deliver or cause to be delivered (i) to a bank account designated by the Company in writing on or prior to the Closing Date, the Purchase Price by wire transfer of immediately available funds, (ii) the executed Series B Registration Rights Agreement, (iii) the executed Nomination Agreement, and (iv) all other documents, instruments and writings required to be delivered by the Purchaser to the Company pursuant to this Agreement.
(c) All deliveries at the Closing will be deemed to occur simultaneously.
1.3 Closing Conditions.
(a) The Support Agreements shall remain in full force and effect;
(b) The Company shall have filed the Certificate of Designations with the Secretary of State of the state of Delaware on or prior to the Closing, which shall continue to be in full force and effect as of the Closing;
(c) Prior to the Closing, the Company shall submit to The Nasdaq Stock Market LLC (“Nasdaq”) a listing application for the Company’s Common Stock (the “Nasdaq Listing Application”) for the listing of the shares of the Company’s Common Stock underlying the Shares;
(d) Each of Brian Hirsch, Chris Masto and Jane J. Thompson has resigned effective as of the Closing; and
(e) Each of Philip Key Bartow III and Jeffrey Rubin has been appointed as Class I Directors to the Board of Directors effective as of the Closing and Derek Medlin has been appointed to the Board of Directors as a Class III Director effective as of the Closing.
2
Article II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. Except as set forth (x) in SEC Documents (as defined below) filed prior to the date of this Agreement, excluding any disclosures set forth in any risk factor section, any disclosure in any section relating to forward-looking statements or any other disclosures included in any such form, report, schedule, statement or other document to the extent they are predictive, cautionary or forward-looking in nature or constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or (y) in a correspondingly identified schedule attached hereto (provided that any such disclosure shall be deemed to be disclosed with respect to each other representation and warranty to which the relevance of such exception is reasonably apparent on the face of such disclosure), the Company represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date), that:
(a) Organization and Authority.
(1) The Company (i) is a corporation duly organized and validly existing under the laws of the state of Delaware, (ii) has all requisite corporate power and authority to own its properties and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except, in the case of this clause (iii), where failure to be so qualified or in good standing, individually or in the aggregate, has not and would not reasonably be expected to have a Company Material Adverse Effect. True and accurate copies of the (A) the Second Amended and Restated Certificate of Incorporation of the Company (as amended by that certain Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated July 27, 2023, and as further amended or modified from time to time prior to the date hereof, the “Certificate of Incorporation”) and the Second Amended and Restated Bylaws of the Company (as amended or modified from time to time prior to the date hereof, the “Bylaws”), each as in effect, have been made available to the Purchaser prior to the date hereof.
(2) Each of the Company’s Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the “SEC”)) are set forth on Exhibit 21.1 to its most recent Annual Report on Form 10-K, and the Company owns, directly or indirectly, 100% of the outstanding equity securities of such subsidiaries. Each of the Company’s Significant Subsidiaries (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) has all requisite corporate or other applicable entity power and authority to own its properties and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified or in good standing, except, in the case of this clause (iii), where failure to be so qualified, individually or in the aggregate, has not and would not reasonably be expected to have a Company Material Adverse Effect.
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(b) Capitalization.
(1) The authorized capital stock of the Company consists of 250,000,000 shares of Common Stock, par value $0.0001 per share (the “Common Stock”), and 25,000,000 shares of Preferred Stock. As of the close of business on October 31, 2025, (i) 4,589,310 shares Common Stock were issued and outstanding, (ii) no shares of Preferred Stock were issued, (iii) 255,189 shares of Common Stock were subject to outstanding Company Options, (iv) no shares of Common Stock were subject to outstanding Company PSUs (assuming satisfaction of performance goals for incomplete periods at the maximum level), (v) 157,224 shares of Common Stock were subject to outstanding Company RSUs, (vi) 1,159,564 shares of Common Stock were subject to outstanding Company Warrants and (vii) no shares of Common Stock held in treasury. Since October 31, 2025, no other shares of Common Stock have been issued other than shares of Common Stock issued in respect of the exercise of Company Options or settlement of Company RSUs or Company PSUs in the ordinary course of business.
(2) All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable, and are not subject to and were not issued in violation of any preemptive or similar right, purchase option, call or right of first refusal or similar right. Except as set forth in Section 2.1(b)(1), the Company has not issued any securities or right to purchase securities of the Company (including any options, warrants or other rights, agreements, arrangements or commitments of any character or any securities convertible into or exchangeable for any capital stock or other Equity Interests of the Company). Except as provided in the Transaction Documents or the Series A Transaction Documents, there are no outstanding contractual obligations of the Company or any of its Subsidiaries (i) restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the sale, issuance, repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (iv) requiring the registration for sale of, or (v) granting any preemptive or antidilutive right, with respect to any shares of capital stock of, or other Equity Interests in, the Company or any of the Company Subsidiaries. The Company does not have outstanding shareholder purchase rights or “poison pill” or any similar arrangement in effect.
(3) None of the Company or any of the Company Subsidiaries hold an Equity Interest in any Person other than Equity Interests in other Company Subsidiaries. Each outstanding share of capital stock of or other Equity Interest in each Company Subsidiary is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by the Company or one or more of its wholly-owned Subsidiaries free and clear of all Liens. There are no options, warrants or other rights, agreements, arrangements or commitments of any character to which any Company Subsidiary is a party or by which any Company Subsidiary is bound relating to the issued or unissued capital stock or other Equity Interests of such Company Subsidiary, or securities convertible into or exchangeable for such capital stock or other Equity Interests, or obligating any Company Subsidiary to issue or sell any shares of its capital stock or other Equity Interests, or securities convertible into or exchangeable for such capital stock of, or other Equity Interests in, such Company Subsidiary. None of the Company or any Company Subsidiary is a party to any shareholders’ agreement, voting trust agreement or
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other similar agreement or understanding relating to any shares of the Company’s or any Company Subsidiary’s capital stock or other Equity Interests or any other agreement relating to the disposition, voting or dividends with respect to any Equity Interest of the Company or a Company Subsidiary. No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into or exchangeable for, securities having the right to vote) on any matters on which the shareholders of the Company may vote are issued.
(c) Authorization.
(1) The Company has the corporate power and authority to enter into this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors. This Agreement has been, and (as of the Closing) the other Transaction Documents will be, duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchaser, this Agreement is, and (as of the Closing) each of the other Transaction Documents will be, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). The Certificate of Designations sets forth the rights, preferences and priorities of the Preferred Stock, and the holders of the Preferred Stock have the rights set forth in the Certificate of Designations. Except as would not reasonably be expected to have a Company Material Adverse Effect1, no other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement or the other Transaction Documents, the performance by it of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or thereby.
(2) Neither the execution and delivery by the Company of this Agreement or the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof (including the rights of the Shares to convert into shares of Common Stock), will (i) require notice, consent or approval pursuant to, violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under any of the terms, conditions or provisions of (A) the Certificate of Incorporation or the Bylaws or the certificate of incorporation, charter, bylaws or other governing instrument of any Company Subsidiary or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or
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1 NTD: Since this transaction is a sign/close, the certificate of designations would need to be filed prior to closing.
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obligation to which the Company or any Company Subsidiary is a party or by which it may be bound, or to which the Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (ii) violate any law, statute, ordinance, rule, regulation, permit, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties or assets, and except for, in the case of clauses (i) and (ii) for such violations, conflicts and breaches as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(3) Other than (i) the securities or blue sky laws of the various states, (ii) the filing of one or more required reports, proxy statements, forms, and other documents with the SEC, (iii) pursuant to any law or regulation applicable to the filing of the Certificate of Designations with the Secretary of State of the State of Delaware and (iv) the listing on the Nasdaq of the shares of Common Stock issuable upon the conversion of the Shares, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of any Governmental Entity or stock exchange, nor expiration or termination of any statutory waiting period, is necessary for the execution and delivery by the Company of this Agreement or the other Transaction Documents or the consummation by the Company of the transactions contemplated by this Agreement or the other Transaction Documents.
(d) Sale of Securities. Assuming the accuracy of the Purchaser’s representations in Section 2.2, the offer and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations promulgated thereunder. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D as promulgated by the SEC under the Securities Act) in connection with the offer or sale of any of the Shares. Neither the Company nor its Subsidiaries nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any Company security, under circumstances that would adversely affect reliance by the Company on Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Shares under the Securities Act.
(e) Status of Securities. The Shares to be issued pursuant to this Agreement and the shares of Common Stock to be issued upon conversion of the Shares have been duly authorized by all necessary corporate action of the Company. When issued and sold against receipt of the consideration therefor as provided in this Agreement or the Certificate of Designations, the Shares will be validly issued, fully paid and nonassessable, will not be subject to preemptive or similar rights under Delaware Law or under the Certificate of Incorporation or the Bylaws, and will effectively vest in the Purchaser good title to all such securities, free and clear of all Liens, except restrictions imposed by the Securities Act and any applicable state, foreign or other securities laws. Upon any conversion of any Shares into shares of Common Stock pursuant to the terms of the Certificate of Designations, such shares of Common Stock issued upon such conversion will be validly issued, fully paid and nonassessable, and will not be subject to preemptive rights under Delaware Law or under the Certificate of Incorporation or the Bylaws, and will effectively vest in the Purchaser good title to all such securities, free and clear of all Liens, except restrictions imposed by the Securities Act and any applicable state, foreign or other securities laws. The shares
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of Common Stock to be issued upon any conversion of the Shares have been duly reserved for such issuance.
(f) SEC Documents; Financial Statements.
(1) The Company has filed, on a timely basis, all required reports, proxy statements, forms, and other documents with the SEC since September 30, 2022 (collectively, the “SEC Documents”), except for late filings, all of which were subsequently filed. Each of the SEC Documents, as of its respective filing date complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and, except to the extent that information contained in any SEC Document has been revised or superseded by a later filed SEC Document filed and publicly available prior to the date of this Agreement, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(2) The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information (both financial and non-financial) relating to the Company, including its consolidated Subsidiaries, is made known to the individuals responsible for the preparation of the Company’s filings with the SEC and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the Board of Director’s audit committee (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.
(3) There is no transaction, arrangement or other relationship between the Company and/or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its SEC Documents and is not so disclosed.
(4) Except as disclosed in the SEC Documents, the financial statements of the Company and its consolidated Subsidiaries included in the SEC Documents (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, in each case as of the date such SEC Document was filed, and (ii) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis
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during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows of the Company and its consolidated Subsidiaries for the periods then ended (subject, in the case of unaudited quarterly statements, to the absence of footnote disclosures and normal year-end audit adjustments).
(g) Brokers and Finders. Except for Guggenheim Securities, LLC (“Guggenheim”) pursuant to (i) that certain engagement letter dated September 11, 2024 between the Company and Guggenheim and (ii) that certain engagement letter dated March 24, 2025 between the Company and Guggenheim, the fees and expenses of which will be paid by the Company, neither the Company nor its Subsidiaries or any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.
(h) Litigation. There is no action, suit, proceeding or investigation pending or, to the Knowledge of the Company, threatened (including “cease and desist” letters or invitations to take patent license) against, nor any outstanding judgment, order, writ or decree against, the Company or any of its Subsidiaries or any of their respective assets before or by any Governmental Entity, which individually or in the aggregate has had, or, would reasonably be expected to have (including for this purpose, assuming an adverse determination of any such matter), a Company Material Adverse Effect. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree of any Governmental Entity.
(i) Indebtedness. Except as set forth in the SEC Documents and after giving effect to waivers obtained on or prior to the date hereof, neither the Company nor any of its Subsidiaries is, immediately prior to the execution and delivery of this Agreement, in default in the payment of any material indebtedness or in default under any agreement relating to its material indebtedness.
(j) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the Knowledge of the Company is reasonably likely to, have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received as of the date of this Agreement any notification that the SEC is contemplating terminating such registration.
(k) Taxes. Except as set forth in the SEC Documents, the Company and each Company Subsidiary has filed all tax returns that are required to be filed or has requested extensions thereof and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except (i) for any such assessment, fine or penalty that is currently being contested in good faith or (ii) where such failure to file or pay would not have a Company Material Adverse Effect.
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(l) Employee Relations. No material labor dispute exists or, to the Company’s Knowledge, is threatened with respect to any of the employees of the Company or any of its Subsidiaries which would have or would reasonably be expected to result in a Material Adverse Effect. None of the Company’s or any Subsidiary’s employees is a member of a labor union that relates to such employee’s relationship with the Company, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement. To the Company’s Knowledge, no executive officer or member of management of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, and to the Company’s Knowledge, the continued employment of each such executive officer or key employee does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters, except, in each case, matters that, individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect. The Company is in compliance in all material respects with all U.S. federal, state, and local Laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours. Any Employee Plans that are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code have received or are otherwise entitled to rely upon determination or opinion letters from the Internal Revenue Service to the effect that such plans are qualified under Section 401(a) of the Code and the related trusts are exempt from federal income Taxes under Section 501(a) of the Code, respectively, and nothing has occurred that would reasonably be expected to materially adversely affect the qualification of such Employee Plan or the tax exempt status of the related trust. No labor problem or dispute with the employees of the Company or any Company Subsidiary exists or, to the knowledge of the Company, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, contractors or customers, that could have a Company Material Adverse Effect
(m) Licenses. The Company and each Company Subsidiary possess all licenses, certificates, permits and other authorizations issued by all applicable authorities necessary to conduct its business, except in each case, the lack of which would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect, and neither the Company nor any Company Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Company Material Adverse Effect.
(n) Intellectual Property. Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company Subsidiary owns, possesses, licenses or has other rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of their business as now conducted, (ii) to the Company’s knowledge, there is no infringement by third parties of any Intellectual Property owned by the Company or any Company Subsidiaries; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s or any Company Subsidiaries’ rights in or to any such Intellectual Property, and the Company is unaware of any
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facts which would form a reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned by the Company or any Company Subsidiaries, and the Company is unaware of any facts which would form a reasonable basis for any such claim; and (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any Company Subsidiary infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any other fact which would form a reasonable basis for any such claim.
(o) Data Privacy. Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company Subsidiary have complied and are presently in compliance with all of their internal and external privacy policies, contractual obligations, applicable laws, statutes, judgments, orders, rules and regulations of any court or arbitrator or other governmental or regulatory authority and any other binding legal obligations, in each case, relating to the collection, use, transfer, import, export, storage, protection, disposal and disclosure by the Company and each Company Subsidiary of personal data or personally identifiable information (“Data Security Obligations”, and such data, “Data”); (ii) neither the Company nor any Company Subsidiary has received any written notification of or complaint regarding and, to the Company’s knowledge, there are no other facts that, individually or in the aggregate, would reasonably indicate the Company’s non-compliance with any Data Security Obligation; and (iii) there is no action, suit or proceeding by or before any court or governmental agency, authority or body pending or, to the Company’s knowledge, threatened alleging in writing the Company’s non-compliance with any Data Security Obligations.
(p) Cybersecurity. The Company and each Company Subsidiary have taken commercially reasonable technical and organizational measures designed to protect the information technology systems and Data used in connection with the operation of their business. Without limiting the foregoing, the Company and each Company Subsidiary have used commercially reasonable efforts to establish and maintain, and have established, maintained, implemented and complied with, commercially reasonable information technology, information security, cyber security and data protection controls, policies and procedures designed to protect against and prevent unauthorized access to or acquisition of Data used in connection with the operation of the their business (“Breach”). To the Company’s knowledge, there has been no such Breach, and neither the Company nor any Company Subsidiary has been notified in writing of and has no knowledge of any event or condition that would reasonably be expected to result in, any such Breach.
(q) Bribery and Anti-Money Laundering Laws. Each of the Company, each Company Subsidiary and any of their respective officers, directors, supervisors, managers, agents, or employees are and have at all times been in compliance in all material respects with and its participation in the offering will not violate: (A) anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or any other law, rule or regulation of similar purposes and scope or (B) anti-money laundering laws, including,
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but not limited to, applicable federal, state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including, without limitation, Title 18 US. Code sections 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder.
(r) XBRL. The interactive data in eXtensible Business Reporting Language included in the SEC Documents fairly presents the information called for in all material respects and has been prepared in accordance with the SEC’s rules and guidelines applicable thereto.
(s) Absence of Changes. Since December 31, 2024, except as set forth in a subsequent SEC Document filed prior to the date hereof or as contemplated by the Transaction Documents, or in connection with the filing of the Certificate of Designations, there has not been any other change, development, occurrence or event that has had or would reasonably be expected to have a Company Material Adverse Effect.
(t) Compliance with Environmental Laws. Since January 1, 2022, the Company and each Company Subsidiary has complied with all applicable federal, state, local or foreign Law relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (“Environmental Laws”), which compliance includes the possession by the Company of all permits and other governmental authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof, except for any failure to be in compliance that, individually or in the aggregate, would not result in or reasonably be expected to result in a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received since January 1, 2022, any written notice or other communication (in writing or otherwise), whether from a Governmental Entity, citizens group, employee or otherwise, that alleges that the Company or any Company Subsidiary is not in compliance with any Environmental Law, and, to the Company’s Knowledge, there are no circumstances that may prevent or interfere with the Company’s or any Company Subsidiary compliance with any Environmental Law in the future, except where such failure to comply would not reasonably be expected to have a Company Material Adverse Effect. To the Company’s Knowledge: (i) no current or prior owner of any property leased or controlled by the Company or any Company Subsidiaries has received, since January 1, 2022, any written notice or other communication relating to property owned or leased at any time by the Company or any Company Subsidiary, whether from a Governmental Entity, citizens group, employee or otherwise, that alleges that such current or prior owner or the Company or any of its Subsidiaries is not in compliance with or violated any Environmental Law relating to such property and neither the Company nor any Company Subsidiary has any material liability under any Environmental Law.
(u) No Additional Representations. Except for the representations and warranties made by the Company in this Section 2.1, neither the Company nor any other Person makes any
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express or implied representation or warranty with respect to the Company or any Subsidiaries or their respective businesses, operations, assets, liabilities, employees, Employee Plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other Person makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to the Company or any of its Subsidiaries or their respective business, or (ii) any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any certificate delivered pursuant hereto, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for fraud.
2.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date in which case as of such date), that:
(a) Organization and Authority. The Purchaser (i) is duly organized, validly existing and in good standing under the laws of the state of Delaware, (ii) has all requisite limited liability company power and authority to own its properties and assets and conduct its business as presently conducted and (iii) is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except, in the case of this clause (iii), where failure to be so qualified has not and would not reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis and (iv) is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D.
(b) Authorization.
(1) The Purchaser has the limited liability company power and authority to enter into this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Purchaser and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Purchaser. This Agreement has been, and (as of the Closing) the other Transaction Documents will be, duly and validly executed and delivered by the Purchaser and assuming due authorization, execution and delivery by the Company, this Agreement is, and (as of the Closing) each of the other Transaction Documents will be, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other organizational proceedings are necessary for the execution and delivery by the Purchaser of this Agreement or the other Transaction Documents, the performance by it of
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its obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby.
