Sezzle Inc 10-Q for FY2026 Q3
Sezzle Inc. (SEZL)
10-Q
2026-11-05
For: 2026-09-30
View Original
Added on
November 05, 2026
About this 10-Q
Sezzle Inc filed this 10-Q on November 5, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $166.5M
- up 42.6% from $116.8M a year earlier
- Net income
- $47.83M
- up 79.3% from net income of $26.67M a year earlier
- Diluted EPS
- $1.38
- up 84.0% from $0.75 a year earlier
| UNITED STATES | ||||||||
| SECURITIES AND EXCHANGE COMMISSION | ||||||||
| WASHINGTON, D.C. 20549 | ||||||||
FORM | ||||||||
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
| OR | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| For the transition period from to | |||||
Commission file number | |||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: +1 651 240 6001
Not Applicable
(Former address)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act).
Accelerated filer ☐ | Non-accelerated filer ☐ | |||||||
Smaller reporting company | Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The total shares of common stock, par value $0.00001 per share, outstanding at November 2, 2026 were 33,783,402 .
SEZZLE INC.
TABLE OF CONTENTS
2
FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report on Form 10-Q and the documents incorporated by reference herein (“Form 10-Q”) includes “forward-looking statements” under Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management included in this Form 10-Q are forward-looking statements. When used in this Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” and similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and in other filings we make with the Securities and Exchange Commission. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. There is a risk that such predictions, estimates, projections, and other forward-looking statements will not be achieved. Nevertheless, and despite the fact that management’s expectations and estimates are based on assumptions management believes to be reasonable and data management believes to be reliable, our actual results, performance, or achievements are subject to future risks and uncertainties, any of which could materially affect our actual performance. Risks and uncertainties that could affect such performance include, but are not limited to:
•the possibility that Sezzle’s national bank charter application, or other applications associated with the national bank application may not be approved timely, if at all;
•the uncertain nature of the impact that a national bank charter may have on Sezzle's business;
•impact of the “buy-now, pay-later” (“BNPL”) industry becoming subject to increased regulatory scrutiny;
•impact of operating in a highly competitive industry;
•impact of macro-economic conditions on consumer spending and consumer credit;
•our ability to maintain our relationship with our existing merchant base, increase our merchant network and Total Transaction Volume (“TTV”);
•our ability to retain and increase our consumer base and TTV;
•our ability to retain and increase our subscriber base and subscription revenue;
•our ability to effectively manage growth, sustain our growth rate and maintain our market share;
•our ability to maintain adequate access to capital in order to meet the capital requirements of our business;
•the loans facilitated through the Sezzle Platform involve a high degree of financial risk;
•our reliance on our originating bank partner to originate a substantial majority of the loans facilitated by the Sezzle Platform;
•our reliance on third-party data to assess creditworthiness of consumers;
•impact of exposure to consumer bad debts and insolvency of merchants;
•our ability to comply with the applicable requirements of Visa and other payment processors;
•impact of the integration, support and prominent presentation of our platform by our merchants;
•impact of any data security breaches, cyberattacks, employee or other internal misconduct, malware, phishing or ransomware, physical security breaches, natural disasters, or similar disruptions;
•impact of key vendors or merchants failing to comply with legal or regulatory requirements or to provide various services that are important to our operations;
•impact of exchange rate fluctuations in the international markets in which we operate;
•our ability to protect our intellectual property rights and third party allegations of the misappropriation of intellectual property rights;
•our ability to retain our existing workforce and recruit additional staff;
•impact of the costs of complying with various laws and regulations applicable to the BNPL industry in the United States and Canada;
•our ability to comply with applicable state lending licenses and other state lending laws and regulations;
•the impact of litigation, regulatory investigations and actions, and compliance issues on our business; and
•our ability to achieve our public benefit purpose as a Delaware public benefit corporation.
We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Risk Factors” in our 2025 Form 10-K. Should one or more of the risks or uncertainties described in the 2025 Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Form 10-Q are expressly qualified in their entirety by these cautionary statements. These cautionary statements should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any intention or obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets (unaudited)
| As of | ||||||||
| (in thousands, except per share amounts) | September 30, 2026 | December 31, 2025 | ||||||
| Assets | ||||||||
| Current Assets | ||||||||
Cash and cash equivalents, including amounts held by variable interest entity (“VIE”) of $ | $ | $ | ||||||
Restricted cash, current, including amounts held by VIE of $ | ||||||||
| Notes receivable | ||||||||
| Allowance for credit losses | ( | ( | ||||||
Notes receivable, net, including amounts held by VIE of $ | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-Current Assets | ||||||||
| Restricted cash, non-current | ||||||||
| Deferred tax asset | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Merchant accounts payable | $ | $ | ||||||
Other payables, including amounts held by VIE of $ | ||||||||
| Deferred revenue | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Operating lease liabilities | ||||||||
Line of credit, net of unamortized debt issuance costs of $ | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (see Note 8) | ||||||||
| Stockholders' Equity | ||||||||
Common stock and additional paid-in capital, $ | ||||||||
Treasury stock, at cost: | ( | ( | ||||||
| Accumulated other comprehensive loss | ( | ( | ||||||
| Accumulated earnings (deficit) | ( | |||||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See the accompanying Notes to the Consolidated Financial Statements.