(2) Neither the execution, delivery and performance by the Purchaser of this Agreement or the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Purchaser with any of the provisions hereof or thereof, will (i) require notice, consent or approval pursuant to, violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any material Lien upon any of the properties or assets of the Purchaser under any of the terms, conditions or provisions of (A) its organizational documents or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Purchaser is a party or by which it may be bound, or to which the Purchaser or any of the properties or assets of the Purchaser may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any law, statute, ordinance, rule or regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Purchaser or any of their respective properties or assets except in the case of clause (i)(B) and (ii) for such violations, conflicts and breaches as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement or have a material adverse effect on the Purchaser’s ability to fully perform its respective covenants and obligations under this Agreement.
(3) Other than (i) the securities or blue sky laws of the various states and (ii) the filing of a Schedule 13D, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the execution, delivery and performance by the Purchaser of this Agreement or the other Transaction Documents or the consummation by the Purchaser of the transactions contemplated by this Agreement or the other Transaction Documents.
(c) Financial Capability1.1.. At the Closing, the Purchaser will have access to available funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement and otherwise has the financial capability to pay and perform its obligations under this Agreement by immediately available funds on hand, including all cash or other sources of immediately available funds necessary consummate the Closing on the terms and conditions contemplated by this Agreement. The Purchaser’s obligations under this Agreement are not subject to any conditions regarding the Purchaser’s ability to obtain financing and the Purchaser is not aware of any reason why the funds sufficient to fulfill its obligations under Article I (including paying the Purchase Price) will not be available on the Closing Date.
(d) Brokers and Finders. Neither the Purchaser nor its Affiliates or any of their respective officers, directors, employees or agents has employed any broker or finder for which the Company will incur any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees in connection with this Agreement or the transactions contemplated hereby.
Article III
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COVENANTS
3.1 Authorized Common Stock. At any time that any Shares are outstanding, the Company shall from time to time take all lawful action within its control to cause the authorized share capital of the Company to include a number of authorized but unissued shares of Common Stock equal to the number of shares of Common Stock issuable upon the conversion of all Shares then issued and outstanding. All shares of Common Stock delivered upon conversion of the Shares shall be newly issued shares or shares held in treasury by the Company, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and free and clear of any Liens (other than Liens created by the Purchaser or restrictions on Transfer arising under applicable securities Laws).
3.2 Nasdaq Listing Application. The Nasdaq Listing Application shall have been submitted. From the Closing, the Company shall use its commercially reasonable efforts to maintain its existing listing on Nasdaq.
3.3 Information Rights. For so long as the Purchaser or its Affiliates hold any Shares, the Company shall provide the Purchaser with:
(a) quarterly financial statements as soon as reasonably practicable after they become available but no later than forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Company files its quarterly report on Form 10-Q for the applicable fiscal quarter with the SEC; and
(b) audited (by a nationally recognized accounting firm) annual financial statements as soon as reasonably practicable after they become available but no later than ninety (90) days after the end of each fiscal year of the Company; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Company files its annual report on Form 10-K for the applicable fiscal year with the SEC,
in each case, prepared in accordance with GAAP as in effect from time to time, which such financial statements shall include the consolidated balance sheets of the Company and its Subsidiaries and the related consolidated statements of operations, income, changes in shareholders’ equity and cash flows. In addition, so long as the Purchaser and its Affiliates hold any Shares, the Company shall provide the Purchaser with copies of all reports, certifications and other information as and when provided to the lenders of the Company and its Subsidiaries, and subject to reasonable restrictions imposed by the Company to comply with antitrust and other applicable Laws, the Company shall permit the Purchaser or its Affiliates or any authorized representatives designated by the Purchaser or its Affiliates reasonable access to visit and inspect any of the properties of the Company or any of its Subsidiaries, including its and their books of accounting and other records, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at such reasonable times and as often as the Purchaser or its Affiliates may reasonably request. Any investigation pursuant to this Section 3.3
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shall be conducted during normal business hours and in such manner as not to interfere unreasonably with the conduct of the Company and its Subsidiaries.
3.4 Resigning Directors. The Company shall cause each of Brian Hirsch, Chris Masto and Jane J. Thompson to deliver written resignation as members of the Board of Directors effective as of the Closing, in forms reasonably satisfactory to the Purchaser (the “Resignation Letters”).
3.5 Controlling Stockholder Transactions. Until the date that is two (2) years following the Closing Date (the “Restriction End Date”), each party hereto (including, for the avoidance of doubt, through one or more of their respective Affiliates, successors, assigns and Permitted Transferees) shall not, directly or indirectly, consummate a “controlling stockholder transaction” (as such transaction is defined in Section 144(e)(3) of the Delaware General Corporation Law (the “DGCL”)) involving the Company or one or more of its subsidiaries, or cause the Company or one or more of its subsidiaries to consummate a “controlling stockholder transaction” unless (i) if such “controlling stockholder transaction” is not a “going private transaction” (as defined in Section 144(e)(6) of the DGCL), the “controlling stockholder transaction” is approved in accordance with Section 144(b) of the DGCL or (ii) if such “controlling stockholder transaction” is a “going private transaction”, the “controlling stockholder transaction” is approved in accordance with Section 144(c) of the DGCL. For the purposes of this Section 3.5, the determination of whether an act or transaction is a “controlling stockholder transaction” or a “going private transaction” shall be made by the affirmative vote of a majority of the directors then-serving on the Board of Directors (with each of such directors being an express intended third party beneficiary of this paragraph) in good faith consultation with the Company’s outside counsel. In addition to any restrictions on Transfer set out in Article IV, until the Restriction End Date, the Purchaser shall not Transfer any Share or any share of Common Stock issued upon conversion of any Share unless the transferee thereof agrees in writing for the benefit of the Company (in form and substance reasonably satisfactory to the Board of Directors) with the transferor or transferee) to be bound by the terms of this Section 3.5. Any attempted Transfer in violation of this Section 3.5 shall be null and void ab initio and the Company shall not be required to give any effect thereto. Section 4.1(c) shall apply to the restriction on Transfer set forth in this Section 3.5 mutatis mutandis except that foreclosure upon, or exercise of any rights with respect to, a Lien or pledge contemplated thereby shall be deemed a Transfer for purposes of this Section 3.5. This Section 3.5 shall not be amended, waived or terminated without the prior written consent of a majority of the directors who are “disinterested directors” (as defined in Section 144 of the DGCL) with respect to such decision.
3.6 Nondisparagement. The Company hereby covenants and agrees that it shall not, directly or indirectly, make or solicit or encourage others to make or solicit any negative comments or otherwise disparaging remarks concerning the Purchaser or its officers, directors, members, managers, shareholders or employees, or any of their respective affiliates. The Purchaser agrees not to make negative comments or otherwise disparage the Company or its officers, directors, members, managers, shareholders or employees or any of their respective affiliates. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).
Article IV
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ADDITIONAL AGREEMENTS
4.1 Transfer Restrictions.
(a) Until the earlier of (x) twelve (12) months following the Closing, and (y) the occurrence of a transaction resulting in a Fundamental Change of Control (as defined in the Certificate of Designations), the Purchaser shall not Transfer any Share or any share of Common Stock issued upon conversion of any Share except as otherwise permitted pursuant to the terms and conditions of this Agreement, including Section 4.1(b).
(b) Notwithstanding anything to the contrary in Section 4.1(a), the Purchaser shall be permitted to Transfer all or any portion of its Shares, or shares of Common Stock issued upon conversion of any Shares at any time under the following circumstances:
(1) Transfers to any Permitted Transferee, but only if such Permitted Transferee agrees in writing for the benefit of the Company (in form and substance reasonably satisfactory to the Company and with a copy thereof to be furnished to the Company) to be bound by the terms of this Section 4.1 with respect to the Shares of shares of Common Stock issuable upon conversion thereof;
(2) Transfers pursuant to an amalgamation, merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction entered into by the Company or any transaction resulting in a Fundamental Change of Control; or
(3) Transfers that have been approved or ratified in writing by the Board of Directors.
(c) Notwithstanding anything to the contrary in this Agreement or otherwise, “Transfer” shall not include, and this Section 4.1 shall not prohibit, (i) any Lien on or pledge of pledge on any Share or of any share of Common Stock issued upon conversion thereof, or any exercise of remedies with respect to any of the foregoing to secure indebtedness of the Purchaser or any of its Affiliates; or (ii) any pledge of equity interests in the Purchaser or its parent entities, or any back leverage financing secured by such equity interests.
(d) Any attempted Transfer in violation of this Section 4.1 shall be null and void ab initio and the Company shall not be required to give any effect thereto.
(e) Notwithstanding anything herein to the contrary, the provisions of this Section 4.1, and any Transfer restrictions on any Shares or shares of Common Stock then-existing as a result of this Section 4.1, shall automatically terminate and be of no further force or effect upon the conversion of any Shares into shares of Common Stock by the Company pursuant to Section 10(c) of the terms of the Certificate of Designations.
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4.2 Legend.
(a) The Purchaser agrees that all certificates or other instruments representing the Shares subject to this Agreement (or the shares of Common Stock issuable upon conversion thereof) will bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF NOVEMBER 3, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.
(b) Upon request of the Purchaser (or any Permitted Transferee), upon (i) termination of the provisions of Section 4.1 pursuant to the terms of Section 4.1(e) or (ii) receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws, the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for any Shares to be transferred in accordance with the terms hereof. The Purchaser acknowledges that the Shares have not been registered under the Securities Act or under any state securities laws and agrees that it will not sell or otherwise dispose of any of the Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act, any other applicable securities laws.
4.3 Tax Matters. The Company and the Purchaser shall each pay 50% of any and all documentary, stamp and similar issue or transfer tax due on (a) the issuance of the Shares or (b) the issuance of shares of Common Stock upon conversion of the Shares. However, in the case of conversion of Shares, the Company shall not be required to pay any tax or duty that may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock or Preferred Stock in a name other than that of the holder of the shares to be converted, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.
4.4 Survival. Except in the case of fraud, the representations and warranties of the parties contained in Article II hereof shall not survive, and shall terminate automatically as of, the
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Closing. All other covenants and agreements of the parties contained herein shall survive the Closing in accordance with their terms.
Article
V
MISCELLANEOUS
5.1 Amendment; Waiver. No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in writing and signed by an officer of a duly authorized representative of such party. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law. No waiver of any party to this Agreement will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
5.2 Counterparts; Electronic Transmission. This Agreement, and any amendments hereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act or any state laws based on the Uniform Electronic Transactions Act. Neither party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission as a defense to the formation of a contract and each such party forever and irrevocably waives any such defense. This Agreement may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on each party hereto.
5.3 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the state of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Delaware. Any dispute relating hereto shall be heard first in the Delaware Court of Chancery, and, if applicable, in any state or federal court located in of Delaware in which appeal from the Court of Chancery may validly be taken under the laws of the State of Delaware (each a “Chosen Court” and
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collectively, the “Chosen Courts”), and the parties agree to the exclusive jurisdiction and venue of the Chosen Courts. Such Persons further agree that any proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby or by any matters related to the foregoing (the “Applicable Matters”) shall be brought exclusively in a Chosen Court, and that any proceeding arising out of this Agreement or any other Applicable Matter shall be deemed to have arisen from a transaction of business in the state of Delaware, and each of the foregoing Persons hereby irrevocably consents to the jurisdiction of such Chosen Courts in any such proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that such Person may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such Chosen Court or that any such proceeding brought in any such Chosen Court has been brought in an inconvenient forum. Such Persons further covenant not to bring a proceeding with respect to the Applicable Matters (or that could affect any Applicable Matter) other than in such Chosen Court and not to challenge or enforce in another jurisdiction a judgment of such Chosen Court. Process in any such proceeding may be served on any Person with respect to such Applicable Matters anywhere in the world, whether within or without the jurisdiction of any such Chosen Court. Without limiting the foregoing, each such Person agrees that service of process on such party as provided in Section 5.4 shall be deemed effective service of process on such Person. AS SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.
5.4 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be either personally delivered, or sent by certified mail, return receipt requested, or sent by reputable overnight courier service (charges prepaid) to the parties at the applicable address set forth below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally or sent by telecopier or electronic mail (provided confirmation of transmission is received), three (3) days after deposit in the U.S. mail and one (1) day after deposit with a reputable overnight courier service.
| (a) | If to Purchaser: |
HHCF Series 21 Sub, LLC
88 West Mound Street
Columbus, OH 43215
Attn: Separately Supplied
E-mail: Separately Supplied
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with a copy to (which copy alone
shall not constitute notice):
Troutman Pepper Locke LLP
600 Peachtree Street, N.E.
Suite 3000
Atlanta, GA 30308
Attn: Separately Supplied
E-mail: Separately Supplied
| (b) | If to the Company: |
Katapult Holdings, Inc.
5360 Legacy Drive, Building 2,
Plano, TX 75024
Attn: Separately Supplied
E-mail: Separately Supplied
with a copy to (which copy alone
shall not constitute notice):
Davis Polk & Wardwell LLP
450 Lexington Ave
New York, NY 10017
Attention: Separately Supplied
Email: Separately Supplied
5.5 Entire Agreement. This Agreement (including the Exhibits hereto and the documents and instruments referred to in this Agreement), constitutes the entire agreement among the parties and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and transactions contemplated hereby.
5.6 Assignment. Neither this Agreement, nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other party, provided, however, that (a) the Purchaser may assign its rights, interests and obligations under this Agreement, in whole or in part, to one or more Permitted Transferees, and (b) in the event of such assignment, the assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned; provided that no such assignment will relieve the Purchaser of its obligations hereunder prior to the Closing.
5.7 Fees and Expenses. At the Closing, the Company shall pay the reasonable fees and expenses of Troutman Pepper Locke LLP, the counsel for the Purchaser, provided that the aggregate amount of such fees and expenses to be paid by the Company shall not exceed $250,000.
5.8 Interpretation. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. All article, section, paragraph or clause references not attributed to a particular
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document shall be references to such parts of this Agreement, and all exhibit, annex, letter and schedule references not attributed to a particular document shall be references to such exhibits, annexes, letters and schedules to this Agreement. In addition, the following terms are ascribed the following meanings:
(a) the word “or” is not exclusive;
(b) the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;
(c) the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and
(d) the term “business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in Chicago, Illinois generally are authorized or required by law or other governmental action to close.
5.9 Captions. The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.
5.10 Severability. If any provision of this Agreement or the application thereof to any Person (including the officers and directors of the parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.
5.11 Third Party Beneficiaries. Except as expressly set forth herein, nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person other than the parties hereto (and their permitted assigns), any benefit, right or remedies.
5.12 Public Announcements. Subject to each party’s disclosure obligations imposed by law or regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor the Purchaser will make any such news release or public disclosure without first consulting with the other, and, in each case, also receiving the other’s consent (which shall not be unreasonably withheld or delayed) and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure. Notwithstanding the forgoing, this Section 5.12 shall not apply to any press release or other public statement made by the Company or the Purchaser (a) which is consistent with prior disclosure and does not contain any information relating to the transactions that has not been previously announced or made public in accordance with the terms of this
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Agreement or (b) is made to its auditors, attorneys, accountants, financial advisors, limited partners or other Permitted Transferees.
5.13 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, without the necessity of posting bond or other undertaking, the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity, and in the event that any action or suit is brought in equity to enforce the provisions of this Agreement, and no party will allege, and each party hereby waives, the defense or counterclaim that there is an adequate remedy at law.
5.14 Definitions.
(a) As used herein, the following terms have the meanings ascribed thereto below:
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person; provided, however, that the Company, any of its Subsidiaries, or any of the Company’s other controlled Affiliates, in each case, will not be deemed to be Affiliates of the Purchaser for purposes of this Agreement. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Code” means the United Stated Internal Revenue Code of 1986, as amended.
“Company Material Adverse Effect” means, with respect to the Company, any Effect that, individually or taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, is or is reasonably likely to be materially adverse to the business, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event shall any of the following individually or taken together, be deemed to constitute, or be taken into account in determining whether a Company Material Adverse Effect has occurred or is expected to occur: (i) changes in global, foreign, national or regional economic, financial, regulatory; political (including results of elections or gerrymandering) or geopolitical conditions or events in general, in each case, in the U.S. or elsewhere in the world, or any escalation or worsening of any of the foregoing, or any action taken by any Governmental Entity in response to any of the foregoing; (ii) conditions generally affecting the industries in which the Company or the Company’s Subsidiaries participate or the United States or global economy as a whole, to the extent that such conditions do not have a materially disproportionate impact on the Company and the Company’s Subsidiaries taken as a whole relative to other similarly situated companies of comparable size in the industries in which the Company and the Company’s Subsidiaries participate (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred, and then only to the extent not otherwise excluded by the other exceptions in this definition); (iii) any failure by the Company or the Company’s Subsidiaries to meet internal or published projections
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or forecasts or third party revenue or earnings predictions for any period ending on or after the date of this Agreement (it being understood, however, that any Effect underlying any such failure to meet projections, forecasts or predictions may, to the extent applicable and not otherwise excluded by the other exceptions in this definition, may be taken into account in determining whether a Company Material Adverse Effect has occurred); (iv) any change in the price or trading volume of shares of equity securities or any other publicly traded securities of the Company, or any change or prospective change in the credit rating of the Company or the Company’s Subsidiaries (provided, however, that the underlying causes of such change may, to the extent applicable and not otherwise excluded by the other exceptions in this definition, be considered in determining whether there has been a Company Material Adverse Effect); (v) changes in the financial, banking, credit, commodity, currency, capital or securities markets, or changes in interest rates or exchange rates, in the United States or any other country in the world; (vi) the negotiation, execution, delivery, announcement or performance of the obligations under this Agreement or the Transaction Documents or the announcement, pendency or anticipated consummation of the transactions contemplated by this Agreement or the Transaction Documents, including the customers, suppliers, distributors, partners, licensors, providers, employees or others having relationships with Company; (vii) the effect of seasonal changes and patterns on the financial condition, business, assets, liabilities or results of operations of the Company or the Company’s Subsidiaries; (viii) litigation brought by securityholders or debtholders arising from or relating to this Agreement, the Transaction Documents or the transactions contemplated thereby; (ix) any computer, Internet, network or system hacking, mal-ware or malicious code, unauthorized access to any computer, network, system or data, cybersecurity incident, data breach, cyber terrorism, cyber-attack, cybersecurity breach or ransom-ware (or ransom-ware attack or ransom-ware incident) affecting or impacting, or outage of or termination by a web hosting platform providing service to, the Company or the Company’s Subsidiaries; (x) any hurricane, tornado, cyclone, tsunami, flood, volcanic eruption, earthquake, nuclear incident, foreign or domestic social protest or social unrest, riots, weather conditions, power outages or electrical black-outs, mudslides, wild fires, casualty events or other natural or man-made disaster, act of God, force majeure event, natural disaster, any public health event (including any epidemic, pandemic, or disease outbreak (including the COVID-19 virus)), or any acts of terrorism, sabotage, military action, act of war or war (whether or not declared, including any escalation or worsening thereof or any regime change or breakup of a country as a result thereof, and including the current dispute between the Russian Federation and Ukraine and in Israel and Gaza), declaration of martial law, rebellion, insurrection or national emergency; (xi) any specific action taken at the written request of the Purchaser or expressly required by this Agreement, or any failure to take any specific action expressly prohibited by this Agreement or the Transaction Documents; (xii) executive orders, public statements or announcements by or on behalf of the U.S. President or the U.S. White House, tariffs, anti-dumping actions, trade policies, trade disputes, agreements or initiatives or any “trade war” or similar actions, or any U.S. government shutdown, continuing resolution, or budget reduction (including due to the inability of Congress to clear any appropriation or the Department of Government Efficiency); or (xiii) any changes (after the date of this Agreement) in GAAP or applicable Laws or interpretations thereof.