4
Consolidated Statements of Operations and Comprehensive Income (unaudited)
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||
| Operating Expenses | |||||||||||||||||
| Personnel | |||||||||||||||||
| Transaction expense | |||||||||||||||||
| Third-party technology and data | |||||||||||||||||
| Marketing, advertising, and tradeshows | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Provision for credit losses | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating Income | |||||||||||||||||
| Other Income (Expense) | |||||||||||||||||
| Net interest expense | ( | ( | ( | ( | |||||||||||||
| Other income (expense), net | ( | ( | ( | ||||||||||||||
| Income before taxes | |||||||||||||||||
| Income tax expense | |||||||||||||||||
| Net Income | |||||||||||||||||
| Other Comprehensive (Loss) Income | |||||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||
| Total Comprehensive Income | $ | $ | $ | $ | |||||||||||||
| Net income per share*: | |||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||
| Weighted-average shares outstanding*: | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
*Effective March 28, 2025, we performed a 6 -for-1 stock split of the Company’s common stock, effected through a stock dividend. Share and per share amounts have been retroactively adjusted.
See the accompanying Notes to the Consolidated Financial Statements.
5
Consolidated Statements of Stockholders’ Equity (unaudited)
| Common Stock and Additional Paid-in Capital | Stock Subscriptions | Treasury Stock, At Cost | Accumulated Other Comprehensive Loss | Accumulated Deficit | |||||||||||||||||||
| (in thousands) | Shares | Amount | Total | ||||||||||||||||||||
| Balance at July 1, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | |||||||||||||
| Equity based compensation | — | — | — | — | — | ||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||
| Restricted stock issuances and vesting of awards | — | — | — | — | |||||||||||||||||||
| Stock subscriptions collected related to stock option exercises | — | — | — | — | — | ||||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | ||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | ( | ||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance at September 30, 2025 | ( | ( | ( | ||||||||||||||||||||
| Common Stock and Additional Paid-in Capital | Stock Subscriptions | Treasury Stock, At Cost | Accumulated Other Comprehensive Loss | Accumulated Earnings | Total | ||||||||||||||||||
| (in thousands) | Shares | Amount | |||||||||||||||||||||
| Balance at July 1, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||
| Equity based compensation | — | — | — | — | — | ||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||
| Restricted stock issuances and vesting of awards | — | — | — | — | |||||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | ||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance at September 30, 2026 | ( | ( | $ | ||||||||||||||||||||
See the accompanying Notes to the Consolidated Financial Statements.
6
Consolidated Statements of Stockholders’ Equity (unaudited)
| Common Stock and Additional Paid-in Capital | Stock Subscriptions | Treasury Stock, At Cost | Accumulated Other Comprehensive Loss | Accumulated Deficit | |||||||||||||||||||
| (in thousands) | Shares* | Amount | Total | ||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||
| Equity based compensation | — | — | — | — | — | ||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||
| Restricted stock issuances and vesting of awards | — | — | — | — | |||||||||||||||||||
| Stock subscriptions receivable related to stock option exercises | ( | — | — | — | |||||||||||||||||||
| Stock subscriptions collected related to stock option exercises | — | — | — | — | — | ||||||||||||||||||
| Repurchase and retirement of common stock | ( | ( | — | — | — | ( | ( | ||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | ||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance at September 30, 2025 | ( | ( | ( | ||||||||||||||||||||
| Common Stock and Additional Paid-in Capital | Stock Subscriptions | Treasury Stock, At Cost | Accumulated Other Comprehensive Loss | Accumulated (Deficit) Earnings | Total | ||||||||||||||||||
| (in thousands) | Shares | Amount | |||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||
| Equity based compensation | — | — | — | — | — | ||||||||||||||||||
| Stock option exercises | — | — | — | — | |||||||||||||||||||
| Restricted stock issuances and vesting of awards | — | — | — | — | |||||||||||||||||||
| Repurchase and retirement of common stock | ( | ( | — | — | — | ( | ( | ||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | ||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | ( | ||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance at September 30, 2026 | ( | ( | $ | ||||||||||||||||||||
* Effective March 28, 2025, we performed a 6 -for-1 stock split of the Company’s common stock, effected through a stock dividend. Share and per share amounts have been retroactively adjusted.
See the accompanying Notes to the Consolidated Financial Statements.
7
Consolidated Statements of Cash Flows (unaudited)
| For the nine months ended September 30, | ||||||||
| (As restated) | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided from operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for credit losses | ||||||||
| Discount on notes receivable | ( | ( | ||||||
| Equity based compensation and restricted stock vested | ||||||||
| Deferred income taxes | ( | |||||||
| Other, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | ( | ( | ||||||
| Merchant accounts payable | ( | |||||||
| Other payables | ( | |||||||
| Other liabilities | ||||||||
| Deferred revenue | ||||||||
| Operating leases | ( | |||||||
| Net Cash Provided from Operating Activities | ||||||||
| Investing Activities: | ||||||||
| Purchases and originations of notes receivable, net of proceeds from repayments | ( | ( | ||||||
| Purchase of property and equipment | ( | ( | ||||||
| Internally developed intangible asset additions | ( | ( | ||||||
| Net Cash Used for Investing Activities | ( | ( | ||||||
| Financing Activities: | ||||||||
| Proceeds from line of credit | ||||||||
| Payments to line of credit | ( | ( | ||||||
| Payments of debt issuance costs | ( | ( | ||||||
| Proceeds from stock option exercises | ||||||||
| Stock subscriptions collected related to stock option exercises | ||||||||
| Repurchase of common stock | ( | ( | ||||||
| Net Cash Used for Financing Activities | ( | ( | ||||||
| Effect of exchange rate changes on cash | ( | |||||||
| Net increase in cash, cash equivalents, and restricted cash | ||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||
| Noncash investing and financing activities: | ||||||||
| Conversion of accrued profit-sharing incentive plan liabilities to stockholders' equity | $ | $ | ||||||
| Supplementary disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | ||||||||
See the accompanying Notes to the Consolidated Financial Statements.