“Company Options” means outstanding options to purchase shares of Common Stock granted by the Company.
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“Company PSUs” means outstanding performance stock units of the Company.
“Company RSUs” means outstanding restricted stock units of the Company.
“Company Subsidiary” means any Subsidiary of the Company.
“Company Warrants” means outstanding warrants to purchase Common Stock granted by the Company.
“Credit Agreement” means that certain Amended and Restated Loan and Security Agreement, dated as of June 12, 2025, by and among Katapult SPV-1 LLC, a Delaware limited liability company, the Company, Midtown Madison Management, LLC, a Delaware limited liability company, the lenders party thereto from time to time (as amended, amended and restated, supplemented, revised, or otherwise modified from time to time).
“Effect” means any change, event, effect, development or circumstance.
“Employee Plan” means (i) any employee pension benefit plan (as defined in Section 3(2)(A) of ERISA) maintained for employees of the Company or of any member of a “controlled group,” as such term is defined in Section 414 of the Code, of which the Company or any of its Subsidiaries is a part, or any such employee pension benefit plan to which the Company or any of its Subsidiaries is required to contribute on behalf of its employees, and any other employee benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to ERISA; or (ii) any compensation or other benefit plan, policy, program, agreement or arrangement, including any employment, change in control, bonus, equity-based compensation, retention or other similar agreement, that the Company or any of its Subsidiaries, maintains, sponsors, is a party to, or as to which the Company or any of its Subsidiaries otherwise has any material obligation or material liability in respect of its employees; in each case, excluding any compensation or benefit arrangement maintained by a Governmental Entity.
“Equity Interest” means any share, capital stock, partnership, limited liability company, member or similar equity interest in any Person, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable into or for any such share, capital stock, partnership, limited liability company, member or similar equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.
“Governmental Entity” means any court, administrative or regulatory agency or commission or other governmental or arbitral body or authority or instrumentality, including any state-controlled or owned corporation or enterprise, in each case whether federal, state, local or foreign, and any applicable industry self-regulatory organization.
“Knowledge of the Company” means the actual knowledge after reasonable inquiry of one or more of the Company’s chief executive officer, chief financial officer, and general counsel.
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“Law” means any applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, rule, regulation, ruling or other legally binding requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien, charge or other restriction of any kind, whether based on common law, statute or contract.
“Permitted Transferee” means, with respect to any Person, (i) any Affiliate of such Person, (ii) any successor entity of such Person, (iii) with respect to any Person that is an investment fund, vehicle or similar entity, any other investment fund, vehicle or similar entity of which such Person or an Affiliate, advisor or manager of such Person serves as the general partner, manager or advisor, or any successor entity of the foregoing or (iv) to limited partners of, or Affiliates of limited partners of, the Purchaser or any of its parallel or feeder funds.
“Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
“Pre-Closing Period” means the period commencing on the date hereof and terminating on the earlier to occur of (a) the Closing and (b) the termination of this Agreement in accordance with the provisions hereof.
“Regulation D” means the provisions of Regulation D promulgated under the Securities Act.
“Series A Certificate of Designations” means that certain Certificate of Designations of the Company establishing the Series A Convertible Preferred Stock.
“Series A Convertible Preferred Stock” means the series of stock of the Company titled the “Series A Convertible Preferred Stock” designated pursuant to that certain Series A Certificate of Designations.
“Series B Registration Rights Agreement” means that certain Registration Rights Agreement dated as of November 3, 2025, by and among the Company and the holders of Series B Convertible Preferred Stock of the Company set forth on Schedule 1 thereto.
“Support Agreements” mean those certain Support Agreements dated as of November 3, 2025, by and between the Company and each of the officers and directors of the Company.
“Series A Transaction Documents” means the Series A Certificate of Designations, the Series A Registration Rights Agreement and the Support Agreements.
“Stockholder” means a holder of Common Stock or Preferred Stock.
“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (i) of which such Person or a Subsidiary of such Person is a general partner or (ii) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power
25
to elect a majority of the board of directors or Persons performing similar functions with respect to such Person, is directly or indirectly owned by such Person and/or one or more subsidiaries thereof.
“Transaction Documents” means this Agreement, the Series B Certificate of Designations, the Series B Registration Rights Agreement, the Nomination Agreement, and the Series B Support Agreements.
“Transfer” by any Person means, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, any securities owned by such Person or of any interest (including any voting interest) in any securities owned by such Person.
(b) As used herein, the following terms are defined in the Section of this Agreement set forth after such term below:
| Term | Location of Definition |
| Agreement | Preamble |
| Applicable Matters | 5.3 |
| Board of Directors | 2.1(c)(1) |
| Bylaws | 2.1(c)(2) |
| Certificate of Incorporation | 2.1(c)(2) |
| Chosen Court | 5.3 |
| Closing | 1.2(a) |
| Closing Date | 1.2(a) |
| Common Stock | 2.1(b)(1) |
| Company | Preamble |
| Exchange Act | 2.1 |
| GAAP | 2.1(f)(4) |
| Non-Recourse Party | 1.3(c) |
| Nasdaq | 1.3(c) |
| Nasdaq Listing Application | 1.3(c) |
| Nomination Agreement | 1.2(b)(1) |
| Per Share Price | 1.1 |
| Preferred Stock | Recitals |
| Purchase Price | 1.1 |
| Purchaser | Preamble |
| Resignation Letters | 3.4 |
| Series B Certificate of Designations | Recitals |
| Series B Registration Rights Agreement | 1.2(b)(1) |
| Series B Support Agreements | Recitals |
| SEC | 2.1(a)(2) |
| SEC Documents | 2.1(f)(1) |
| Shares | 1.1 |
| Supporting Stockholders | Recitals |
*****
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[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.
| KATAPULT HOLDINGS, INC. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | CEO | |
[Signature Page to Series B Investment Agreement]
| HHCF SERIES 21 SUB, LLC | ||
| By: | /s/ John Detwiler | |
| Name: | John Detwiler | |
| Title: | Authorized Signatory | |
[Signature Page to Series B Investment Agreement]
EXHIBIT A
Form of Series B Certificate of Designations
[See Attached]
EXHIBIT B
Form of Series B Support Agreement
[See Attached]
EXHIBIT C
Supporting Stockholders
[See Attached]
EXHIBIT D
Form of Series B Registration Rights Agreement
[See Attached]
EXHIBIT E
Form of Director Nomination Agreement
[See Attached]
Exhibit 10.4
Execution Version
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 3, 2025, by and among Katapult Holdings, Inc., a Delaware corporation (“Katapult”), and the holders of Series A Convertible Preferred Stock of Katapult set forth on Schedule 1 hereto (each, a “Securityholder”, and collectively, the “Securityholders”), and shall become effective only as of the Closing (as defined below).
RECITALS
A. Katapult is party to that certain Series A Investment Agreement, dated as of November 3, 2025, by and between Katapult and the Securityholder[s] (the “Investment Agreement”), pursuant to which, at the Closing and subject to certain terms and conditions contained therein, Katapult will issue to the Securityholder[s] shares of Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”).
B. Subject to certain terms and conditions contained in the Series A Certificate of Designations of Katapult establishing the Series A Convertible Preferred Stock, the Series A Convertible Preferred Stock is convertible into shares of Katapult Common Stock (the “Shares”).
C. To induce the Securityholders to enter into the Investment Agreement, Katapult has agreed to provide certain registration rights under the Securities Act, and applicable state securities laws, effective as of Closing.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, Katapult and each Securityholder agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Investment Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Closing” has the meaning assigned thereto in the Investment Agreement.
“Effectiveness Deadline” means the later of (i) the seventy-fifth (75th) day following the Filing Date if the SEC notifies Katapult that it will “review” the Registration Statement and (ii) the fifth (5th) Business Day after the date Katapult is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review; provided that the Effectiveness Deadline in clause (i) shall extend to the one-hundred twentieth (120th) day following the Filing Date if Katapult receives comments from the SEC.
“Effectiveness Period” shall have the meaning set forth in Article II.
“Filing Date” means the forty-fifth (45th) day following the Closing Date; provided, however, that if the Filing Date falls on a day that is not a Business Day, then the Filing Date shall be extended to the next Business Day.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 6.3(a).
“Indemnifying Party” shall have the meaning set forth in Section 6.3(a).
“Losses” shall have the meaning set forth in Section 6.1.
“Managing Underwriter(s)” means the underwriter or underwriters of an underwritten offering.
“Prospectus” means any prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to any such Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.
“Registrable Securities” means (i) each of the Shares issued to the Securityholders upon the conversion of the Series A Preferred Stock from time to time and (ii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that the applicable Holder has completed and delivered to Katapult a Selling Stockholder Questionnaire; and provided further that such securities shall no longer be deemed Registrable Securities if (A) such securities have been sold pursuant to a Registration Statement, (B) such securities shall have been otherwise transferred, new certificates or book entry positions for such securities not bearing a legend restricting further transfer shall have been delivered by Katapult and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; or (D) such securities may be sold without registration pursuant to Rule 144 (but with no volume or other restrictions or limitations thereunder).
“Registration Statement” means the registration statements and any additional registration statements contemplated by Article II, including (in each case) the related Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
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“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
“Selling Stockholder Questionnaire” means a questionnaire substantially in the form attached as Annex B hereto.
“Trading Day” means a day on which Katapult Common Stock is traded on any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the OTCQB or OTCQX (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the Investment Agreement, and the annexes and exhibits attached hereto and thereto.
“Underwritten Demand Offering” means an underwritten offering of Registrable Securities pursuant to a Demand Registration, including any underwritten takedown off an effective shelf Registration Statement (including any block trade or bought deal).
ARTICLE II
REGISTRATION
2.1 Registration Obligations; Filing Date Registration. Katapult shall prepare and file with the SEC on or prior to the Filing Date a Registration Statement covering the resale of the Registrable Securities as would permit the sale and distribution of all the Registrable Securities from time to time pursuant to Rule 415 in the manner reasonably requested by the Holder. The Registration Statement shall be on Form S-3 (except if Katapult is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on a Form S-1 or another appropriate form in accordance with the Securities Act and the rules promulgated thereunder and Katapult shall undertake to register the Registrable Securities on Form S-3 as soon as practicable following the availability of such form, provided that Katapult shall use commercially reasonable efforts to maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC). The Registration Statement shall contain the “Plan of Distribution” section in substantially the form attached hereto as Annex A. Katapult shall use commercially reasonable efforts to cause the Registration Statement filed by it to be declared effective under the Securities Act as promptly as practicable after the filing thereof but in any event on or prior to the Effectiveness Deadline, and, subject to Section 4.1(m) hereof, to keep such Registration Statement continuously effective under the Securities Act until such date as all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities (the “Effectiveness Period”). By 4:00 p.m. (Eastern time) on the second Business Day following the Effectiveness Deadline, Katapult shall file with the SEC in accordance with Rule 424 under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement. Katapult shall use commercially reasonable efforts to become and remain eligible to use Form S-3 (or any successor form) for the registration of Registrable
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Securities as soon as practicable following the date hereof, including by timely filing all reports required under the Exchange Act and taking any other actions necessary to maintain such eligibility. Katapult shall promptly notify the Holders if it ceases to be eligible to use Form S-3 and of any actions it is taking to regain such eligibility. No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior written consent.
2.2 Right to Request Registration. Subject to the provisions hereof, at any time the Registration Statement covering all Registrable Securities is not effective, other than as permitted in accordance with Section 4.1(m) hereof, and for so long as a Holder holds any Registrable Securities, Holders of at least a majority in interest of the then-outstanding number of Registrable Securities may at any time request registration under the Securities Act for resale of all or any portion of the Registrable Securities then-held by the applicable Holder(s) (a “Demand Registration” and Holders who properly initiates such request shall be referred to as the “Initiating Holders”). At the election of the Initiating Holders (which election shall be made in the corresponding demand notice to Katapult), any Demand Registration shall be effected as an Underwritten Demand Offering. If Katapult then has an effective shelf Registration Statement covering Registrable Securities, the Initiating Holders may instead request an underwritten shelf takedown as an Underwritten Demand Offering, and Katapult shall, to the extent permitted by applicable law and SEC guidance, file and make effective any required prospectus supplement or other filing to permit such Underwritten Demand Offering. Subject to Section 2.4 and Section 4.1(m) below, Katapult shall (i) file a Registration Statement registering for resale such number of Registrable Securities as requested to be so registered pursuant to this Section 2.2 (a “Demand Registration Statement”) within forty-five (45) days after the Initiating Holders’ request therefor (or, in the case of an Underwritten Demand Offering off an effective shelf Registration Statement, file any required Prospectus supplement or other filing within ten (10) Trading Days after the Initiating Holders’ request) and (ii) use commercially reasonable efforts to cause such Demand Registration Statement to be declared effective by the SEC as soon as practicable thereafter and, in the case of an Underwritten Demand Offering off an effective shelf Registration Statement, to permit marketing to commence promptly and pricing to occur as directed by the Managing Underwriter(s), in each case subject to Section 4.1(m). To the extent requested by the Initiating Holders, the Demand Registration Statement shall allow the offer and sale of the Registrable Securities on a continuous basis pursuant to Rule 415 under the Securities Act, unless Katapult is not eligible to use a form which allows such offer and sale in which case the Demand Registration Statement shall allow such offer and resale for so long a period as permitted by the Securities Act and the rules thereunder.
2.3 Priority on Demand Registrations. Katapult may include securities other than Registrable Securities in a Demand Registration for any accounts (including for the account of Katapult) on the terms provided below; and if such Demand Registration is an Underwritten Demand Offering, such securities may be included only with the prior written consent of the Managing Underwriter(s) of such offering. If the Managing Underwriter(s) of the requested Demand Registration advise Katapult and the Initiating Holder that in their opinion the number of securities proposed to be included in the Demand Registration exceeds the number of securities which can be sold in such underwritten offering without materially delaying or jeopardizing the success of the offering (including the price per share of any Shares proposed to be sold in such underwritten offering), Katapult shall include in such Demand Registration (i) first, the number of Registrable Securities that the Initiating Holders propose to sell, (ii) second, the number of
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securities proposed to be included therein by any other Holder (allocated pro rata (as nearly as practicable) among all participating Holders on the basis of the number of securities requested to be included therein by all such Holders or as such Holders and Katapult may otherwise agree) and (iii) third, the number of securities proposed to be included therein for the account of Katapult. If the number of securities which can be sold is less than the number of securities proposed to be registered pursuant to clause (i) above by the Initiating Holders, the number of securities to be sold shall be allocated to the Initiating Holders in their entirety.
2.4 Effective Period of Demand Registration. Upon the date of effectiveness of the Demand Registration and if such offering is priced promptly on or after such date, Katapult shall use commercially reasonable efforts to keep such Demand Registration Statement effective for sale on a continuous basis under Rule 415, or if such rule is unavailable to Katapult, for a period equal to one hundred eighty (180) days from such date (or such longer period as in the opinion of counsel for the underwriters a Prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) or such shorter period which shall terminate when all of the Registrable Securities covered by such Demand Registration have been sold by the Initiating Holder.
2.5 Underwritten Demand Offerings; Selection of Underwriters; Number; Withdrawals; Shelf Takedowns; Block Trades.
(a) Selection of Underwriters; Documentation. In connection with any Underwritten Demand Offering, the Initiating Holders shall have the right to select the Managing Underwriter(s), subject to Katapult’s consent (not to be unreasonably withheld, conditioned or delayed). The form and substance of the underwriting agreement shall be customary for transactions of such type and reasonably acceptable to the Initiating Holders and Katapult, and shall include only those representations, warranties, covenants and indemnities customarily included for issuers and selling stockholders in underwritten offerings of similar size and type.
(b) No Numerical Limit; Timing. The Holders shall have the right to request an unlimited number of Underwritten Demand Offerings; provided, however, that Katapult shall not be required to effect more than one (1) Underwritten Demand Offering during any Suspension Period or during any period in which a Suspension Event is continuing pursuant to Section 4.1(m). Katapult shall not be obligated to (but may, at its sole option) effect any Demand Registration or Underwritten Demand Offering (i) within sixty (60) days after the closing of an Underwritten Demand Offering or (ii) during the period starting with the date sixty (60) days prior to Katapult’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Katapult initiated registration and provided that Katapult has delivered notice to the Holders pursuant to subsection 4.1(d) and it continues to actively employ, in good faith, all reasonable best efforts to cause the applicable Registration Statement to become effective. Katapult shall not be required to file a Registration Statement (or any amendment thereto) or effect an Underwritten Demand Offering (or, if Katapult has an effective Registration Statement including Registrable Securities therein, Katapult shall be entitled to suspend the offer and sale of Registrable Securities pursuant to such Registration Statement) for a period of up to thirty (30) days (i) if the Holders have requested an Underwritten Demand Registration and Katapult and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer or (ii) if Katapult has determined in good faith that the sale of Registrable Securities
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pursuant to a Registration Statement would require disclosure of material non-public information not otherwise required to be disclosed under applicable securities laws (x) which disclosure would have a detrimental effect on Katapult or (y) relating to a material transaction involving Katapult (any such period, a “Blackout Period”); provided, however, that in no event shall any Blackout Period together with other Blackout Periods exceed an aggregate of 90 days in any consecutive 12-month period.
(c) Withdrawals; No “Use” of Demand. The Initiating Holders may, at any time prior to the pricing of any Underwritten Demand Offering, elect to withdraw such Underwritten Demand Offering by written notice to Katapult, and such withdrawal shall not be deemed a use of a Demand Registration or otherwise limit the rights of the Holders hereunder and Katapult shall bear the expenses set forth in Section 5.1 incurred in connection therewith; provided that if the withdrawal is primarily the result of a material breach by Katapult of its obligations hereunder, the Initiating Holders’ rights shall be without limitation and any such breach shall be subject to Section 8.2.
(d) Shelf Takedowns. If Katapult is eligible to use Form S-3, any Demand Registration requested as an Underwritten Demand Offering shall, at the option of the Initiating Holders, be effected as an underwritten takedown off an effective shelf Registration Statement. In such case, Katapult shall (i) prepare and file any Prospectus supplement and related filings no later than ten (10) Trading Days after receipt of the Holders’ request (or, in the case of an overnight or same-day “bought deal” or block trade, by no later than the time reasonably necessary to permit such offering) and (ii) use commercially reasonable efforts to cooperate to permit marketing to commence and pricing to occur as directed by the Managing Underwriter(s).
(e) Block Trades; Bought Deals. The Initiating Holders may request that an Underwritten Demand Offering be conducted as a block trade or bought deal. Katapult shall use commercially reasonable efforts to facilitate any such transaction (including by cooperating to prepare, file and make effective any required Prospectus supplement or other filing within the timeframes reasonably requested by the Managing Underwriter(s)). Any notice periods otherwise applicable to a Demand Registration shall not apply to a block trade or bought deal, and Katapult shall not be permitted to include any securities therein for its own account or the account of any other Holder without the Initiating Holders’ prior written consent.