8
Notes to Consolidated Financial Statements (unaudited)
Note 1. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
These unaudited consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these consolidated financial statements and the accompanying notes thereof reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These consolidated financial statements and their accompanying notes should be read in conjunction with the consolidated financial statement disclosures in our 2025 annual consolidated financial statements.
Operating results reported for the three and nine months ended September 30, 2026 might not be indicative of the results for any subsequent period or the entire year ending December 31, 2026.
Fair Value
Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:
•Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;
•Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and
•Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.
As of September 30, 2026 and December 31, 2025, our assets and liabilities measured at fair value were not material. We hold certain financial assets and liabilities that are not measured at fair value on the consolidated balance sheets. Such financial assets and liabilities are comprised of cash and cash equivalents; restricted cash; notes receivable, net; and line of credit, net. Cash and cash equivalents, and restricted cash are classified within Level 1 of fair value hierarchy. Carrying amount approximates fair value because these balances are held on demand. Line of credit, net, is classified within Level 2 of the fair value hierarchy. The line of credit’s carrying value approximates its fair value because the contractual interest rate follows current market rates, and there have been no material change in our credit profile since the line of credit was amended. Notes receivable, net, is classified within Level 3 of the fair value hierarchy. Given the short-term nature of the underlying loans and the recognition of an allowance for credit losses against the notes receivable balance, the carrying amount approximates fair value.
Segments
Segments are components of a company that have discrete financial information available and are regularly evaluated by a chief operating decision maker (“CODM”) to assess performance and decide how resources are allocated. Our Chief Executive Officer is considered to be the CODM, and our operations comprise one reportable segment, primarily deriving revenue from our payment processing platform in North America. Our CODM manages business activities on a consolidated basis and uses consolidated net income, as reported on the consolidated statements of operations and comprehensive income, to evaluate financial performance, allocate resources, and monitor budget versus actuals. The measure of segment assets is reported on the consolidated balance sheets as total assets. Significant expenses reviewed by the CODM are the expense line items presented in the consolidated statements of operations and comprehensive income. There are no significant concentrations by state or geographical location.
9
Variable Interest Entities
Consolidated Variable Interest Entities
Our primary source of funding consumer receivables is through a secured line of credit. We transfer a portion of our notes receivable to a wholly owned, bankruptcy-remote special purpose entity (the “SPE”), which then pledges such receivables as collateral for our line of credit. We continue to service all receivables sold and pledged to the SPE. The amount we can borrow under our line of credit is dependent on the amount of eligible, pledged notes receivable we have sold to the SPE. While we serve as a limited guarantor for the SPE and are subject to certain financial covenants, our line of credit provider does not have full recourse against our general credit and may absorb losses in the event of default if the cash receipts related to our pledged notes receivable are not sufficient to repay the outstanding line of credit balance. Refer to Note 7. Line of Credit for more information about our line of credit and the relationship between our line of credit and our notes receivable.
We are required to evaluate the SPE for consolidation, which we have concluded is a VIE. We have the ability to direct the activities that most significantly impact the economic performance of our wholly owned SPE. We also have the obligation to absorb losses and the right to proceeds related to the pledged notes receivable in the SPE, exposing us to losses and returns that could potentially be significant. As such, we have determined that we are the primary beneficiary of the SPE and are required to consolidate the entity as a VIE.
Unconsolidated Variable Interest Entities
Under an arrangement with a third-party partner, our originating partner sells eligible long-term installment loans originated through the Sezzle Platform to three statutory trusts (the "Financing Entities") formed to purchase and hold these loans. Each Financing Entity is a variable interest entity and are substantially similar; therefore, we disclose information about them in the aggregate. Our variable interests consist of the servicing and ancillary fees we earn for servicing the loans and our obligations to repurchase loans upon breaches of certain representations and warranties made by us or our originating partner. As of September 30, 2026, the unpaid principal balance of loans held by the Financing Entities was approximately $24.4 million.
We are not the primary beneficiary of the Financing Entities because we do not have the power to direct the activities that most significantly impact their economic performance, namely the selection, pricing, and purchase of loans, which are directed by other parties. Our maximum exposure to loss is the amount we would pay to repurchase every loan owned by the Financing Entities under the representation and warranty provisions described above, which are not subject to a contractual cap. As of September 30, 2026, the carrying amounts of assets and liabilities related to our variable interests in the Financing Entities were not material, and our maximum exposure to loss was approximately $24.4 million, equal to the total unpaid principal balance of loans held by the Financing Entities. During the three and nine months ended September 30, 2026, we did not provide financial or other support to the Financing Entities that we were not contractually required to.
Stock Split
Our Board of Directors approved a stock split of our issued shares of common stock at a ratio of 6 -for-1, effected through a stock dividend (the “Stock Split”). The Stock Split became effective March 28, 2025. All share and per share amounts for all periods presented in these consolidated financial statements and their accompanying notes have been adjusted, on a retrospective basis, to reflect the Stock Split, unless otherwise stated. The number of authorized shares and the par value of the shares remained unaffected.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation format. These reclassifications had no effect on our total assets, total equity, net income, or total comprehensive income.
Restatement of Previously Issued Consolidated Financial Statements
We have restated our consolidated statements of cash flows for the nine months ended September 30, 2025. Such restatement was previously reported in our Annual Report on Form 10-K for the year ended December 31, 2025.
10
Recent Accounting Pronouncements
Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements
| Standard | Description | Date of Planned Adoption | Effect on Consolidated Financial Statements | ||||||||
ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | This ASU requires, in the notes to the consolidated financial statements, the disaggregation of certain expenses within relevant expense captions in tabular format, incremental qualitative disclosures about expenses, and the disclosure of total selling expenses. | Year ended December 31, 2027 | As this ASU relates to disclosures only, there will be no impact to our consolidated results of operations and financial condition. We will include the enhanced disclosure requirements in our 2027 annual consolidated financial statements. | ||||||||
ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software | This ASU changes the criteria required to begin capitalizing internal-use software and website development costs, in addition to clarifying which disclosures are required for capitalized internal-use software costs. | Year ended December 31, 2028 | We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. We expect to elect the prospective transition approach upon adoption. | ||||||||
There are additional new accounting pronouncements issued by the FASB that we have not yet adopted. We do not believe any of these additional accounting pronouncements will have a material impact on the consolidated financial statements or disclosures.
Note 2. Total Revenue
Total revenue was $166.5 million and $116.8 million for the three months ended September 30, 2026 and 2025, respectively, and $451.7 million and $320.4 million for the nine months ended September 30, 2026 and 2025, respectively. Our total revenue is classified into two categories, based on Accounting Standards Codification (“ASC”) recognition criteria: lending-based income and revenue from contracts with customers. Our total revenue by category for the three and nine months ended September 30, 2026 and 2025 was as follows:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Lending-based income (ASC Topic 310) | $ | $ | $ | $ | |||||||||||||
| Revenue from contracts with customers (ASC Topic 606) | |||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||
Lending-Based Income (ASC Topic 310)
Total revenue within the scope of ASC Topic 310, Receivables, relates to net origination fees on financing receivables we originate, premiums and discounts on financing receivables we purchase, and delinquency fees on financing receivables we hold. This is primarily comprised of merchant processing fees on orders that result in a financing receivable, delinquency fees, and other ancillary consumer fees, such as fees to reschedule installment due dates and nonrefundable fees assessed for using Sezzle On-Demand. Merchant processing fees are based on the merchant-specific volume passing through our platform and are predominately based on a percentage of the volume, plus a fixed fee per transaction. Lending-based income derived from merchants and partners totaled $11.5 million and $12.7 million for the three months ended September 30, 2026 and 2025, respectively, and $32.5 million and $39.6 million for the nine months ended September 30, 2026 and 2025, respectively. Lending-based income derived from consumers totaled $62.1 million and $46.6 million for the three months ended September 30, 2026 and 2025, respectively, and $166.6 million and $114.3 million for the nine months ended September 30, 2026 and 2025, respectively.
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Lending-based income, other than delinquency fees, is initially recorded as a reduction to notes receivable, net, within the consolidated balance sheets. Such income is subsequently recognized over the average duration of the related note receivable using the interest method. $2.4 million and $3.1 million of lending-based income was deferred within notes receivable, net, as of September 30, 2026 and December 31, 2025, respectively. Delinquency fees include fees assessed to consumers who fail to make a timely principal payment or their payment method fails when attempting to make an installment payment, and are recognized at the time the fee is charged to the consumer, to the extent they are reasonably collectible.
Revenue from Contracts with Customers (ASC Topic 606)
Total revenue within the scope of ASC Topic 606, Revenue from Contracts with Customers, primarily relates to subscription revenue, partner revenue, and certain consumer fees. Revenue from contracts with customers derived from merchants and partners totaled $30.4 million and $20.9 million for the three months ended September 30, 2026 and 2025, respectively, and $83.1 million and $51.4 million for the nine months ended September 30, 2026 and 2025, respectively. Revenue from contracts with customers derived from consumers totaled $62.6 million and $36.6 million for the three months ended September 30, 2026 and 2025, respectively, and $169.5 million and $115.1 million for the nine months ended September 30, 2026 and 2025, respectively.
Subscription Revenue
We earn revenue from two paid subscription services, Sezzle Premium and Sezzle Anywhere, for a fixed fee paid at the beginning of the subscription period. Sezzle Premium allows consumers to shop at select large, non-integrated premium merchants, along with other benefits. Sezzle Anywhere allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions. These performance obligations comprise a series of distinct services that are substantially the same; therefore, such revenue is recognized straight-line over the subscription period. Subscription revenue totaled $41.3 million and $24.3 million for the three months ended September 30, 2026 and 2025, respectively, and $110.3 million and $70.3 million for the nine months ended September 30, 2026 and 2025, respectively.
All performance obligations related to these subscriptions are fully satisfied within one year of receiving payment. Payment received for performance obligations not yet satisfied are recorded as deferred revenue within the consolidated balance sheets until such performance obligations are satisfied. Subscription revenue to be recognized over the remaining duration of outstanding performance obligations was $7.6 million and $5.3 million as of September 30, 2026 and December 31, 2025, respectively. Total revenue for the nine months ended September 30, 2026 includes $5.3 million of revenue that was included in deferred revenue as of December 31, 2025. Total revenue for the nine months ended September 30, 2025 includes $4.1 million of revenue that was included in deferred revenue as of December 31, 2024.