(f) Inclusion of Other Securities; Cutbacks. No securities other than Registrable Securities shall be included in any Underwritten Demand Offering without the prior written consent of the Initiating Holders. If the Managing Underwriter(s) advise Katapult and the Initiating Holders in writing that the number of securities proposed to be included in such Underwritten Demand Offering exceeds the number of securities which can be sold without materially delaying or jeopardizing the success of the offering, the Registrable Securities to be included shall be allocated as follows: (i) first, to the Registrable Securities that the Initiating Holders propose to sell; (ii) second, to other Registrable Securities requested to be included by other Holders, pro rata (as nearly as practicable) among such Holders on the basis of the number of securities requested to be included by all such Holders or as such Holders and Katapult may otherwise agree; and (iii) third, to any securities proposed to be included by Katapult, in each case subject to Section 2.4. For the avoidance of doubt, if the number of securities which can be sold is
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less than the number of securities proposed to be included pursuant to clause (i), all such capacity shall be allocated to the Initiating Holders.
(g) Katapult Cooperation. Without limiting Article IV, in connection with any Underwritten Demand Offering, Katapult shall (i) prepare and make available a reasonable number of “road show” participation opportunities (including virtual) as reasonably requested by the Managing Underwriter(s), (ii) furnish customary opinions and negative assurance letters of counsel and comfort letters of independent accountants, and (iii) deliver officer certificates, all in each case as reasonably requested by the Managing Underwriter(s) and consistent with Section 4.1(n) and Section 4.1(o).
(h) Failure or Delay. If Katapult fails to comply with its obligations with respect to an Underwritten Demand Offering within the time periods specified herein (other than as permitted by Section 4.1(m)), then, in addition to any other remedies, (x) the Initiating Holders may withdraw such Underwritten Demand Offering and such withdrawal shall not be deemed a use of a Demand Registration and (y) the Effectiveness Period shall be tolled for the period of such failure or delay.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Right to Piggyback. For so long as a Holder holds any Registrable Securities, in the event the Registration Statement covering all Registrable Securities is not effective, whenever Katapult proposes to register any Shares under the Securities Act (other than on a registration statement on Form S-8, Form F-8, Form S-4 or Form F-4), whether for its own account or for the account of one or more holders of securities, and the form of registration statement to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), Katapult shall give written notice to such Holders of its intention to effect such a registration and, subject to Sections 3.2 and 3.3, shall include in such registration statement and in any offering of Shares to be made pursuant to that registration statement all Registrable Securities with respect to which Katapult has received a written request for inclusion therein from a Holder within ten (10) days after such Holder’s receipt of Katapult’s notice. Katapult shall have no obligation to proceed with any Piggyback Registration and may abandon, terminate and/or withdraw such registration for any reason at any time prior to the pricing thereof. Any Holder may elect to withdraw its request for inclusion of Registrable Securities in any Piggyback Registration by giving written notice to Katapult of such request to withdraw at least five (5) days prior to the effectiveness of such Registration Statement or prior to the pricing of the applicable offering. No registration effected under this Section 3 shall relieve Katapult of its obligations to effect any registration of the sale of Registrable Securities under Article II and no registration effected pursuant to this Section 3 shall be deemed to have been effected pursuant to Section 2.2.
3.2 Priority on Primary Piggyback Registrations. If a Piggyback Registration is initiated as a primary underwritten offering on behalf of Katapult and the Managing Underwriter(s) advise Katapult and the Holders (if any Holders have elected to include Registrable Securities in such Piggyback Registration) that in their good faith opinion the number of securities proposed to be included in such offering exceeds the number of securities which can be sold in such offering
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without materially delaying or jeopardizing the success of the offering (including the price per security proposed to be sold in such offering), Katapult shall include in such registration and offering (i) first, the number of Shares that Katapult proposes to sell, and (ii) second, the number of securities requested to be included therein by holders of securities, including the Holders (if any Holders have elected to include Registrable Securities in such Piggyback Registration), pro rata (as nearly as practicable) among all participating holders on the basis of the number of securities requested to be included therein by all such holders or as such holders and Katapult may otherwise agree.
3.3 Priority on Secondary Piggyback Registrations. If a Piggyback Registration is initiated as an underwritten registration on behalf of a holder of securities other than a Holder and the Managing Underwriter(s) advise Katapult that in their good faith opinion the number of securities proposed to be included in such registration exceeds the number of securities which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including the price per security proposed to be sold in such offering), then Katapult shall include in such registration (i) first, the number of securities requested to be included therein by the holder(s) requesting such registration (including any Initiating Holders), (ii) second, the number of securities requested to be included therein by other holders of securities including any other Holders (if any other Holders have elected to include Registrable Securities in such Piggyback Registration), pro rata (as nearly as practicable) among participating holders on the basis of the number of securities requested to be included therein by such holders or as such holders and Katapult may otherwise agree and (iii) third, the number of securities that Katapult proposes to sell.
3.4 Basis of Participation. The Holders may not sell Registrable Securities in any offering pursuant to a Piggyback Registration unless it (i) agrees to sell such Registrable Securities on the same basis provided in the underwriting or other distribution arrangements approved by Katapult and that apply to Katapult and/or any other holders involved in such Piggyback Registration and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lockups and other documents required under the terms of such arrangements.
3.5 Selection of Underwriters. If any Piggyback Registration is a primary or secondary underwritten offering, subject to the terms and conditions of Section 2 hereof, Katapult shall have the sole right to select the Managing Underwriter(s) or underwriters to administer any such offering.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Registration Procedures. In connection with Katapult’s registration obligations hereunder, Katapult shall:
(a) Prepare and file with the SEC on or prior to the Filing Date, a Registration Statement on Form S-3 (or if Katapult is not then eligible to register for resale the Registrable Securities on Form S-3 such Registration Statement shall be on a Form S-1 or another appropriate
8
form in accordance with the Securities Act and the rules and regulations promulgated thereunder) in accordance with the method or methods of distribution thereof as described on Annex A hereto, and use commercially reasonable efforts to cause the Registration Statement to become effective and remain effective as provided herein. In connection with any Underwritten Demand Offering off an effective shelf Registration Statement, Katapult shall, upon request by the Initiating Holders, prepare and file any required Prospectus supplement or other filing within two (2) Trading Days (or such shorter period as reasonably necessary in the case of a block trade or bought deal) to permit such offering to proceed as contemplated by Section 2.5(d) and (e).
(b) Prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective (subject to Section 4.1(m)) as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements, if necessary, in order to register for resale under the Securities Act all of the Registrable Securities; cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; respond promptly to any comments received from the SEC with respect to the Registration Statement or any amendment thereto and promptly provide the Holders true and complete copies of all correspondence from and to the SEC relating to such Registration Statement; and comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.
(c) [Reserved].
(d) Promptly notify the Holders of Registrable Securities (i)(A) when a Registration Statement, a Prospectus or any Prospectus supplement or pre- or post-effective amendment to the Registration Statement is filed; (B) when the SEC notifies Katapult whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement, and if requested by such Holders, furnish to them a copy of such comments and Katapult’s responses thereto and (C) with respect to the Registration Statement or any post-effective amendment filed by Katapult, when the same has become effective; (ii) of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information of Katapult; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Legal Proceedings for that purpose; (iv) of the receipt by Katapult of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities of Katapult for sale in any jurisdiction, or the initiation or threatening of any Legal Proceeding for such purpose; and (v) of the occurrence of any event that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
9
or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(e) Use commercially reasonable efforts to avoid the issuance of, and, if issued, to obtain the withdrawal of, (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any U.S. jurisdiction.
(f) If requested by the Holders of a majority of the Registrable Securities, (i) promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as such Holders reasonably request to be included therein unless the inclusion of such information would reasonably be expected to expose Katapult to liability under federal and state securities laws and regulations and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after Katapult has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment.
(g) Furnish to each Holder, without charge and upon request, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and, to the extent requested by such Person, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC, provided, that Katapult shall have no obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system.
(h) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and Katapult hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.
(i) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities of Katapult to be sold pursuant to a Registration Statement.
(j) Upon the occurrence of any event contemplated by Section 4.1(d)(v), as promptly as practicable prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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(k) Use commercially reasonable efforts to cause all Registrable Securities relating to the Registration Statement to be listed on The Nasdaq Stock Market, LLC or any subsequent securities exchange, quotation system or market, if any, on which similar securities issued by Katapult are then listed or traded.
(l) Katapult may require each selling Holder to furnish to Katapult information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the Registration Statement, and Katapult may exclude from such registration the Registrable Securities of any such Holder who fails to furnish such information within five (5) days after receiving such request.
(m) Katapult shall be entitled to delay the filing or effectiveness of, or suspend the use of, the Registration Statement if it determines that in order for the Registration Statement not to contain a material misstatement or omission, (i) an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act, (ii) the negotiation or consummation of a transaction by Katapult or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event that the Board of Directors reasonably believes would require additional disclosure by Katapult in the Registration Statement of material information that Katapult has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Board of Directors to cause the Registration Statement to fail to comply with applicable disclosure requirements, or (iii) an amendment thereto so as to convert the Registration Statement to a Registration Statement on Form S-3 at such time after Katapult becomes eligible to use such Form S-3 (each such circumstance, a “Suspension Event”); provided, however, that Katapult may not delay or suspend the Registration Statement on more than two occasions or for more than forty-five (45) consecutive days, or more than sixty (60) total days, in each case during any twelve (12)-month period; provided however that no such postponement or suspension by Katapult shall be permitted for more than one (1) forty-five (45) day period, arising out of the same set of facts, circumstances or transactions. Any period during which Katapult has delayed a filing, an effective date or an offering pursuant to this Section 4 is herein called a “Suspension Period.” Katapult shall provide prompt written notice to participating Holders of the commencement and termination of any Suspension Period (and any withdrawal of a registration statement pursuant to this Section 4.1(m)), but shall not be obligated under this Agreement to disclose the reasons therefor. Holders shall keep the existence of each Suspension Period confidential and refrain from making offers and sales of Registrable Securities (and direct any other Persons making such offers and sales to refrain from doing so) during each Suspension Period under the applicable Registration Statement.
(n) Katapult shall use commercially reasonable efforts to register or qualify, or cooperate with the Holders of the Registrable Securities included in the Registration Statement in connection with the registration or qualification of, the resale of the Registrable Securities under applicable securities or “blue sky” laws of such states of the United States as any such Holder requests in writing and to do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that Katapult shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would
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subject it to general service of process or to taxation in any jurisdiction to which it is not then so subject.
(o) Katapult will comply with all rules and regulations of the SEC to the extent and so long as they are applicable to the registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, no later than forty-five (45) days after the end of a twelve (12)-month period (or ninety (90) days, if such period is a fiscal year) beginning with Katapult’s first fiscal quarter commencing after the effective date of the Registration Statement.
(p) In the case of an underwritten offering in which the Holders participate, Katapult will enter into an underwriting agreement, containing customary provisions (including provisions for indemnification, lockups, opinions of counsel and comfort letters) consistent with Section 2.5 and reasonably acceptable to the Initiating Holders, and take all such other customary and reasonable actions as the Managing Underwriter(s) of such offering may request in order to facilitate the disposition of such Registrable Securities (including, making appropriate personnel of Katapult available at reasonable times and places to assist in customary road-shows that the Managing Underwriter(s) determine are necessary or advisable to effect the offering).
(q) In the case of an underwritten offering in which the Holders participate, and to the extent not prohibited by applicable law, Katapult will (i) make reasonably available, for inspection by the Managing Underwriter(s) of such offering and any attorneys and accountants acting for such Managing Underwriter(s), pertinent corporate documents and financial and other records of Katapult and its subsidiaries and controlled Affiliates (but excluding any documents incorporated by reference in such Registration Statement, amendments or supplements that are available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (or any successor system)), (ii) cause Katapult’s officers and employees to supply information reasonably requested by such Managing Underwriter(s) or attorney in connection with such offering, (iii) make Katapult’s independent accountants available for any such underwriters’ due diligence and have them provide customary comfort letters to such underwriters in connection therewith; and (iv) cause Katapult’s counsel to furnish customary legal opinions to such underwriters in connection therewith; provided, however, that such records and other information shall be subject to such confidential treatment as is customary for underwriters’ due diligence reviews.
4.2 Holder Obligations.
(a) At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, Katapult shall notify each Holder in writing of the information Katapult requires from each such Holder if such Holder elects to have any of such Holder’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of Katapult to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Holder that (i) such Holder furnish to Katapult such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities, and (ii) the Holder execute such documents in connection with such registration as Katapult may reasonably request.
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(b) Each Holder covenants and agrees by its acquisition of such Registrable Securities that (i) it will not sell any Registrable Securities under the Registration Statement until it has received copies of the Prospectus as then amended or supplemented as contemplated in Section 4.1(h) and notice from Katapult that such Registration Statement and any post-effective amendments thereto have become effective as contemplated by Section 4.1(d) and (ii) it and its officers, directors or Affiliates, if any, will comply with the prospectus delivery requirements of the Securities Act as applicable to them in connection with sales of Registrable Securities pursuant to the Registration Statement.
(c) Upon receipt of a notice from Katapult of the occurrence of any event of the kind described in Section 4.1(d)(ii), 4.1(d)(iii), 4.1(d)(iv), 4.1(d)(v) or 4.1(m), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 4.1(j), or until it is advised in writing by Katapult that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.
(d) Katapult shall, upon reasonable request by any Holder, provide such Holder with access to information reasonably necessary to facilitate the sale or transfer of Registrable Securities, including updated capitalization tables, transfer agent contact information, and any other information customarily provided in connection with such sales, subject to applicable confidentiality obligations.
ARTICLE V
REGISTRATION EXPENSES
5.1 Registration Expenses. All reasonable fees and expenses incident to the performance of or compliance with this Agreement by Katapult (excluding underwriters’ discounts and commissions and all fees and expenses of legal counsel, accountants and other advisors for the Securityholders except as specifically provided below), except as and to the extent specified in this Section 5.1, shall be borne by Katapult whether or not a Registration Statement is filed by Katapult or becomes effective and whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with The Nasdaq Stock Market, LLC and each other securities exchange or market on which Registrable Securities are required hereunder to be listed, (B) with respect to filings required to be made by Katapult with the Financial Industry Regulatory Authority and (C) in compliance with state securities or Blue Sky laws by Katapult or with respect to Registrable Securities, (ii) messenger, telephone and delivery expenses, (iii) fees and disbursements of counsel for Katapult, (iv) Securities Act liability insurance, if Katapult so desires such insurance, and (v) fees and expenses of all other Persons retained by Katapult in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, Katapult’s independent public accountants). In addition, Katapult shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and
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expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall Katapult be responsible for any underwriting, broker or similar fees or commissions of the Securityholders or, except to the extent provided for above or in the Transaction Documents, any legal fees or other costs of the Securityholders. Notwithstanding the foregoing, with respect to any Underwritten Demand Offering (including any withdrawn or terminated Underwritten Demand Offering as provided in Section 2.5(c)), Katapult shall also pay the reasonable and documented fees and expenses of one (1) counsel for the Initiating Holders (and, if reasonably required by the nature of the offering, one (1) local counsel in any relevant jurisdiction), in each case selected by the Initiating Holders. In addition, Katapult shall reimburse the Initiating Holders for their reasonable and documented out-of-pocket expenses directly incurred in connection with any Underwritten Demand Offering.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Katapult. Katapult shall, notwithstanding any termination of this Agreement, indemnify, defend and hold harmless each Holder, its permitted assignees, officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Katapult Common Stock), underwriters, investment advisors and employees, each Person who controls any such Holder or permitted assignee (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against any and all claims, losses, damages, liabilities, penalties, judgments, costs (including, without limitation, costs of preparation and investigation) and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”), arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by Katapult of the Securities Act, the Exchange Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except (A) to the extent, but only to the extent, that such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to Katapult by such Holder expressly for use in such Registration Statement, such Prospectus or in any amendment or supplement thereto or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was furnished in writing by such Holder expressly for use therein; or (B) in the case of an occurrence of an event of the type specified in Section 4.1(d)(ii)-(v), the use by a Holder of an outdated or defective Prospectus, but only if and to the extent that following such receipt the misstatement or omission giving rise to such Loss would have been corrected; provided, however, that the indemnity agreement contained in this Section 6.1 shall not apply to amounts paid in
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settlement of any Losses if such settlement is effected without the prior written consent of Katapult, which consent shall not be unreasonably withheld. Katapult shall notify such Holder promptly of the institution, threat or assertion of any Legal Proceeding of which Katapult is aware in connection with the transactions contemplated by this Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party (as defined in Section 6.3(a) hereof) and shall survive the transfer of the Registrable Securities by the Holder.
6.2 Indemnification by Holders. Each Holder and its permitted assignees shall, severally and not jointly, indemnify and hold harmless Katapult, its directors, officers, agents and employees, each Person who controls Katapult (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission or alleged untrue statement or omission is contained in or omitted from any information regarding such Holder furnished in writing to Katapult by such Holder expressly for use in therein, and that such information was reasonably relied upon by Katapult for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was furnished in writing by such Holder expressly for use therein (it being understood that each Holder has approved Annex A hereto for this purpose); provided however, that in no event shall a Holder’s liability pursuant to this Section 6.2, exceed the net proceeds from the offering received by such Holder.
6.3 Conduct of Indemnification Legal Proceedings.
(a) If any Legal Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.
(b) An Indemnified Party shall have the right to employ separate counsel in any such Legal Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Legal Proceeding and to employ counsel reasonably
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satisfactory to such Indemnified Party in any such Legal Proceeding; or (iii) the named parties to any such Legal Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel (which shall be reasonably acceptable to the Indemnifying Party) that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, the Indemnifying Party shall be responsible for reasonable fees and expenses of no more than one counsel (together with appropriate local counsel) for the Indemnified Parties). The Indemnifying Party shall not be liable for any settlement of any such Legal Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Legal Proceeding in respect of which any Indemnified Party is or could have been a party, unless such settlement (A) includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Legal Proceeding and (B) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.
(c) All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Legal Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within twenty (20) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).
6.4 Contribution.
(a) If a claim for indemnification under Section 6.1 or 6.2 is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.3, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Legal Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
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(b) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(b), (i) no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of Registrable Securities subject to the Legal Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) no contribution will be made under circumstances where the maker of such contribution would not have been required to indemnify the Indemnified Party under the fault standards set forth in this Article VI. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(c) The indemnity and contribution agreements contained in this Article VI are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
ARTICLE VII
RULE 144
7.1 Rule 144. As long as any Holder owns any Registrable Securities, Katapult covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by Katapult after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. Katapult further covenants that it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Person to sell the Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions relating to such sale pursuant to Rule 144. Upon the reasonable request of any Holder, Katapult shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
ARTICLE VIII
MISCELLANEOUS
8.1 Effectiveness. Katapult’s obligations hereunder shall be conditioned upon the occurrence of the Closing under the Investment Agreement, and this Agreement shall not be effective until such Closing. If the Investment Agreement shall be terminated prior to the Closing, then this Agreement shall be void and of no further force or effect (and notwithstanding anything to the contrary herein, no party hereto shall have any rights or obligations with respect to this Agreement).
8.2 Remedies. In the event of a breach by Katapult or by a Holder, of any of their obligations under this Agreement, each non-breaching Holder and Katapult, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Katapult and each Holder agree that monetary damages would not provide adequate compensation
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for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. In the event any Holder prevails in any action or proceeding to enforce its rights under this Agreement, Katapult shall reimburse such Holder for its reasonable attorneys’ fees and other costs and expenses incurred in connection with such action or proceeding, in addition to any other remedies available at law or in equity.