Partner Revenue
We earn revenue from contracts with customers via partners. This revenue primarily includes interchange fees earned through our virtual card and promotional incentives with third parties. We have an agreement with a card-issuing partner to facilitate the issuance of virtual cards to be used by our consumers at checkout. We earn virtual card interchange fees when a consumer uses a virtual card to complete a purchase. Such interchange fees are established by the applicable payment network, are assessed to the merchant’s acquiring bank, and are remitted to the card-issuing partner that issues our virtual cards, which in turn remits to us the portion of those fees to which we are contractually entitled. Our customer in this arrangement is our card-issuing partner, and our performance obligation is to facilitate and process the underlying card transaction. The performance obligation is satisfied at the point in time the transaction is settled by the payment network, at which time the related revenue is recognized. Virtual card interchange revenue totaled $18.2 million and $12.7 million for the three months ended September 30, 2026 and 2025, respectively, and $50.7 million and $32.0 million for the nine months ended September 30, 2026 and 2025, respectively.
We earn promotional incentives from third-party platforms and brand partners for directing consumer traffic or transaction volume to specified merchants or brands. Revenue is recognized at the point in time the performance obligation is fulfilled, which is when a sale is made or traffic is directed to the merchant or brand. Consideration under these arrangements is generally determined based on the volume of consumer traffic or transaction activity in the period.
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Consumer Fees
Revenue from contracts with customers also includes revenue from fees assessed when consumers make a scheduled payment using a card or load funds into their Sezzle Balance, a digital account issued by our originating partner that allows consumers to store, manage, and spend funds. Such consumer fees relate to a single performance obligation to process the related payment, which is satisfied, and the related revenue is recognized, at the point in time the transaction is processed.
Note 3. Notes Receivable and Allowance for Credit Losses
We offer consumer installment payment plans on our platform. Consumers pay a portion of the purchase price at the point-of-sale as a down payment, and then pay off the remaining amount over time through scheduled payments. We purchase certain receivables related to installment payment plans extended to consumers in the United States by an independent chartered financial institution (our “originating partner”) and are responsible for servicing such receivables. All other consumer installment payment plans within our notes receivable are originated by us. Our notes receivable represent amounts due from consumers primarily for outstanding principal on installment payment plans made on our platform that we have either originated or purchased from our originating partner. Our notes receivable are generally due no later than 56 days from origination.
We classify all of our notes receivable as held for investment, as we have the intent and ability to hold these investments for the foreseeable future or until maturity or payoff. Our portfolio is comprised of one product segment: point-of-sale unsecured installment loans; therefore, we evaluate our notes receivable as a single, homogenous portfolio and make merchant-specific or other adjustments as necessary. Our notes receivable are reported at amortized cost, which includes unpaid principal adjusted for charge-offs and deferred loan fees and costs. The amortized cost basis is adjusted for the allowance for credit losses within notes receivable, net.
As of September 30, 2026 and December 31, 2025, our notes receivable at amortized cost was comprised of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Notes receivable, gross | $ | $ | ||||||
Deferred loan fees and costs | ( | ( | ||||||
| Notes receivable, amortized cost | $ | $ | ||||||
Deferred loan fees and costs are primarily comprised of unrecognized merchant processing fees, which are recognized over the duration of the note with the consumer and are recorded as an offset to total revenue on the consolidated statements of operations and comprehensive income. As of September 30, 2026, our outstanding notes receivable had a weighted average days outstanding of 29 days.
We closely monitor credit quality for our notes receivable to manage and evaluate our related exposure to credit risk. When assessing the credit quality and risk of our portfolio, we monitor a variety of internal risk indicators and consumer attributes that are shown to be predictive of ability and willingness to repay, and combine these factors to establish an internal, proprietary score as a credit quality indicator (the “Prophet Score”). We evaluate the credit risk of our portfolio by grouping Prophet Scores into three buckets that range from A to C, with receivables having an “A” rating representing the highest credit quality and lowest likelihood of loss. Our risk and fraud team closely monitors the distribution of Prophet Scores for signs of changes in credit risk exposure and portfolio performance. Consumers’ Prophet Scores are updated real-time. The risk and fraud team also evaluates the integrity of the Prophet Score machine learning model at least annually and updates it as necessary.
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The amortized cost basis of our notes receivable by Prophet Score and year of origination as of September 30, 2026 and December 31, 2025 was as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Amortized cost basis by year of origination | |||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | Total | 2025 | 2024 | Total | |||||||||||||||||
| A | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| B | |||||||||||||||||||||||
| C | |||||||||||||||||||||||
| No score | |||||||||||||||||||||||
| Total amortized cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Our notes receivable are considered past due when the principal has not been received within one calendar day of when they are due in accordance with the agreed upon contractual terms. Any amounts delinquent after 90 days are charged off with an offsetting reversal to the allowance for credit losses through the provision for credit losses on our consolidated statements of operations and comprehensive income. Charged-off principal payments recovered after 90 days are recognized as a reduction to the allowance for credit losses in the period the receivable is recovered. The amortized cost basis of our notes receivable by delinquency status as of September 30, 2026 and December 31, 2025 was as follows:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Current | $ | $ | ||||||
| 1–28 days past due | ||||||||
| 29–56 days past due | ||||||||
| 57–90 days past due | ||||||||
| Total amortized cost | $ | $ | ||||||
We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on notes receivables from consumers. The allowance for credit losses is determined based on our current estimate of expected credit losses over the remaining contractual term and incorporates evaluations of known and inherent risks in our portfolio, historical credit losses, and current economic conditions. In estimating the allowance for credit losses, we utilize a roll rate analysis of delinquent and current notes receivable. A roll rate analysis is a technique used to estimate the likelihood that a loan progresses through various stages of delinquency and eventually charges off. We segment our notes receivable into delinquency statuses and semi-monthly vintages for the purpose of evaluating historical performance and determining the future likelihood of default. We regularly assess the adequacy of our allowance for credit losses and adjust the allowance as necessary to reflect changes in the credit risk of our notes receivable. Any adjustment to the allowance for credit losses is recognized in net income through the provision for credit losses on our consolidated statements of operations and comprehensive income. The increase in the allowance for credit losses during the three and nine months ended September 30, 2026 is generally consistent with the growth in our notes receivable, with any deviations a result of changes in expected performance on the current year portfolio compared to the prior year. While we believe our allowance for credit losses is appropriate based on the information available, actual losses could differ from our estimate.