8.3 Entire Agreement; Amendment. This Agreement and the other Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or therein, neither Katapult nor any Holder make any representation, warranty, covenant or undertaking with respect to such matters, and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. This Agreement and any term hereof may be amended, terminated or waived only with the written consent of Katapult and the Holders of at least a majority of all outstanding Registrable Securities then held by all Holders. Any amendment or waiver effected in accordance with this Section 8.3 shall be binding upon each Holder (and their permitted assigns).
8.4 No Inconsistent Agreements. Katapult will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of Katapult’s securities under any agreement in effect on the date hereof.
8.5 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section prior to 4:00 p.m. (Eastern time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 4:00 p.m. (Eastern time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth below, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person:
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| If to Katapult: | Katapult
Holdings, Inc. Plano, TX 75024 Attn: Separately Supplied E-mail: Separately Supplied
|
| with copies (which copies shall not constitute notice to Katapult) to: | Davis Polk & Wardwell LLP 450 Lexington Ave New York, NY 10017 Attention: Separately Supplied Email: Separately Supplied
|
and (following the Closing)
Davis Polk & Wardwell LLP 450 Lexington Ave New York, NY 10017 Attention: Separately Supplied Email: Separately Supplied | |
| If to the Securityholders: | To their respective addresses as set forth on Schedule 1 hereto. |
8.6 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
8.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns and shall inure to the benefit of each Holder and its successors and assigns. Katapult may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the Holders of at least a majority of all Registrable Securities then outstanding.
8.8 Assignment of Registration Rights. The rights of each Holder hereunder, including the right to have Katapult register for resale Registrable Securities in accordance with the terms of this Agreement, shall be assignable by each Holder of all or a portion of the Registrable Securities if: (a) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to Katapult within a reasonable time after such assignment, (b) Katapult is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the Registrable Securities with respect to which such registration rights are being transferred or assigned to such transferee or assignee, (c) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws, (d) at or before the time Katapult receives the written notice contemplated by clause (b) of this Section, the transferee or assignee agrees in writing with Katapult to be bound by all of the provisions of this Agreement, and (e) such transfer shall have been made in accordance with the
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applicable requirements of the Investment Agreement. The rights to assignment shall apply to the Holders (and to subsequent) successors and assigns.
8.9 Other Registration Rights. From and after the date of this Agreement until the end of the Effectiveness Period, Katapult shall not enter into, and, is not currently a party to, any agreement with respect to its securities that is inconsistent in any material respect with the rights granted to the Holders pursuant to this Agreement. Katapult shall not, prior to the end of the Effectiveness Period, grant any registration rights that are superior to, conflict with, or would otherwise prevent Katapult from performing, the rights granted to the Holders hereby.
8.10 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
8.11 Termination. This Agreement shall terminate at the end of the Effectiveness Period, except that Articles V and VI and this Article VIII shall remain in effect in accordance with their terms.
8.12 Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, then any federal court of the United States of America sitting in the State of Delaware) for the purpose of any suit, action, Legal Proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or Legal Proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or Legal Proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or Legal Proceeding brought in such courts and irrevocably waives any claim that any such suit, action or Legal Proceeding brought in any such court has been brought in an inconvenient forum. If any party hereto shall commence an action or Legal Proceeding to enforce any provisions of the Transaction Documents, then, the prevailing party in such action or Legal Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or Legal Proceeding.
8.13 Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.
8.14 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect and shall be liberally construed in order to carry out the intentions of the parties as nearly as may be possible and (b) the parties shall use their commercially
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reasonable efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of such provision(s) in this Agreement.
8.15 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed by their respective authorized officers as of the date first above written.
| KATAPULT: | ||
| KATAPULT HOLDINGS, INC. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | CEO | |
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed by their respective authorized officers as of the date first above written.
| SECURITYHOLDERS: | ||
| HHCF SERIES 21 SUB, LLC | ||
| By: | /s/ John Detwiler | |
| Name: | John Detwiler | |
| Title: | Authorized Signatory | |
SCHEDULE 1
SECURITYHOLDERS
HHCF Series 21 Sub, LLC
88 West Mound Street
Columbus, OH 43215
ANNEX A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock previously issued or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The selling stockholders may sell their shares of our common stock pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits Securityholders; |
| • | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| • | an exchange distribution in accordance with the rules of the applicable exchange; |
| • | privately negotiated transactions; |
| • | short sales; |
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| • | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
| • | distributions to partners, members, or other equity holders of selling stockholders, including in connection with the winding up, liquidation, or dissolution of any selling stockholder; |
| • | a combination of any such methods of sale; and |
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until such time as the shares offered by the selling stockholders have been effectively registered under the Securities Act and disposed of in accordance with such registration statement, the shares offered by the selling stockholders have been disposed of pursuant to Rule 144 under the Securities Act or the shares offered by the selling stockholders may be resold pursuant to Rule 144 without restriction or limitation (including without the requirement to be in compliance with Rule 144(c)(1)) or another similar exemption under the Securities Act.
ANNEX B
SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE
KATAPULT HOLDINGS, INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock, $0.0001 par value per share (the “Common Stock”), of Katapult Holdings, Inc. (“Katapult”), (the “Registrable Securities”) understands that Katapult has filed or intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement, dated as of [●], 2025 (the “Registration Rights Agreement”), among Katapult and the Securityholders named therein. The purpose of this Questionnaire is to facilitate the filing of the Registration Statement under the Securities Act that will permit you to resell the Registrable Securities in the future. The information supplied by you will be used in preparing the Registration Statement. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related Prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) in the Registration Statement.
QUESTIONNAIRE
| 1. | Name. |
| (a) | Full Legal Name of Selling Stockholder | |
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: | |
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): | |
| 2. | Address for Notices to Selling Stockholder: |
Telephone:
Fax:
Contact Person:
E-mail address of Contact Person:
| 3. | Beneficial Ownership of Registrable Securities: |
| (a) | Type and Number of Registrable Securities beneficially owned: | |
| 4. | Broker-Dealer Status: |
| (a) | Are you a broker-dealer? |
Yes ☐ No ☐
Note: If yes, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
| (b) | Are you an affiliate of a broker-dealer? |
Yes ☐ No ☐
Note: If yes, provide a narrative explanation below:
| (c) | If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ☐ No ☐
Note: If no, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
| 5. | Beneficial Ownership of Other Securities of Katapult Owned by the Selling Stockholder. |
Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of Katapult other than the Registrable Securities listed above in Item 3.
| (a) | As of ___________, 202___, the Selling Stockholder owned outright (including shares registered in Selling Stockholder’s name individually or jointly with others, shares held in the name of a bank, broker, nominee, depository or in “street name” for its account), _________ shares of Katapult Common Stock (excluding the Registrable Securities). If “zero,” please so state. |
| (b) | In addition to the number of shares Selling Stockholder owned outright as indicated in Item 5(a) above, as of ________________, 202___, the Selling Stockholder had or shared voting power or investment power, directly or indirectly, through a contract, arrangement, understanding, relationship or otherwise, with respect to ______________ shares of Katapult Common Stock (excluding the Registrable Securities). If “zero,” please so state. |
If the answer to Item 5(b) is not “zero,” please complete the following tables:
Sole Voting Power:
Number
of |
Nature
of Relationship Resulting in Sole Voting Power | |
Shared Voting Power:
Number
of |
With Whom Shared |
Nature of Relationship |
Sole Investment power:
Number
of |
Nature of Relationship
Resulting in Sole Investment Power | |
Shared Investment power:
Number
of |
With Whom Shared |
Nature of Relationship |
| (c) | As of _____________, 202___, the Selling Stockholder had the right to acquire the following shares of Katapult Common Stock pursuant to the exercise of outstanding stock options, warrants or other rights (excluding the Registrable Securities). Please describe the number, type and terms of the securities, the method of ownership, and whether the undersigned holds sole or shared voting and investment power. If “none”, please so state. |
| 6. | Relationships with Katapult: |
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with Katapult (or its predecessors or affiliates) during the past three years.
State any exceptions here:
| 7. | Plan of Distribution: |
The undersigned has reviewed the form of Plan of Distribution attached as Annex A to the Registration Rights Agreement, and hereby confirms that, except as set forth below, the information contained therein regarding the undersigned and its plan of distribution is correct and complete.
State any exceptions here:
***********
The undersigned agrees to promptly notify Katapult of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the effective date of any applicable Registration Statement filed pursuant to the Registration Rights Agreement.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in each Registration Statement filed pursuant to the Registration Rights Agreement and each related Prospectus. The undersigned understands that such information will be relied upon by Katapult in connection with the preparation or amendment of any such Registration Statement and the related Prospectus.
By signing below, the undersigned acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M. The undersigned also acknowledges that it understands that the answers to this Questionnaire are furnished for use in connection with Registration Statements filed pursuant to the Registration Rights Agreement and any amendments or supplements thereto filed with the SEC pursuant to the Securities Act.
The undersigned hereby acknowledges and is advised of the following Interpretation A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations regarding short selling:
“A Company filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. Katapult was advised that the short sale could not be made before the registration statement become effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.”
By returning this Questionnaire, the undersigned will be deemed to be aware of the foregoing interpretation.
I confirm that, to the best of my knowledge and belief, the foregoing statements (including without limitation the answers to this Questionnaire) are correct.
Katapult agrees that all information provided by the Selling Stockholder in this Questionnaire will be kept confidential and used solely for purposes of compliance with applicable securities laws and the preparation and filing of the Registration Statement and related Prospectus, except to the extent disclosure is required by law, regulation, or the rules of any securities exchange.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Dated: | Beneficial Owner: | ||||
| By: | |||||
| Name: | |||||
| Title: | |||||
Exhibit 10.5
Execution Version
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 3, 2025, by and among Katapult Holdings, Inc., a Delaware corporation (“Katapult”), and the holders of Series B Convertible Preferred Stock of Katapult set forth on Schedule 1 hereto (each, a “Securityholder”, and collectively, the “Securityholders”), and shall become effective only as of the Closing (as defined below).
RECITALS
A. Katapult is party to that certain Series B Investment Agreement, dated as of November 3, 2025, by and between Katapult and the Securityholder[s] (the “Investment Agreement”), pursuant to which, at the Closing and subject to certain terms and conditions contained therein, Katapult will issue to the Securityholder[s] shares of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”).
B. Subject to certain terms and conditions contained in the Series B Certificate of Designations of Katapult establishing the Series B Convertible Preferred Stock, the Series B Convertible Preferred Stock is convertible into shares of Katapult Common Stock (the “Shares”).
C. To induce the Securityholders to enter into the Investment Agreement, Katapult has agreed to provide certain registration rights under the Securities Act, and applicable state securities laws, effective as of Closing.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, Katapult and each Securityholder agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Investment Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Closing” has the meaning assigned thereto in the Investment Agreement.
“Effectiveness Deadline” means the later of (i) the seventy-fifth (75th) day following the Filing Date if the SEC notifies Katapult that it will “review” the Registration Statement and (ii) the fifth (5th) Business Day after the date Katapult is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review; provided that the Effectiveness Deadline in clause (i) shall extend to the one-hundred twentieth (120th) day following the Filing Date if Katapult receives comments from the SEC.
“Effectiveness Period” shall have the meaning set forth in Article II.
“Filing Date” means the forty-fifth (45th) day following the Closing Date; provided, however, that if the Filing Date falls on a day that is not a Business Day, then the Filing Date shall be extended to the next Business Day.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 6.3(a).
“Indemnifying Party” shall have the meaning set forth in Section 6.3(a).
“Losses” shall have the meaning set forth in Section 6.1.
“Managing Underwriter(s)” means the underwriter or underwriters of an underwritten offering.
“Prospectus” means any prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to any such Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.
“Registrable Securities” means (i) each of the Shares issued to the Securityholders upon the conversion of the Series B Preferred Stock from time to time and (ii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that the applicable Holder has completed and delivered to Katapult a Selling Stockholder Questionnaire; and provided further that such securities shall no longer be deemed Registrable Securities if (A) such securities have been sold pursuant to a Registration Statement, (B) such securities shall have been otherwise transferred, new certificates or book entry positions for such securities not bearing a legend restricting further transfer shall have been delivered by Katapult and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; or (D) such securities may be sold without registration pursuant to Rule 144 (but with no volume or other restrictions or limitations thereunder).
“Registration Statement” means the registration statements and any additional registration statements contemplated by Article II, including (in each case) the related Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
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“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
“Selling Stockholder Questionnaire” means a questionnaire substantially in the form attached as Annex B hereto.
“Trading Day” means a day on which Katapult Common Stock is traded on any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the OTCQB or OTCQX (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the Investment Agreement, and the annexes and exhibits attached hereto and thereto.
“Underwritten Demand Offering” means an underwritten offering of Registrable Securities pursuant to a Demand Registration, including any underwritten takedown off an effective shelf Registration Statement (including any block trade or bought deal).
ARTICLE II
REGISTRATION
2.1 Registration Obligations; Filing Date Registration. Katapult shall prepare and file with the SEC on or prior to the Filing Date a Registration Statement covering the resale of the Registrable Securities as would permit the sale and distribution of all the Registrable Securities from time to time pursuant to Rule 415 in the manner reasonably requested by the Holder. The Registration Statement shall be on Form S-3 (except if Katapult is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on a Form S-1 or another appropriate form in accordance with the Securities Act and the rules promulgated thereunder and Katapult shall undertake to register the Registrable Securities on Form S-3 as soon as practicable following the availability of such form, provided that Katapult shall use commercially reasonable efforts to maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC). The Registration Statement shall contain the “Plan of Distribution” section in substantially the form attached hereto as Annex A. Katapult shall use commercially reasonable efforts to cause the Registration Statement filed by it to be declared effective under the Securities Act as promptly as practicable after the filing thereof but in any event on or prior to the Effectiveness Deadline, and, subject to Section 4.1(m) hereof, to keep such Registration Statement continuously effective under the Securities Act until such date as all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities (the “Effectiveness Period”). By 4:00 p.m. (Eastern time) on the second Business Day following the Effectiveness Deadline, Katapult shall file with the SEC in accordance with Rule 424 under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement. Katapult shall use commercially reasonable efforts to become and remain eligible to use Form S-3 (or any successor form) for the registration of Registrable
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Securities as soon as practicable following the date hereof, including by timely filing all reports required under the Exchange Act and taking any other actions necessary to maintain such eligibility. Katapult shall promptly notify the Holders if it ceases to be eligible to use Form S-3 and of any actions it is taking to regain such eligibility. No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior written consent.
2.2 Right to Request Registration. Subject to the provisions hereof, at any time the Registration Statement covering all Registrable Securities is not effective, other than as permitted in accordance with Section 4.1(m) hereof, and for so long as a Holder holds any Registrable Securities, Holders of at least a majority in interest of the then-outstanding number of Registrable Securities may at any time request registration under the Securities Act for resale of all or any portion of the Registrable Securities then-held by the applicable Holder(s) (a “Demand Registration” and Holders who properly initiates such request shall be referred to as the “Initiating Holders”). At the election of the Initiating Holders (which election shall be made in the corresponding demand notice to Katapult), any Demand Registration shall be effected as an Underwritten Demand Offering. If Katapult then has an effective shelf Registration Statement covering Registrable Securities, the Initiating Holders may instead request an underwritten shelf takedown as an Underwritten Demand Offering, and Katapult shall, to the extent permitted by applicable law and SEC guidance, file and make effective any required prospectus supplement or other filing to permit such Underwritten Demand Offering. Subject to Section 2.4 and Section 4.1(m) below, Katapult shall (i) file a Registration Statement registering for resale such number of Registrable Securities as requested to be so registered pursuant to this Section 2.2 (a “Demand Registration Statement”) within forty-five (45) days after the Initiating Holders’ request therefor (or, in the case of an Underwritten Demand Offering off an effective shelf Registration Statement, file any required Prospectus supplement or other filing within ten (10) Trading Days after the Initiating Holders’ request) and (ii) use commercially reasonable efforts to cause such Demand Registration Statement to be declared effective by the SEC as soon as practicable thereafter and, in the case of an Underwritten Demand Offering off an effective shelf Registration Statement, to permit marketing to commence promptly and pricing to occur as directed by the Managing Underwriter(s), in each case subject to Section 4.1(m). To the extent requested by the Initiating Holders, the Demand Registration Statement shall allow the offer and sale of the Registrable Securities on a continuous basis pursuant to Rule 415 under the Securities Act, unless Katapult is not eligible to use a form which allows such offer and sale in which case the Demand Registration Statement shall allow such offer and resale for so long a period as permitted by the Securities Act and the rules thereunder.
2.3 Priority on Demand Registrations. Katapult may include securities other than Registrable Securities in a Demand Registration for any accounts (including for the account of Katapult) on the terms provided below; and if such Demand Registration is an Underwritten Demand Offering, such securities may be included only with the prior written consent of the Managing Underwriter(s) of such offering. If the Managing Underwriter(s) of the requested Demand Registration advise Katapult and the Initiating Holder that in their opinion the number of securities proposed to be included in the Demand Registration exceeds the number of securities which can be sold in such underwritten offering without materially delaying or jeopardizing the success of the offering (including the price per share of any Shares proposed to be sold in such underwritten offering), Katapult shall include in such Demand Registration (i) first, the number of Registrable Securities that the Initiating Holders propose to sell, (ii) second, the number of
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securities proposed to be included therein by any other Holder (allocated pro rata (as nearly as practicable) among all participating Holders on the basis of the number of securities requested to be included therein by all such Holders or as such Holders and Katapult may otherwise agree) and (iii) third, the number of securities proposed to be included therein for the account of Katapult. If the number of securities which can be sold is less than the number of securities proposed to be registered pursuant to clause (i) above by the Initiating Holders, the number of securities to be sold shall be allocated to the Initiating Holders in their entirety.
2.4 Effective Period of Demand Registration. Upon the date of effectiveness of the Demand Registration and if such offering is priced promptly on or after such date, Katapult shall use commercially reasonable efforts to keep such Demand Registration Statement effective for sale on a continuous basis under Rule 415, or if such rule is unavailable to Katapult, for a period equal to one hundred eighty (180) days from such date (or such longer period as in the opinion of counsel for the underwriters a Prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) or such shorter period which shall terminate when all of the Registrable Securities covered by such Demand Registration have been sold by the Initiating Holder.
2.5 Underwritten Demand Offerings; Selection of Underwriters; Number; Withdrawals; Shelf Takedowns; Block Trades.
(a) Selection of Underwriters; Documentation. In connection with any Underwritten Demand Offering, the Initiating Holders shall have the right to select the Managing Underwriter(s), subject to Katapult’s consent (not to be unreasonably withheld, conditioned or delayed). The form and substance of the underwriting agreement shall be customary for transactions of such type and reasonably acceptable to the Initiating Holders and Katapult, and shall include only those representations, warranties, covenants and indemnities customarily included for issuers and selling stockholders in underwritten offerings of similar size and type.
(b) No Numerical Limit; Timing. The Holders shall have the right to request an unlimited number of Underwritten Demand Offerings; provided, however, that Katapult shall not be required to effect more than one (1) Underwritten Demand Offering during any Suspension Period or during any period in which a Suspension Event is continuing pursuant to Section 4.1(m). Katapult shall not be obligated to (but may, at its sole option) effect any Demand Registration or Underwritten Demand Offering (i) within sixty (60) days after the closing of an Underwritten Demand Offering or (ii) during the period starting with the date sixty (60) days prior to Katapult’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Katapult initiated registration and provided that Katapult has delivered notice to the Holders pursuant to subsection 4.1(d) and it continues to actively employ, in good faith, all reasonable best efforts to cause the applicable Registration Statement to become effective. Katapult shall not be required to file a Registration Statement (or any amendment thereto) or effect an Underwritten Demand Offering (or, if Katapult has an effective Registration Statement including Registrable Securities therein, Katapult shall be entitled to suspend the offer and sale of Registrable Securities pursuant to such Registration Statement) for a period of up to thirty (30) days (i) if the Holders have requested an Underwritten Demand Registration and Katapult and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer or (ii) if Katapult has determined in good faith that the sale of Registrable Securities
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pursuant to a Registration Statement would require disclosure of material non-public information not otherwise required to be disclosed under applicable securities laws (x) which disclosure would have a detrimental effect on Katapult or (y) relating to a material transaction involving Katapult (any such period, a “Blackout Period”); provided, however, that in no event shall any Blackout Period together with other Blackout Periods exceed an aggregate of 90 days in any consecutive 12-month period.
(c) Withdrawals; No “Use” of Demand. The Initiating Holders may, at any time prior to the pricing of any Underwritten Demand Offering, elect to withdraw such Underwritten Demand Offering by written notice to Katapult, and such withdrawal shall not be deemed a use of a Demand Registration or otherwise limit the rights of the Holders hereunder and Katapult shall bear the expenses set forth in Section 5.1 incurred in connection therewith; provided that if the withdrawal is primarily the result of a material breach by Katapult of its obligations hereunder, the Initiating Holders’ rights shall be without limitation and any such breach shall be subject to Section 8.2.
(d) Shelf Takedowns. If Katapult is eligible to use Form S-3, any Demand Registration requested as an Underwritten Demand Offering shall, at the option of the Initiating Holders, be effected as an underwritten takedown off an effective shelf Registration Statement. In such case, Katapult shall (i) prepare and file any Prospectus supplement and related filings no later than ten (10) Trading Days after receipt of the Holders’ request (or, in the case of an overnight or same-day “bought deal” or block trade, by no later than the time reasonably necessary to permit such offering) and (ii) use commercially reasonable efforts to cooperate to permit marketing to commence and pricing to occur as directed by the Managing Underwriter(s).
(e) Block Trades; Bought Deals. The Initiating Holders may request that an Underwritten Demand Offering be conducted as a block trade or bought deal. Katapult shall use commercially reasonable efforts to facilitate any such transaction (including by cooperating to prepare, file and make effective any required Prospectus supplement or other filing within the timeframes reasonably requested by the Managing Underwriter(s)). Any notice periods otherwise applicable to a Demand Registration shall not apply to a block trade or bought deal, and Katapult shall not be permitted to include any securities therein for its own account or the account of any other Holder without the Initiating Holders’ prior written consent.
(f) Inclusion of Other Securities; Cutbacks. No securities other than Registrable Securities shall be included in any Underwritten Demand Offering without the prior written consent of the Initiating Holders. If the Managing Underwriter(s) advise Katapult and the Initiating Holders in writing that the number of securities proposed to be included in such Underwritten Demand Offering exceeds the number of securities which can be sold without materially delaying or jeopardizing the success of the offering, the Registrable Securities to be included shall be allocated as follows: (i) first, to the Registrable Securities that the Initiating Holders propose to sell; (ii) second, to other Registrable Securities requested to be included by other Holders, pro rata (as nearly as practicable) among such Holders on the basis of the number of securities requested to be included by all such Holders or as such Holders and Katapult may otherwise agree; and (iii) third, to any securities proposed to be included by Katapult, in each case subject to Section 2.4. For the avoidance of doubt, if the number of securities which can be sold is
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less than the number of securities proposed to be included pursuant to clause (i), all such capacity shall be allocated to the Initiating Holders.
(g) Katapult Cooperation. Without limiting Article IV, in connection with any Underwritten Demand Offering, Katapult shall (i) prepare and make available a reasonable number of “road show” participation opportunities (including virtual) as reasonably requested by the Managing Underwriter(s), (ii) furnish customary opinions and negative assurance letters of counsel and comfort letters of independent accountants, and (iii) deliver officer certificates, all in each case as reasonably requested by the Managing Underwriter(s) and consistent with Section 4.1(n) and Section 4.1(o).
(h) Failure or Delay. If Katapult fails to comply with its obligations with respect to an Underwritten Demand Offering within the time periods specified herein (other than as permitted by Section 4.1(m)), then, in addition to any other remedies, (x) the Initiating Holders may withdraw such Underwritten Demand Offering and such withdrawal shall not be deemed a use of a Demand Registration and (y) the Effectiveness Period shall be tolled for the period of such failure or delay.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Right to Piggyback. For so long as a Holder holds any Registrable Securities, in the event the Registration Statement covering all Registrable Securities is not effective, whenever Katapult proposes to register any Shares under the Securities Act (other than on a registration statement on Form S-8, Form F-8, Form S-4 or Form F-4), whether for its own account or for the account of one or more holders of securities, and the form of registration statement to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), Katapult shall give written notice to such Holders of its intention to effect such a registration and, subject to Sections 3.2 and 3.3, shall include in such registration statement and in any offering of Shares to be made pursuant to that registration statement all Registrable Securities with respect to which Katapult has received a written request for inclusion therein from a Holder within ten (10) days after such Holder’s receipt of Katapult’s notice. Katapult shall have no obligation to proceed with any Piggyback Registration and may abandon, terminate and/or withdraw such registration for any reason at any time prior to the pricing thereof. Any Holder may elect to withdraw its request for inclusion of Registrable Securities in any Piggyback Registration by giving written notice to Katapult of such request to withdraw at least five (5) days prior to the effectiveness of such Registration Statement or prior to the pricing of the applicable offering. No registration effected under this Section 3 shall relieve Katapult of its obligations to effect any registration of the sale of Registrable Securities under Article II and no registration effected pursuant to this Section 3 shall be deemed to have been effected pursuant to Section 2.2.
3.2 Priority on Primary Piggyback Registrations. If a Piggyback Registration is initiated as a primary underwritten offering on behalf of Katapult and the Managing Underwriter(s) advise Katapult and the Holders (if any Holders have elected to include Registrable Securities in such Piggyback Registration) that in their good faith opinion the number of securities proposed to be included in such offering exceeds the number of securities which can be sold in such offering
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without materially delaying or jeopardizing the success of the offering (including the price per security proposed to be sold in such offering), Katapult shall include in such registration and offering (i) first, the number of Shares that Katapult proposes to sell, and (ii) second, the number of securities requested to be included therein by holders of securities, including the Holders (if any Holders have elected to include Registrable Securities in such Piggyback Registration), pro rata (as nearly as practicable) among all participating holders on the basis of the number of securities requested to be included therein by all such holders or as such holders and Katapult may otherwise agree.
3.3 Priority on Secondary Piggyback Registrations. If a Piggyback Registration is initiated as an underwritten registration on behalf of a holder of securities other than a Holder and the Managing Underwriter(s) advise Katapult that in their good faith opinion the number of securities proposed to be included in such registration exceeds the number of securities which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including the price per security proposed to be sold in such offering), then Katapult shall include in such registration (i) first, the number of securities requested to be included therein by the holder(s) requesting such registration (including any Initiating Holders), (ii) second, the number of securities requested to be included therein by other holders of securities including any other Holders (if any other Holders have elected to include Registrable Securities in such Piggyback Registration), pro rata (as nearly as practicable) among participating holders on the basis of the number of securities requested to be included therein by such holders or as such holders and Katapult may otherwise agree and (iii) third, the number of securities that Katapult proposes to sell.
3.4 Basis of Participation. The Holders may not sell Registrable Securities in any offering pursuant to a Piggyback Registration unless it (i) agrees to sell such Registrable Securities on the same basis provided in the underwriting or other distribution arrangements approved by Katapult and that apply to Katapult and/or any other holders involved in such Piggyback Registration and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lockups and other documents required under the terms of such arrangements.
3.5 Selection of Underwriters. If any Piggyback Registration is a primary or secondary underwritten offering, subject to the terms and conditions of Section 2 hereof, Katapult shall have the sole right to select the Managing Underwriter(s) or underwriters to administer any such offering.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Registration Procedures. In connection with Katapult’s registration obligations hereunder, Katapult shall:
(a) Prepare and file with the SEC on or prior to the Filing Date, a Registration Statement on Form S-3 (or if Katapult is not then eligible to register for resale the Registrable Securities on Form S-3 such Registration Statement shall be on a Form S-1 or another appropriate
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form in accordance with the Securities Act and the rules and regulations promulgated thereunder) in accordance with the method or methods of distribution thereof as described on Annex A hereto, and use commercially reasonable efforts to cause the Registration Statement to become effective and remain effective as provided herein. In connection with any Underwritten Demand Offering off an effective shelf Registration Statement, Katapult shall, upon request by the Initiating Holders, prepare and file any required Prospectus supplement or other filing within two (2) Trading Days (or such shorter period as reasonably necessary in the case of a block trade or bought deal) to permit such offering to proceed as contemplated by Section 2.5(d) and (e).
(b) Prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective (subject to Section 4.1(m)) as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements, if necessary, in order to register for resale under the Securities Act all of the Registrable Securities; cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; respond promptly to any comments received from the SEC with respect to the Registration Statement or any amendment thereto and promptly provide the Holders true and complete copies of all correspondence from and to the SEC relating to such Registration Statement; and comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.
(c) [Reserved].
(d) Promptly notify the Holders of Registrable Securities (i)(A) when a Registration Statement, a Prospectus or any Prospectus supplement or pre- or post-effective amendment to the Registration Statement is filed; (B) when the SEC notifies Katapult whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement, and if requested by such Holders, furnish to them a copy of such comments and Katapult’s responses thereto and (C) with respect to the Registration Statement or any post-effective amendment filed by Katapult, when the same has become effective; (ii) of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information of Katapult; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Legal Proceedings for that purpose; (iv) of the receipt by Katapult of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities of Katapult for sale in any jurisdiction, or the initiation or threatening of any Legal Proceeding for such purpose; and (v) of the occurrence of any event that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
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or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(e) Use commercially reasonable efforts to avoid the issuance of, and, if issued, to obtain the withdrawal of, (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any U.S. jurisdiction.
(f) If requested by the Holders of a majority of the Registrable Securities, (i) promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as such Holders reasonably request to be included therein unless the inclusion of such information would reasonably be expected to expose Katapult to liability under federal and state securities laws and regulations and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after Katapult has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment.
(g) Furnish to each Holder, without charge and upon request, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and, to the extent requested by such Person, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC, provided, that Katapult shall have no obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system.
(h) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and Katapult hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.
(i) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities of Katapult to be sold pursuant to a Registration Statement.
(j) Upon the occurrence of any event contemplated by Section 4.1(d)(v), as promptly as practicable prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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(k) Use commercially reasonable efforts to cause all Registrable Securities relating to the Registration Statement to be listed on The Nasdaq Stock Market, LLC or any subsequent securities exchange, quotation system or market, if any, on which similar securities issued by Katapult are then listed or traded.
(l) Katapult may require each selling Holder to furnish to Katapult information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the Registration Statement, and Katapult may exclude from such registration the Registrable Securities of any such Holder who fails to furnish such information within five (5) days after receiving such request.
(m) Katapult shall be entitled to delay the filing or effectiveness of, or suspend the use of, the Registration Statement if it determines that in order for the Registration Statement not to contain a material misstatement or omission, (i) an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act, (ii) the negotiation or consummation of a transaction by Katapult or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event that the Board of Directors reasonably believes would require additional disclosure by Katapult in the Registration Statement of material information that Katapult has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Katapult Board to cause the Registration Statement to fail to comply with applicable disclosure requirements, or (iii) an amendment thereto so as to convert the Registration Statement to a Registration Statement on Form S-3 at such time after Katapult becomes eligible to use such Form S-3 (each such circumstance, a “Suspension Event”); provided, however, that Katapult may not delay or suspend the Registration Statement on more than two occasions or for more than forty-five (45) consecutive days, or more than sixty (60) total days, in each case during any twelve (12)-month period; provided however that no such postponement or suspension by Katapult shall be permitted for more than one (1) forty-five (45) day period, arising out of the same set of facts, circumstances or transactions. Any period during which Katapult has delayed a filing, an effective date or an offering pursuant to this Section 4 is herein called a “Suspension Period.” Katapult shall provide prompt written notice to participating Holders of the commencement and termination of any Suspension Period (and any withdrawal of a registration statement pursuant to this Section 4.1(m)), but shall not be obligated under this Agreement to disclose the reasons therefor. Holders shall keep the existence of each Suspension Period confidential and refrain from making offers and sales of Registrable Securities (and direct any other Persons making such offers and sales to refrain from doing so) during each Suspension Period under the applicable Registration Statement.
(n) Katapult shall use commercially reasonable efforts to register or qualify, or cooperate with the Holders of the Registrable Securities included in the Registration Statement in connection with the registration or qualification of, the resale of the Registrable Securities under applicable securities or “blue sky” laws of such states of the United States as any such Holder requests in writing and to do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that Katapult shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would
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subject it to general service of process or to taxation in any jurisdiction to which it is not then so subject.
(o) Katapult will comply with all rules and regulations of the SEC to the extent and so long as they are applicable to the registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, no later than forty-five (45) days after the end of a twelve (12)-month period (or ninety (90) days, if such period is a fiscal year) beginning with Katapult’s first fiscal quarter commencing after the effective date of the Registration Statement.
(p) In the case of an underwritten offering in which the Holders participate, Katapult will enter into an underwriting agreement, containing customary provisions (including provisions for indemnification, lockups, opinions of counsel and comfort letters) consistent with Section 2.5 and reasonably acceptable to the Initiating Holders, and take all such other customary and reasonable actions as the Managing Underwriter(s) of such offering may request in order to facilitate the disposition of such Registrable Securities (including, making appropriate personnel of Katapult available at reasonable times and places to assist in customary road-shows that the Managing Underwriter(s) determine are necessary or advisable to effect the offering).
(q) In the case of an underwritten offering in which the Holders participate, and to the extent not prohibited by applicable law, Katapult will (i) make reasonably available, for inspection by the Managing Underwriter(s) of such offering and any attorneys and accountants acting for such Managing Underwriter(s), pertinent corporate documents and financial and other records of Katapult and its subsidiaries and controlled Affiliates (but excluding any documents incorporated by reference in such Registration Statement, amendments or supplements that are available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (or any successor system)), (ii) cause Katapult’s officers and employees to supply information reasonably requested by such Managing Underwriter(s) or attorney in connection with such offering, (iii) make Katapult’s independent accountants available for any such underwriters’ due diligence and have them provide customary comfort letters to such underwriters in connection therewith; and (iv) cause Katapult’s counsel to furnish customary legal opinions to such underwriters in connection therewith; provided, however, that such records and other information shall be subject to such confidential treatment as is customary for underwriters’ due diligence reviews.
4.2 Holder Obligations.
(a) At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, Katapult shall notify each Holder in writing of the information Katapult requires from each such Holder if such Holder elects to have any of such Holder’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of Katapult to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Holder that (i) such Holder furnish to Katapult such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities, and (ii) the Holder execute such documents in connection with such registration as Katapult may reasonably request.
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(b) Each Holder covenants and agrees by its acquisition of such Registrable Securities that (i) it will not sell any Registrable Securities under the Registration Statement until it has received copies of the Prospectus as then amended or supplemented as contemplated in Section 4.1(h) and notice from Katapult that such Registration Statement and any post-effective amendments thereto have become effective as contemplated by Section 4.1(d) and (ii) it and its officers, directors or Affiliates, if any, will comply with the prospectus delivery requirements of the Securities Act as applicable to them in connection with sales of Registrable Securities pursuant to the Registration Statement.
(c) Upon receipt of a notice from Katapult of the occurrence of any event of the kind described in Section 4.1(d)(ii), 4.1(d)(iii), 4.1(d)(iv), 4.1(d)(v) or 4.1(m), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 4.1(j), or until it is advised in writing by Katapult that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.
(d) Katapult shall, upon reasonable request by any Holder, provide such Holder with access to information reasonably necessary to facilitate the sale or transfer of Registrable Securities, including updated capitalization tables, transfer agent contact information, and any other information customarily provided in connection with such sales, subject to applicable confidentiality obligations.
ARTICLE V
REGISTRATION EXPENSES
5.1 Registration Expenses. All reasonable fees and expenses incident to the performance of or compliance with this Agreement by Katapult (excluding underwriters’ discounts and commissions and all fees and expenses of legal counsel, accountants and other advisors for the Securityholders except as specifically provided below), except as and to the extent specified in this Section 5.1, shall be borne by Katapult whether or not a Registration Statement is filed by Katapult or becomes effective and whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with The Nasdaq Stock Market, LLC and each other securities exchange or market on which Registrable Securities are required hereunder to be listed, (B) with respect to filings required to be made by Katapult with the Financial Industry Regulatory Authority and (C) in compliance with state securities or Blue Sky laws by Katapult or with respect to Registrable Securities, (ii) messenger, telephone and delivery expenses, (iii) fees and disbursements of counsel for Katapult, (iv) Securities Act liability insurance, if Katapult so desires such insurance, and (v) fees and expenses of all other Persons retained by Katapult in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, Katapult’s independent public accountants). In addition, Katapult shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and
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expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall Katapult be responsible for any underwriting, broker or similar fees or commissions of the Securityholders or, except to the extent provided for above or in the Transaction Documents, any legal fees or other costs of the Securityholders. Notwithstanding the foregoing, with respect to any Underwritten Demand Offering (including any withdrawn or terminated Underwritten Demand Offering as provided in Section 2.5(c)), Katapult shall also pay the reasonable and documented fees and expenses of one (1) counsel for the Initiating Holders (and, if reasonably required by the nature of the offering, one (1) local counsel in any relevant jurisdiction), in each case selected by the Initiating Holders. In addition, Katapult shall reimburse the Initiating Holders for their reasonable and documented out-of-pocket expenses directly incurred in connection with any Underwritten Demand Offering.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Katapult. Katapult shall, notwithstanding any termination of this Agreement, indemnify, defend and hold harmless each Holder, its permitted assignees, officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Katapult Common Stock), underwriters, investment advisors and employees, each Person who controls any such Holder or permitted assignee (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against any and all claims, losses, damages, liabilities, penalties, judgments, costs (including, without limitation, costs of preparation and investigation) and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”), arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by Katapult of the Securities Act, the Exchange Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except (A) to the extent, but only to the extent, that such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to Katapult by such Holder expressly for use in such Registration Statement, such Prospectus or in any amendment or supplement thereto or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was furnished in writing by such Holder expressly for use therein; or (B) in the case of an occurrence of an event of the type specified in Section 4.1(d)(ii)-(v), the use by a Holder of an outdated or defective Prospectus, but only if and to the extent that following such receipt the misstatement or omission giving rise to such Loss would have been corrected; provided, however, that the indemnity agreement contained in this Section 6.1 shall not apply to amounts paid in
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settlement of any Losses if such settlement is effected without the prior written consent of Katapult, which consent shall not be unreasonably withheld. Katapult shall notify such Holder promptly of the institution, threat or assertion of any Legal Proceeding of which Katapult is aware in connection with the transactions contemplated by this Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party (as defined in Section 6.3(a) hereof) and shall survive the transfer of the Registrable Securities by the Holder.