The activity in the allowance for credit losses, including the provision for credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2026 and 2025 was as follows:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||
| Provision for credit losses | |||||||||||||||||
| Charge-offs | ( | ( | ( | ( | |||||||||||||
| Recoveries of charged-off receivables | |||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | |||||||||||||
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Net charge-offs against our allowance for credit losses by year of origination for the nine months ended September 30, 2026 was as follows:
| (in thousands) | 2026 | 2025 | 2024 | 2023 | 2022 | Total | ||||||||||||||
| Current period gross charge-offs | $ | ( | $ | ( | $ | $ | $ | $ | ( | |||||||||||
| Current period recoveries | ||||||||||||||||||||
| Current period net charge-offs | $ | ( | $ | ( | $ | $ | $ | $ | ( | |||||||||||
Note 4. Other Current Assets
As of September 30, 2026 and December 31, 2025, the balance of other current assets on the consolidated balance sheets comprised the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Delinquency fees receivable | $ | $ | ||||||
Merchant and partner income receivable | ||||||||
Receivables from originating partner | ||||||||
Prepaid expenses | ||||||||
Other | ||||||||
| Other current assets | $ | $ | ||||||
Delinquency fees are comprised of late payment fees and failed payment fees that we reasonably expect to collect from our consumers in future periods. Late payment fees are applied to delinquent principal installments. Failed payment fees are applied when a payment method fails when attempting to make an installment payment. Delinquency fees are subject to regulations within specific state jurisdictions and are considered to be the same number of days delinquent as the principal payment associated with the fee.
Merchant and partner income receivable primarily represents amounts due to us from our third-party partners and affiliates, including virtual card interchange amounts from the card-issuing bank that issues our virtual cards. Receivables from originating partner represents amounts due to us from our originating partner that will be used to settle outstanding merchant accounts payable on orders originated by them. We do not expect to incur losses on receivables from merchants, partners, or our originating partner; therefore, there is no allowance for credit losses recorded.
Note 5. Merchant Accounts Payable
Merchant accounts payable represents amounts owed to merchants related to orders placed on the Sezzle Platform.
Merchants have the ability to enroll, subject to our approval, into the Delayed Settlement Incentive Program (“DSIP”), which allows merchants to delay settlement from us in exchange for daily incentive payments. Within merchant accounts payable, $43.1 million and $42.3 million were recorded within the DSIP balance as of September 30, 2026 and December 31, 2025, respectively. The related interest expense was $0.5 1.4 4.5 % on an annual basis, compounding daily.
Delayed settlements are due on demand, up to $250,000 during any seven day period, at the request of the merchant. Any request larger than $250,000 is processed within to ten days . We reserve the right to impose additional limits on the program and make changes to the program without notice or restriction. These limits and changes to the program can include but are not limited to maximum balances, settlement amount limits, settlement frequency, the daily incentive rate for all or a portion of a merchant’s specific DSIP balance, and the ability for merchants to participate in the DSIP.
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Note 6. Other Current Liabilities
As of September 30, 2026 and December 31, 2025, the balance of other current liabilities on the consolidated balance sheets was comprised of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
Consumer down payments on unpurchased originating partner receivables(1) | $ | $ | ||||||
| Accrued operational expenses | ||||||||
| Accrued personnel expenses | ||||||||
| Other current liabilities | $ | $ | ||||||
(1)We are the servicer of receivables originated by our originating partner. The balance reported within other current liabilities primarily represents down payments collected from consumers prior to purchasing the related receivables from our originating partner.
Note 7. Line of Credit
We fund our consumer receivables through the use of a secured line of credit. We had an outstanding principal balance on our line of credit totaling $104.0 million and $141.3 million as of September 30, 2026 and December 31, 2025, respectively. Our revolving credit facilities are secured by a pool of pledged, eligible notes receivable. As of September 30, 2026 and December 31, 2025, we had pledged $297.2 million and $251.1 million of eligible gross notes receivable, respectively. We had an unused borrowing capacity of $169.3 million and $73.5 million as of September 30, 2026 and December 31, 2025, respectively.
Expenses related to our line of credit for the three and nine months ended September 30, 2026 and 2025 were as follows:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest expense on utilization | $ | $ | $ | $ | |||||||||||||
| Interest expense on unused daily amounts | |||||||||||||||||
| Amortization of debt issuance costs | |||||||||||||||||
For the three months ended September 30, 2026 and 2025, our line of credit carried an effective annual interest rate of 7.64 % and 11.99 %, respectively. For the nine months ended September 30, 2026 and 2025, our line of credit carried an effective annual interest rate of 9.06 % and 11.57 %, respectively.