6.2 Indemnification by Holders. Each Holder and its permitted assignees shall, severally and not jointly, indemnify and hold harmless Katapult, its directors, officers, agents and employees, each Person who controls Katapult (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission or alleged untrue statement or omission is contained in or omitted from any information regarding such Holder furnished in writing to Katapult by such Holder expressly for use in therein, and that such information was reasonably relied upon by Katapult for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was furnished in writing by such Holder expressly for use therein (it being understood that each Holder has approved Annex A hereto for this purpose); provided however, that in no event shall a Holder’s liability pursuant to this Section 6.2, exceed the net proceeds from the offering received by such Holder.
6.3 Conduct of Indemnification Legal Proceedings.
(a) If any Legal Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.
(b) An Indemnified Party shall have the right to employ separate counsel in any such Legal Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Legal Proceeding and to employ counsel reasonably
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satisfactory to such Indemnified Party in any such Legal Proceeding; or (iii) the named parties to any such Legal Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel (which shall be reasonably acceptable to the Indemnifying Party) that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, the Indemnifying Party shall be responsible for reasonable fees and expenses of no more than one counsel (together with appropriate local counsel) for the Indemnified Parties). The Indemnifying Party shall not be liable for any settlement of any such Legal Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Legal Proceeding in respect of which any Indemnified Party is or could have been a party, unless such settlement (A) includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Legal Proceeding and (B) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.
(c) All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Legal Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within twenty (20) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).
6.4 Contribution.
(a) If a claim for indemnification under Section 6.1 or 6.2 is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.3, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Legal Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
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(b) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(b), (i) no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of Registrable Securities subject to the Legal Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) no contribution will be made under circumstances where the maker of such contribution would not have been required to indemnify the Indemnified Party under the fault standards set forth in this Article VI. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(c) The indemnity and contribution agreements contained in this Article VI are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
ARTICLE VII
RULE 144
7.1 Rule 144. As long as any Holder owns any Registrable Securities, Katapult covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by Katapult after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. Katapult further covenants that it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Person to sell the Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions relating to such sale pursuant to Rule 144. Upon the reasonable request of any Holder, Katapult shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
ARTICLE VIII
MISCELLANEOUS
8.1 Effectiveness. Katapult’s obligations hereunder shall be conditioned upon the occurrence of the Closing under the Investment Agreement, and this Agreement shall not be effective until such Closing. If the Investment Agreement shall be terminated prior to the Closing, then this Agreement shall be void and of no further force or effect (and notwithstanding anything to the contrary herein, no party hereto shall have any rights or obligations with respect to this Agreement).
8.2 Remedies. In the event of a breach by Katapult or by a Holder, of any of their obligations under this Agreement, each non-breaching Holder and Katapult, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Katapult and each Holder agree that monetary damages would not provide adequate compensation
17
for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. In the event any Holder prevails in any action or proceeding to enforce its rights under this Agreement, Katapult shall reimburse such Holder for its reasonable attorneys’ fees and other costs and expenses incurred in connection with such action or proceeding, in addition to any other remedies available at law or in equity.
8.3 Entire Agreement; Amendment. This Agreement and the other Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or therein, neither Katapult nor any Holder make any representation, warranty, covenant or undertaking with respect to such matters, and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. This Agreement and any term hereof may be amended, terminated or waived only with the written consent of Katapult and the Holders of at least a majority of all outstanding Registrable Securities then held by all Holders. Any amendment or waiver effected in accordance with this Section 8.3 shall be binding upon each Holder (and their permitted assigns).
8.4 No Inconsistent Agreements. Katapult will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of Katapult’s securities under any agreement in effect on the date hereof.
8.5 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section prior to 4:00 p.m. (Eastern time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 4:00 p.m. (Eastern time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth below, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person:
18
| If to Katapult: | Katapult Holdings, Inc. Plano, TX 75024 Attn: Separately Supplied E-mail: Separately Supplied
|
| with copies (which copies shall not constitute notice to Katapult) to: | Davis Polk & Wardwell LLP 450 Lexington Ave New York, NY 10017 Attention: Separately Supplied Email: Separately Supplied
|
and (following the Closing)
Davis Polk & Wardwell LLP 450 Lexington Ave New York, NY 10017 Attention: Separately Supplied Email: Separately Supplied
| |
| If to the Securityholders: | To their respective addresses as set forth on Schedule 1 hereto. |
8.6 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
8.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns and shall inure to the benefit of each Holder and its successors and assigns. Katapult may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the Holders of at least a majority of all Registrable Securities then outstanding.
8.8 Assignment of Registration Rights. The rights of each Holder hereunder, including the right to have Katapult register for resale Registrable Securities in accordance with the terms of this Agreement, shall be assignable by each Holder of all or a portion of the Registrable Securities if: (a) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to Katapult within a reasonable time after such assignment, (b) Katapult is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the Registrable Securities with respect to which such registration rights are being transferred or assigned to such transferee or assignee, (c) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws, (d) at or before the time Katapult receives the written notice contemplated by clause (b) of this Section, the transferee or assignee agrees in writing with Katapult to be bound by all of the provisions of this Agreement, and (e) such transfer shall have been made in accordance with the
19
applicable requirements of the Investment Agreement. The rights to assignment shall apply to the Holders (and to subsequent) successors and assigns.
8.9 Other Registration Rights. From and after the date of this Agreement until the end of the Effectiveness Period, Katapult shall not enter into, and, is not currently a party to, any agreement with respect to its securities that is inconsistent in any material respect with the rights granted to the Holders pursuant to this Agreement. Katapult shall not, prior to the end of the Effectiveness Period, grant any registration rights that are superior to, conflict with, or would otherwise prevent Katapult from performing, the rights granted to the Holders hereby.
8.10 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
8.11 Termination. This Agreement shall terminate at the end of the Effectiveness Period, except that Articles V and VI and this Article VIII shall remain in effect in accordance with their terms.
8.12 Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, then any federal court of the United States of America sitting in the State of Delaware) for the purpose of any suit, action, Legal Proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or Legal Proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or Legal Proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or Legal Proceeding brought in such courts and irrevocably waives any claim that any such suit, action or Legal Proceeding brought in any such court has been brought in an inconvenient forum. If any party hereto shall commence an action or Legal Proceeding to enforce any provisions of the Transaction Documents, then, the prevailing party in such action or Legal Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or Legal Proceeding.
8.13 Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.
8.14 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect and shall be liberally construed in order to carry out the intentions of the parties as nearly as may be possible and (b) the parties shall use their commercially
20
reasonable efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of such provision(s) in this Agreement.
8.15 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed by their respective authorized officers as of the date first above written.
| KATAPULT: | ||
| KATAPULT HOLDINGS, INC. | ||
| By: | /s/ Orlando Zayas | |
| Name: | Orlando Zayas | |
| Title: | CEO | |
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed by their respective authorized officers as of the date first above written.
| SECURITYHOLDERS: | ||
| HHCF SERIES 21 SUB, LLC | ||
| By: | /s/ John Detwiler | |
| Name: | John Detwiler | |
| Title: | Authorized Signatory | |
[Signature Page to Registration Rights Agreement]
SCHEDULE 1
SECURITYHOLDERS
HHCF Series 21 Sub, LLC
88 West Mound Street
Columbus, OH 43215
ANNEX A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock previously issued or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The selling stockholders may sell their shares of our common stock pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits Securityholders; |
| • | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| • | an exchange distribution in accordance with the rules of the applicable exchange; |
| • | privately negotiated transactions; |
| • | short sales; |
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| • | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
| • | distributions to partners, members, or other equity holders of selling stockholders, including in connection with the winding up, liquidation, or dissolution of any selling stockholder; |
| • | a combination of any such methods of sale; and |
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until such time as the shares offered by the selling stockholders have been effectively registered under the Securities Act and disposed of in accordance with such registration statement, the shares offered by the selling stockholders have been disposed of pursuant to Rule 144 under the Securities Act or the shares offered by the selling stockholders may be resold pursuant to Rule 144 without restriction or limitation (including without the requirement to be in compliance with Rule 144(c)(1)) or another similar exemption under the Securities Act.
ANNEX B
SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE
KATAPULT HOLDINGS, INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock, $0.0001 par value per share (the “Common Stock”), of Katapult Holdings, Inc. (“Katapult”), (the “Registrable Securities”) understands that Katapult has filed or intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement, dated as of [●], 2025 (the “Registration Rights Agreement”), among Katapult and the Securityholders named therein. The purpose of this Questionnaire is to facilitate the filing of the Registration Statement under the Securities Act that will permit you to resell the Registrable Securities in the future. The information supplied by you will be used in preparing the Registration Statement. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related Prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) in the Registration Statement.
QUESTIONNAIRE
| 1. | Name. |
| (a) | Full Legal Name of Selling Stockholder | |
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: | |
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): | |
| 2. | Address for Notices to Selling Stockholder: |
Telephone:
Fax:
Contact Person:
E-mail address of Contact Person:
| 3. | Beneficial Ownership of Registrable Securities: |
| (a) | Type and Number of Registrable Securities beneficially owned: | |
| 4. | Broker-Dealer Status: |
| (a) | Are you a broker-dealer? |
Yes ☐ No ☐
Note: If yes, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
| (b) | Are you an affiliate of a broker-dealer? |
Yes ☐ No ☐
Note: If yes, provide a narrative explanation below:
| (c) | If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ☐ No ☐
Note: If no, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
| 5. | Beneficial Ownership of Other Securities of Katapult Owned by the Selling Stockholder. |
Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of Katapult other than the Registrable Securities listed above in Item 3.
| (a) | As of ___________, 202___, the Selling Stockholder owned outright (including shares registered in Selling Stockholder’s name individually or jointly with others, shares held in the name of a bank, broker, nominee, depository or in “street name” for its account), _________ shares of Katapult Common Stock (excluding the Registrable Securities). If “zero,” please so state. |
| (b) | In addition to the number of shares Selling Stockholder owned outright as indicated in Item 5(a) above, as of ________________, 202___, the Selling Stockholder had or shared voting power or investment power, directly or indirectly, through a contract, arrangement, understanding, relationship or otherwise, with respect to ______________ shares of Katapult Common Stock (excluding the Registrable Securities). If “zero,” please so state. |
If the answer to Item 5(b) is not “zero,” please complete the following tables:
Sole Voting Power:
Number
of |
Nature
of Relationship Resulting in Sole Voting Power | |
Shared Voting Power:
Number
of |
With Whom Shared |
Nature of Relationship |
Sole Investment power:
Number
of |
Nature of Relationship
Resulting in Sole Investment Power | |
Shared Investment power:
Number
of |
With Whom Shared |
Nature of Relationship |
| (c) | As of _____________, 202___, the Selling Stockholder had the right to acquire the following shares of Katapult Common Stock pursuant to the exercise of outstanding stock options, warrants or other rights (excluding the Registrable Securities). Please describe the number, type and terms of the securities, the method of ownership, and whether the undersigned holds sole or shared voting and investment power. If “none”, please so state. | |
| 6. | Relationships with Katapult: |
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with Katapult (or its predecessors or affiliates) during the past three years.
State any exceptions here:
| 7. | Plan of Distribution: |
The undersigned has reviewed the form of Plan of Distribution attached as Annex A to the Registration Rights Agreement, and hereby confirms that, except as set forth below, the information contained therein regarding the undersigned and its plan of distribution is correct and complete.
State any exceptions here:
***********
The undersigned agrees to promptly notify Katapult of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the effective date of any applicable Registration Statement filed pursuant to the Registration Rights Agreement.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in each Registration Statement filed pursuant to the Registration Rights Agreement and each related Prospectus. The undersigned understands that such information will be relied upon by Katapult in connection with the preparation or amendment of any such Registration Statement and the related Prospectus.
By signing below, the undersigned acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M. The undersigned also acknowledges that it understands that the answers to this Questionnaire are furnished for use in connection with Registration Statements filed pursuant to the Registration Rights Agreement and any amendments or supplements thereto filed with the SEC pursuant to the Securities Act.
The undersigned hereby acknowledges and is advised of the following Interpretation A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations regarding short selling:
“A Company filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. Katapult was advised that the short sale could not be made before the registration statement become effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.”
By returning this Questionnaire, the undersigned will be deemed to be aware of the foregoing interpretation.
I confirm that, to the best of my knowledge and belief, the foregoing statements (including without limitation the answers to this Questionnaire) are correct.
Katapult agrees that all information provided by the Selling Stockholder in this Questionnaire will be kept confidential and used solely for purposes of compliance with applicable securities laws and the preparation and filing of the Registration Statement and related Prospectus, except to the extent disclosure is required by law, regulation, or the rules of any securities exchange.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Dated: | Beneficial Owner: | ||||
| By: | |||||
| Name: | |||||
| Title: | |||||
Exhibit 10.6
Execution Version
Director Nomination Agreement
This Director Nomination Agreement (this “Agreement”) is made on November 3, 2025 (the “Effective Date”), by and among Katapult Holdings, Inc., a Delaware corporation (the “Company”) and HHCF Series 21 Sub, LLC, a Delaware limited liability company (“HHCF”).
RECITALS
WHEREAS, the Company and HHCF desire to memorialize certain matters made in connection with the purchase of shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share, and Series B Convertible Preferred Stock, par value $0.0001, by HHCF and to permit HHCF to designate up to three persons for nomination for election to the board of directors of the Company (the “Board”), subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
(a) Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the specified Person; provided that the Company and any Person Controlled by the Company shall not be considered to be an Affiliate of HHCF for any purpose under this Agreement.
“Agreement” has the meaning set forth in the Preamble.
“Beneficial Owner” means, with respect to a security, a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (a) voting power, which includes the power to vote, or to direct the voting of, such security, or (b) investment power, which includes the power to dispose, or to direct the disposition of, such security. The term “Beneficially Own” shall have a correlative meaning.
“Board” has the meaning set forth in the Recitals.
“Bylaws” means the Second Amended and Restated Bylaws of the Company (as amended or modified from time to time.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company, as amended by that certain Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated July 27, 2023, and as further amended or modified from time to time.
“Certificate of Designations” means the Series A Convertible Preferred Stock Certificate of Designations of the Company, as amended or restated from time to time.
“Class I Director” means a class of directors of the Board, the term of which expires at the 2028 Annual Meeting of the Company.
“Class III Director” means a class of directors of the Board, the term of which expires at the 2027 Annual Meeting of the Company.
“Company” has the meaning set forth in the Preamble.
“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The terms “Controlled by” and “under common Control with” shall have correlative meanings.
“Effective Date” has the meaning set forth in the Preamble.
“Exchange Act” means the Securities Exchange Act of 1934.
“HHCF” has the meaning set forth in the Preamble.
“Designated Directors” has the meaning set forth in Section 2.02(a).
“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof or other entity, and also includes any managed investment account.
“Preferred Stock Director Designation Right Condition” means the condition that HHCF beneficially owns one third (1/3) the total voting power on a fully diluted basis of the voting equity securities of the Company.
“Proceeding” has the meaning set forth in Section 4.07.
“Qualified Director” means an individual who (i) qualifies as independent of the Company under all applicable listing standards, applicable rules of the SEC and publicly disclosed standards used by the Board in determining the independence of the Company’s directors (an “Independent Director”) and, (ii) unless a majority of the members of the Board who are Independent Directors provide their consent, (A) is not an employee, officer, director, general partner, manager or other agent of HHCF or of any Affiliate of HHCF, (B) is not a limited partner, member, or other investor in any HHCF or any Affiliate of HHCF (unless such investment has been disclosed to the Company), and (C) does not have any
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agreement, arrangement, or understanding, written or oral, with HHCF or any Affiliate of HHCF regarding such person’s service as a director of the Company.
“Securities Exchange” means the national securities exchange on which the Company’s common stock, par value $0.0001 per share, is then listed.
“Selected Courts” has the meaning set forth in Section 4.07.
“Termination Date” means the date of the expiration of the then-current term of the HHCF Designated Director (or such person’s successor designee appointed under Section 2.02(e)) with the longest term remaining that expires after the date when the Preferred Stock Director Designation Right Condition is no longer satisfied after the Effective Date.
(b) Section 1.02 Other Definitional and Interpretive Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References in the singular or to “him,” “her,” “it,” “itself” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be. References to the Preamble, Recitals, Articles and Sections shall refer to the Preamble, Recitals, Articles and Sections of this Agreement, unless otherwise specified. The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to “include,” “includes” and “including” in this Agreement shall be deemed to be followed by the words “without limitation,” whether or not so specified. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted.
Section 2. Nomination Rights.
(a) Number of Directors. Except as required by applicable law or the listing standards of the Securities Exchange, from and after the Effective Date until the Termination Date, the Company shall not, without the prior written consent of HHCF, take any action to (i) increase the number of directors on the Board to more than five directors, (ii) alter, remove or amend the classification of the Board into three groups of directors with staggered three-year terms or (iii) amend the Bylaws to provide for a voting standard in the election of directors other than plurality voting.
(b) Board Nominees. Subject to the terms and conditions of this Agreement, from and after the Effective Date until the Termination Date, at every meeting of the Board, or a committee thereof, at which directors of the Company are appointed by the Board or are nominated to stand for election by stockholders of the Company, HHCF shall have the right to nominate for election to the Board (the “HHCF Designated Directors”):
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(i) three nominees for so long as the Preferred Stock Director Designation Right Condition is satisfied, two of whom shall be a Class I Director and one of whom shall be a Class III director, as designated by HHCF; provided that (i) prior to the receipt of the Requisite Stockholder Approval (as defined in the Certificate of Designations), HHCF shall only have the right to nominate for election to the Board two such nominees, which nominees shall be Class I Directors (ii) two HHCF Designated Directors shall be Qualified Directors and (ii) any event that causes the Preferred Stock Director Designation Right Condition to not be satisfied shall not shorten the term of any director then serving on the Board. The initial HHCF Designated Directors as of the Effective Date are Philip Key Bartow III and Jeffrey Rubin (who have been named as Class I Directors) and Daniel Easley (who shall be named as a Class III Director immediately following the receipt of the Requisite Stockholder Approval and in accordance with the terms and conditions of this Agreement).
(ii) Subject to Sections 2.02(b)(i) and 2.02(c), the Company shall take all actions (to the extent such actions are permitted by applicable law) to (i) include each HHCF Designated Director in the slate of director nominees for election by the Company’s stockholders and (ii) include each HHCF Designated Director in the proxy statement prepared by the Company in connection with soliciting proxies for every meeting of the stockholders of the Company called with respect to the election of members of the Board, and at every adjournment or postponement thereof, and on every action or approval by written consent of the Board with respect to the election of members of the Board.
(iii) The Company’s obligations pursuant to Section 2.02(b) shall be subject to each HHCF Designated Director providing, fully and completely, (i) any information that is required to be disclosed in any filing or report under the listing standards of the Securities Exchange and applicable law, (ii) any information that is required in connection with determining the independence status of the HHCF Designated Directors under the listing standards of the Securities Exchange and applicable law, and (iii) if required by applicable law, such individual’s written consent to being named in a proxy statement as a nominee and to serving as director if elected.
(iv) If a HHCF Designated Director is not appointed, nominated or elected to the Board because of such person’s death, disability, disqualification, withdrawal as a nominee or for other reason, (i) HHCF shall be entitled to designate another nominee and shall do so as promptly as practicable following the failure of such HHCF Designated Director to be appointed, nominated or elected to the Board and (ii) the director position for which the original HHCF Designated Director was nominated shall not be filled pending such designation.
(v) If a vacancy occurs because of the death, disability, disqualification, resignation or removal of a HHCF Designated Director or for any other reason, HHCF shall be entitled to designate such person’s successor (regardless of if the Preferred Stock Director Designation Right Condition is satisfied at the time of such replacement designation), and the Board shall promptly fill the vacancy with such successor, it being understood that any such successor designee shall serve the remainder of the term of the HHCF Designated Director whom such designee replaces. HHCF shall designate a
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successor pursuant to this Section 2.02(e) as promptly as practicable following any such vacancy.
(c) Compensation; Reimbursement of Expenses. The Company shall reimburse each HHCF Designated Director for all reasonable and documented out-of-pocket expenses properly incurred in connection with such HHCF Designated Director’s participation in the meetings of the Board or any committee of the Board and all functions and duties as a member of the Board, including all reasonable and documented travel, lodging and meal expenses, in each case to the same extent as the Company reimburses the other non-executive members of the Board for such expenses.
(d) Indemnification, Exculpation and Insurance.
(i) The Company shall maintain in effect at all times directors’ and officers’ indemnity insurance covering the HHCF Designated Directors to the same extent and on the same terms as any directors’ and officers’ indemnity insurance maintained by the Company with respect to the other non-executive members of the Board. Any directors’ and officers’ indemnity insurance shall be secondary to any insurance coverage for any of the HHCF Designated Directors maintained by HHCF.
(ii) The Company shall not amend or alter any right to indemnification, exculpation or the advancement of expenses covering or benefiting any HHCF Designated Director contained in the Certificate of Incorporation or Bylaws as in effect on the Effective Date without the prior written consent of HHCF, except to the extent (i) required by applicable law or the listing standards of the Securities Exchange (and in such cases, in accordance with the Certificate of Incorporation or the Bylaws) or (ii) such amendment or alteration provides a broader right to indemnification, exculpation or advancement of expenses than those previously contained in the Certificate of Incorporation or Bylaws, as applicable.
(e) Corporate Policies. Except as otherwise provided in the Certificate of Incorporation, HHCF acknowledges that each HHCF Designated Director will be subject to all applicable corporate governance, conflict of interest, confidentiality, stock ownership and insider trading policies and guidelines of the Company, each as approved by the Board from time to time to the extent such policies and guidelines are applicable to all non-executive directors. Notwithstanding the foregoing, no confidentiality policy shall preclude any HHCF Designated Director that is an employee of HHCF or its Affiliates from sharing information with HHCF; provided that HHCF maintains the confidentiality of such information and subject to such director’s observance of standard confidentiality obligations and fiduciary duties to the Company. HHCF represents, warrants and agrees that neither it nor any of its Affiliates (i) has paid or will pay any compensation to the HHCF Designated Director in connection with such person’s service on the Board or any committee thereof, or (ii) has or will have any agreement, arrangement or understanding, written or oral, with the HHCF Designated Director regarding such person’s service on the Board or any committee thereof (for the avoidance of doubt, excluding ordinary course employment agreements or arrangements with any of the HHCF or their Affiliates).
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Section 3. Effectiveness and Termination.
(a) Termination. This Agreement and all rights and obligations hereunder shall terminate upon the earlier to occur of (a) the Termination Date and (b) the delivery of written notice to the Company by HHCF terminating this Agreement.
Section 4. Miscellaneous
(a) Notices. All notices, requests, consents and other communications hereunder to any party shall be in writing and shall be personally delivered, sent by nationally recognized overnight courier or mailed by registered or certified mail to such party at the address set forth below, or sent by e-mail transmission (or such other address or contact information as shall be specified by like notice):
(i) if to the Company, to:
| Katapult Holdings, Inc. |
| 5360 Legacy Drive, Building 2 |
| Plano, Texas 75024 |
| Attention: Separately Supplied |
| E-mail: Separately Supplied |
(ii) if to HHCF, to:
| HHCF Series 21 Sub, LLC |
| 88 West Mound Street |
| Columbus, Ohio 43215 |
| Attention: Separately Supplied |
| Email: Separately Supplied |
Notices will be deemed to have been given hereunder when personally delivered or when receipt of e-mail has been acknowledged by non-automated response, one calendar day after deposit with a nationally recognized overnight courier and five calendar days after deposit in U.S. mail.
(b) Severability. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
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(c) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, taken together, shall be considered one and the same agreement.
(d) Entire Agreement; No Third Party Beneficiaries. This Agreement (a) constitutes the entire agreement and supersedes all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended to confer upon any Person, other than the parties hereto, any rights or remedies hereunder.
(e) Further Assurances. Each party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other parties hereto to give effect to and carry out the transactions contemplated herein.
(f) Governing Law; Equitable Remedies. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF). The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts (as defined below), this being in addition to any other remedy to which they are entitled at law or in equity. Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties hereto. Each party further agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at law would be adequate.
(g) Consent To Jurisdiction. With respect to any suit, action or proceeding (“Proceeding”) arising out of or relating to this Agreement, each of the parties hereto hereby irrevocably (a) submits to the non-exclusive jurisdiction of the Court of Chancery of the State of Delaware and the United States District Court for the District of Delaware and the appellate courts therefrom (the “Selected Courts”) and waives any objection to venue being laid in the Selected Courts whether based on the grounds of forum non conveniens or otherwise and hereby agrees not to commence any such Proceeding other than before one of the Selected Courts; provided, however, that a party may commence any Proceeding in a court other than a Selected Court solely for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (b) consents to service of process in any Proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or HHCF at their respective addresses referred to in Section 4.01 hereof; provided, however, that nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law; and (c) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY
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COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT AND TO HAVE ALL MATTERS RELATING TO THIS AGREEMENT BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
(h) Amendments; Waivers.
(i) No provision of this Agreement may be amended or waived unless such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and HHCF, or, in the case of a waiver, by each of the parties against whom the waiver is to be effective.
(ii) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
(i) Assignment
Neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties.
This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.
[The Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.
| KATAPULT HOLDINGS, INC. | |||
| By: | /s/ Orlando Zayas | ||
| Name: | Orlando Zayas | ||
| Title: | CEO | ||
[Signature Page to Director Nomination Agreement]
| HHCF SERIES 21 SUB, LLC | |||
| By: | /s/ John Detwiler | ||
| Name: | John Detwiler | ||
| Its: | Authorized Signatory | ||
[Signature Page to Director Nomination Agreement]
Exhibit 10.7
acknowledgment and support agreement
November 3, 2025
HHCF Series 21 Sub, LLC
88 West Mound Street
Columbus, Ohio 43215
| Re: | Acknowledgment and Support Agreement |
Reference is made to that certain Series A Investment Agreement, dated as of November 3, 2025 (the “Series A Investment Agreement”), by and between HHCF Series 21 Sub, LLC, a Delaware limited liability company (together with its Affiliates, “Purchaser”) and Katapult Holdings, Inc., a Delaware corporation (the “Company”), and that certain Series B Investment Agreement, dated as of November 3, 2025, by and between Purchaser and the Company (the “Series B Investment Agreement” and collectively with the Series A Investment Agreement, the “Investment Agreements”), pursuant to which the Company will issue and sell, and the Purchaser will purchase, 35,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share, and 30,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (such shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, the “Shares”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Investment Agreements.
As of the date hereof, the undersigned (“Stockholder”) is the record or beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, which meaning will apply for all purposes of this Acknowledgment and Support Agreement (this “Support Agreement”) whenever the term “beneficial owner” or “beneficially own” is used) of the number of shares of common stock, par value $0.0001 per share of the Company (the “Company Common Stock”), set forth below Stockholder’s name on the signature page hereto (all such shares of Company Common Stock, including securities convertible into or exercisable or exchangeable for Company Common Stock, for which Stockholder is or becomes the record or beneficial owner in a personal capacity (and for the avoidance of doubt excluding any shares held by affiliated funds) prior to the termination of this Support Agreement being referred to herein as the “Covered Shares” ).
Stockholder acknowledges and agrees that the execution of this Support Agreement and its delivery to Purchaser by Stockholder is a material inducement to Purchaser to enter into the Investment Agreements and purchase the Shares. Stockholder hereby acknowledges and agrees to the following:
| 1. | Stockholder Vote. |
| (a) | At any meeting of the stockholders of the Company, however called, or at any adjournment thereof, or in any other circumstance in which the vote, consent or |
other approval of the stockholders of the Company is sought (including any written consent of such stockholders) (each, a “Company Stockholders Meeting or Consent”), Stockholder shall (i) appear at each such meeting (if applicable) or otherwise cause all Covered Shares to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all Covered Shares:
| (i) | in favor of the Requisite Stockholder Approval (as such term is defined in the Certificate of Designations) (the “Stockholder Approval”), |
| (ii) | in favor of any other matter considered at any Company Stockholders Meeting or Consent which the Board of Directors of the Company has determined is necessary in connection with the Stockholder Approval, |
| (iii) | in favor of any adjournment or postponement recommended by the Company in order to obtain the Stockholder Approval if there are not sufficient votes in favor of the Stockholder Approval, and |
| (iv) | against any proposal, action or agreement that does or would oppose, prevent or nullify the Stockholder Approval, any provision of this Support Agreement or any matter that is proposed in furtherance thereof. |
| 2. | Irrevocable Proxy. |
| (a) | SOLELY IN THE EVENT OF A FAILURE BY STOCKHOLDER TO ACT IN ACCORDANCE WITH SUCH STOCKHOLDER’S OBLIGATIONS AS TO VOTING PURSUANT TO SECTION 1(A), UNTIL THE EARLIER OF (A) THE DATE THAT THE STOCKHOLDER APPROVAL HAS BEEN OBTAINED AND (B) FEBRUARY 27, 2026 (SUCH DATE THE “TERMINATION TIME”), STOCKHOLDER HEREBY IRREVOCABLY (UNTIL THE TERMINATION TIME) GRANTS TO AND APPOINTS PURCHASER SUCH STOCKHOLDER’S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION), FOR AND IN THE NAME, PLACE AND STEAD OF STOCKHOLDER, TO REPRESENT, VOTE AND OTHERWISE ACT (BY VOTING AT ANY MEETING OF COMPANY STOCKHOLDERS, BY WRITTEN CONSENT IN LIEU THEREOF OR OTHERWISE) WITH RESPECT TO THE COVERED SHARES REGARDING THE MATTERS REFERRED TO IN SECTION 1(A) UNTIL THE TERMINATION TIME, TO THE SAME EXTENT AND WITH THE SAME EFFECT AS STOCKHOLDER MIGHT OR COULD DO UNDER APPLICABLE LAW, RULES AND REGULATIONS. THE PROXY GRANTED PURSUANT TO THIS SECTION 2(A) IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION TIME. UNTIL THE TERMINATION TIME, STOCKHOLDER WILL TAKE SUCH FURTHER ACTION AND WILL EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY. STOCKHOLDER HEREBY REVOKES ANY AND ALL PREVIOUS PROXIES |
OR POWERS OF ATTORNEY GRANTED WITH RESPECT TO ANY OF THE COVERED SHARES THAT MAY HAVE HERETOFORE BEEN APPOINTED OR GRANTED WITH RESPECT TO THE MATTERS REFERRED TO IN THIS SECTION 2(A), AND PRIOR TO THE TERMINATION TIME NO SUBSEQUENT PROXY (WHETHER REVOCABLE OR IRREVOCABLE) OR POWER OF ATTORNEY SHALL BE GIVEN BY STOCKHOLDER. NOTWITHSTANDING THE FOREGOING, THIS PROXY SHALL TERMINATE UPON TERMINATION OF THIS SUPPORT AGREEMENT IN ACCORDANCE WITH ITS TERMS.
| 3. | No Inconsistent Arrangements. Until the Termination Time, Stockholder shall not, directly or indirectly, (a) transfer, sell, assign, gift, hedge, pledge, tender or otherwise dispose of, create or permit to exist any Lien on, or grant any proxy, power of attorney or other authorization in respect of (collectively, “Transfer”), or enter into any contract or other arrangement with respect to any Transfer of, the Covered Shares or any interest therein, (b) deposit or permit the deposit of the Covered Shares into a voting trust or enter into a tender, support, voting or similar agreement or arrangement with respect to the Covered Shares or (c) otherwise take any action with respect to any of the Covered Shares that would restrict, limit or interfere with the performance of any of Stockholder’s obligations under this Support Agreement or otherwise make any representation or warranty of Stockholder contained herein untrue or incorrect. Notwithstanding the foregoing, Stockholder may make Transfers of Covered Shares: |
| (i) | if the undersigned is a natural person, (A) to any person related to the undersigned by blood or adoption who is an immediate family member of the undersigned, or by marriage or domestic partnership (a “Family Member”), or to a trust formed for the direct or indirect benefit of the undersigned or any of the undersigned’s Family Members, (B) to the undersigned’s estate, following the death of the undersigned, by will, testamentary document or intestate succession, (C) by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement or (D) to any partnership, corporation or limited liability company which is controlled by the undersigned and/or by any such Family Member(s); |
| (ii) | if the undersigned is a corporation, partnership or other business entity, (A) to another corporation, partnership or other business entity that is an affiliate (as defined under Rule 12b-2 of the Exchange Act) of the undersigned, including investment funds or other entities under common control or management with the undersigned or (B) as a distribution or dividend to equity holders (including, without limitation, general or limited partners and members) of the undersigned (including upon the liquidation and dissolution of the undersigned pursuant to a plan of liquidation approved by the undersigned’s equity holders); |
| (iii) | if the undersigned is a trust, to any grantors or beneficiaries of the trust; or | |
(iv)
|
as a bona fide gift to a charitable organization,
|
provided that, in each case, the Covered Shares shall continue to be bound by this Support Agreement and provided that, prior to such Transfer, each donee, heir, beneficiary or other transferee or distributee thereof agrees in a writing reasonably acceptable to Purchaser to be bound by the terms and conditions of this Support Agreement.
| 4. | Representations and Warranties of Stockholder. |
| (a) | Stockholder hereby represents and warrants to Purchaser as follows: |
| (i) | If Stockholder is an entity or trust, such Stockholder is duly constituted, validly existing and in good standing under the laws of its jurisdiction of formation, if applicable, with full power, capacity and authority to own the Covered Shares and to perform the Stockholder’s obligations hereunder and to consummate the transactions contemplated hereby. The Stockholder has full power and authority to execute, deliver and perform this Support Agreement. This Support Agreement has been duly and validly executed and delivered by the Stockholder, and constitutes a valid and binding obligation of the Stockholder enforceable against the Stockholder in accordance with its terms, subject to (a) Laws of general application relating to bankruptcy, insolvency and the relief of debtors and (b) Laws of general application relating to bankruptcy, insolvency, the relief of debtors, fraudulent transfer, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditor’s rights; |
| (ii) | Stockholder owns beneficially and of record the Covered Shares, free and clear of all Liens or other restrictions on the right to vote the Covered Shares, except as provided hereunder. The Covered Shares listed below the Stockholder’s name constitute all of the shares of Company Common Stock owned by the Stockholder, beneficially or of record, as of the date hereof. Except pursuant to this Support Agreement and the Investment Agreement, no person has any contractual or other right or obligation to purchase or otherwise acquire any of the Covered Shares; |
| (iii) | Except as set forth on the signature page hereto, Stockholder has full voting power with respect to the Covered Shares, full power to issue instructions with respect to the matters set forth herein and full power and authority to agree to all of the matters set forth in this Support Agreement, in each case, with respect to all of the Covered Shares. None of the Covered Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of the Covered Shares with respect to the matters contemplated herein; and |
| (iv) | The execution, delivery and performance by Stockholder of this Support Agreement do not and will not (a) contravene, conflict with or result in any violation or breach of any organizational document of Stockholder, if applicable, (b) result in the creation of any Lien on the Covered Shares, or (c) violate, conflict with, result in any material breach of, or constitute a |
default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or result in or give to others any material rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the Covered Shares pursuant to, any contract to which Stockholder is a party or by which any of the Covered Shares is bound.
| 5. | Miscellaneous. |
| (a) | This Support Agreement shall be governed by, and construed in accordance with, the Laws of the state of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Delaware. Any dispute relating hereto shall be heard first in the Delaware Court of Chancery, and, if applicable, in any state or federal court located in of Delaware in which appeals from the Court of Chancery may validly be taken under the laws of the State of Delaware (each a “Chosen Court” and collectively, the “Chosen Courts”), and the parties agree to the exclusive jurisdiction and venue of the Chosen Courts. Such persons further agree that any proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Support Agreement or the transactions contemplated hereby or by any matters related to the foregoing (the “Applicable Matters”) shall be brought exclusively in a Chosen Court, and that any proceeding arising out of this Support Agreement or any other Applicable Matter shall be deemed to have arisen from a transaction of business in the state of Delaware, and each of the foregoing persons hereby irrevocably consents to the jurisdiction of such Chosen Courts in any such proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that such person may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such Chosen Court or that any such proceeding brought in any such Chosen Court has been brought in an inconvenient forum. Such persons further covenant not to bring a proceeding with respect to the Applicable Matters (or that could affect any Applicable Matter) other than in such Chosen Court and not to challenge or enforce in another jurisdiction a judgment of such Chosen Court. Process in any such proceeding may be served on any person with respect to such Applicable Matters anywhere in the world, whether within or without the jurisdiction of any such Chosen Court. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS SUPPORT AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS SUPPORT AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY. |
| (b) | This Support Agreement may be amended only by an instrument in writing signed by each of Purchaser and Stockholder. |
| (c) | Stockholder may not assign this Support Agreement by operation of law or otherwise without the prior written consent of Purchaser. Subject to the foregoing, this Support Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and permitted assigns. |
| (d) | This Support Agreement, and any amendments hereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. Neither party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense. This Support Agreement may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on each party hereto. |
| (e) | Neither party hereto shall be deemed to have waived any claim arising out of this Support Agreement, or any power, right, privilege or remedy under this Support Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. No failure on the part of either party to exercise any power, right, privilege or remedy under this Support Agreement, and no delay on the part of either party in exercising any power, right, privilege or remedy under this Support Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. |
| (f) | Nothing in this Support Agreement, expressed or implied, shall amend, modify, alter or change any of the terms of, or any of the parties’ rights or obligations under, the Investment Agreements. |
* * * * *
IN WITNESS WHEREOF, the parties have executed this Acknowledgment and Support Agreement as of the date first written above.
| STOCKHOLDER: | |||
| By: | |||
| Name: | |||
|
Number of Shares of Company Common Stock Beneficially Owned: | |||
Signature Page to Acknowledgment and Support Agreement
Acknowledged and agreed, as of the date first written above, by:
| HHCF Series 21 Sub, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
Signature Page to Acknowledgment and Support Agreement