2026 Credit Agreement
On May 7, 2026, our SPE amended and restated its secured revolving credit facility (the “2026 Credit Agreement”) with Bastion Funding VI, LP and other certain lenders. The 2026 Credit Agreement has a borrowing capacity of up to $300 million, with an option to increase the borrowing capacity by an additional $75 million, and a maturity date of May 7, 2029. The borrowing base is 92.5 % of pledged, eligible notes receivable, decreasing to 85 % based on the loss rates of the underlying collateral. Eligible notes receivable are defined as notes receivable from consumers from the United States or Canada that are less than 30 days past due and fall within certain term and principal criteria.
The 2026 Credit Agreement carries an interest rate of 3-month Term SOFR plus 3.86 %, with a 3-month Term SOFR floor rate of 2.00 %. Interest on borrowings is due on collection dates as specified in the loan agreement, typically monthly. We incur an unused facility fee of 0.5 % per annum on the difference between the maximum borrowing capacity and the amount of principal outstanding. We are also required to maintain a minimum outstanding balance of $50 million.
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The 2026 Credit Agreement contains customary representations, warranties, affirmative and negative covenants, events of default (including upon change of control or collateral loss rates exceeding pre-determined levels), and indemnification provisions in favor of the lenders. The negative covenants limit the SPE’s ability to incur or guarantee additional indebtedness; make investments or other restricted payments; acquire assets or form or acquire subsidiaries; create liens; sell assets; pay dividends or make other distributions or repurchase or redeem capital stock; engage in certain transactions with affiliates; enter into agreements that restrict the creation or incurrence of liens other than liens securing the new 2026 Credit Agreement and related documents; engage in liquidations, mergers, or consolidations; and make any material amendment, modification, or supplement to our credit guidelines or servicing guide, in each case subject to certain exceptions and qualifications. We are also subject to financial covenants, which limit our ability to make certain restricted payments and requires us to meet financial tests related to tangible net worth, liquidity, and leverage.
Prior to May 7, 2026, we had $153.5 million outstanding under our then existing revolving credit facility. In connection with the amendment and restatement of this prior credit facility, no amounts were repaid at closing, and the outstanding obligations were carried forward into the 2026 Credit Agreement. As of September 30, 2026, we were in compliance with all financial covenants under the 2026 Credit Agreement.
Note 8. Commitments and Contingencies
Loan Commitments
Through our strategic partnership program with our originating partner, we have a direct obligation to purchase receivables extended to consumers by our originating partner. During the three months ended September 30, 2026 and 2025, the total order value of loans purchased from our originating partner was $1,235.0 million and $942.2 million, respectively, and the carrying value of the receivables on those purchases totaled $949.7 million and $693.3 million, respectively. During the nine months ended September 30, 2026 and 2025, the total order value of loans purchased from our originating partner was $3,351.8 million and $2,469.7 million, respectively, and the carrying value of the receivables on those purchases totaled $2,575.8 million and $1,815.1 million, respectively. As of September 30, 2026 and December 31, 2025, the total order value of loans we had an obligation to purchase from our originating partner was $36.1 million and $27.3 million, respectively, and the carrying value of the receivables on those obligations totaled $27.8 million and $20.1 million, respectively.
Loss Contingencies
In the ordinary course of business, we are subject to various legal and regulatory matters, including inquiries, investigations, and demands from federal and state regulatory authorities concerning our business practices and compliance with applicable laws and regulations. The results of such matters often involve judgments, estimates, and inherent uncertainties, which cannot be predicted with certainty. In accordance with applicable accounting guidance, we establish an accrued liability for legal proceedings and claims when those matters present loss contingencies which are both probable and reasonably estimable. We disclose the nature of the contingency when management believes there is at least a reasonable possibility that the outcome may be material to our consolidated financial statements and, where feasible, an estimate of the possible loss. Based on currently available information, management does not believe that losses associated with any such matters are probable. While certain losses may be reasonably possible, we are unable to estimate the amount or range of potential losses due to the preliminary nature of the matters and uncertainties regarding their ultimate resolution.
Note 9. Net Income Per Share
Basic net income per share is computed by dividing net income for the period by the weighted-average number of shares outstanding during the period, including repurchases carried as treasury stock. Diluted net income per share is computed by dividing net income by the weighted-average number of shares outstanding adjusted for the dilutive effect of all potential shares of stock, including the exercise of employee stock options and assumed vesting of restricted stock units (if dilutive). Diluted net income per share was computed using the treasury stock method for stock options and restricted stock units.
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The following table presents the calculation of basic and diluted net income per share:
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | |||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||
Denominator(1): | |||||||||||||||||
| Basic shares: | |||||||||||||||||
| Weighted-average shares outstanding | |||||||||||||||||
Diluted shares(2): | |||||||||||||||||
| Stock options | |||||||||||||||||
| Restricted stock units | |||||||||||||||||
| Weighted-average shares outstanding | |||||||||||||||||
| Net income per share: | |||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||
(1) Effective March 28, 2025, we performed a 6 -for-1 stock split of the Company’s common stock, effected through a stock dividend. Share and per share amounts have been retroactively adjusted.
(2) Because their effect would have been anti-dilutive, 3 shares were excluded from the denominator of diluted net income per share for the nine months ended September 30, 2026.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. You should review the “Forward-Looking Statements”, “Factors Affecting Results from Operations”, and “Risk Factors” sections of this Form 10-Q, and the “Risk Factors” sections on this Form 10-Q and the 2025 Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis.
Overview
We are a purpose-driven payments company on a mission to financially empower the next generation. Launched in 2017, we have built a digital shopping and payments platform that provides consumers a flexible alternative to traditional credit. Through our platform, we aim to give consumers control of their spending, ways to save money, and access to responsible credit. Our vision is to create a digital ecosystem benefiting all of our stakeholders—including merchants, consumers, employees, communities, and investors—while continuing to drive ethical and sustainable growth.
The Sezzle Platform offers a payments solution for consumers in the United States and Canada that has the ability to instantly extend credit at the point-of-sale, allowing consumers to purchase and receive merchandise, while paying in installments over time. Consumers pay a portion of the purchase price at the point-of-sale as a down payment, and then pay off the remaining amount over time through scheduled payments. We also offer the ability to “pay-in-full” using the Sezzle Platform.
We provide consumers access to subscription products, short-term credit products at the point of sale, which may be free or subject to fees and/or interest, and access to interest-bearing loans with our third-party partner. We make a majority of our revenue from merchants, partners, consumer fees, and through our two paid versions of the core Sezzle experience: Sezzle Premium and Sezzle Anywhere. Sezzle Premium is a paid subscription service for consumers to access large, non-integrated premium merchants for a recurring fee. Sezzle Anywhere is a paid subscription service that allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions, for a recurring fee. Sezzle On-Demand allows consumers who are not subscribed to Sezzle Anywhere to use the Sezzle Platform at any merchant online or in-store (subject to the same restrictions as Sezzle Anywhere) in exchange for a finance charge, which is added to the consumer’s initial down payment. Additionally, through collaboration with third-party partners we enable our consumers access to interest-bearing monthly fixed-rate installment-loan products at participating merchants for larger-ticket items (up to $15,000), which extend up to 48 months.
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Factors Affecting Results of Operations
The following key factors have affected our financial performance and are expected to impact our performance going forward.
Sustainable Business Model
Our ability to profitably scale our business long-term is reliant on creating a transparent and sustainable ecosystem of products and services that add value for all of our stakeholders, including our consumers and merchants. We stand at the intersection of digital shopping and a need for credit for consumers who prefer to use credit alternatives other than credit cards or do not have access to traditional credit products. We provide consumers access to subscription products, short-term credit products at the point of sale, which may be free or subject to fees and/or interest, and access to interest-bearing loans with our third-party partners.
We earn fees from our merchants predominately based on a percentage of the merchant-specific volume plus a fixed fee per transaction, collectively called a “merchant processing fee.” We generally pay our merchants the full transaction value upfront, net of the merchant processing fee owed to us, and assume all costs associated with consumer payment processing, fraud, and payment default. We also earn income from partners, including interchange fees through our virtual card solution, promotional incentives with third parties, and marketing revenue earned from affiliates. Our merchants have access to a toolkit we provide that can assist in the growth of their businesses. This toolkit includes marketing placements, co-branded marketing, and exclusive promotions for consumers using Sezzle.
Acquisition, Monetization, and Retention of Consumers
Our ability to profitably scale our business relies on the acquisition, monetization, and retention of consumers on the Sezzle Platform. Changes in our consumer base have had, and will continue to have, an impact on our results of operations. The success of our business depends on a consumer base that actively engages with the Sezzle Platform. It is costly for us to acquire consumers; therefore, we aim to provide offerings to our consumers that keep them engaged within our ecosystem, such as our in-app product marketplace, price comparison feature, Payment Streaks, Earn tab, and Sezzle Up. High turnover in our consumer base could result in higher than anticipated overhead costs. There is a risk that we may lose consumers for a variety of reasons, including consumers shifting to competitors or other payment options, changes in the general macroeconomic climate, or changes in our underwriting.
Additionally, our results of operations are significantly impacted by our success in monetizing our consumer base who use the Sezzle Platform. A majority of our revenue is earned through consumers using the Sezzle Platform as a payment method when making purchases, especially when using the Sezzle Virtual Card, or when consumers choose to enroll in either of our optional, paid subscription services. There is a risk that we may be unable to successfully monetize consumers who actively engage with the Sezzle Platform, which could adversely impact our results of operations.
Product Innovation
Our expanding product suite enables us to further promote our mission of financially empowering the next generation, and the adoption of these products by our consumers is expected to drive operating and financial performance.
In 2025, we launched price comparison, the Rewards tab, and Sezzle Balance. Price comparison is a feature in our product marketplace that provides consumers the ability to compare the price of a product across a variety of different merchants and receive notifications if the price drops. The Rewards tab allows consumers the ability to save money through coupons, discounts, and playing games. Sezzle Balance allows consumers to preload funds into a digital wallet for a simplified repayment process.
In 2026, we launched Sezzle Mobile, SezzleCash, and Sezzle Send. Sezzle Mobile is a mobile phone plan embedded directly within the Sezzle app that offers unlimited talk, text, and 5G data on AT&T’s network, to our consumers. SezzleCash allows consumers to borrow funds and pay back the amount over time, plus a service fee. Sezzle Send is a peer-to-peer money transfer product available to all Sezzle consumers, enabling transfers to any recipient by phone number. Senders can fund a transfer in full or over five installments using Pay-in-5. We also partnered with a new long-term lending provider to expand and further integrate interest-bearing monthly fixed-rate installment-loan products into the Sezzle Platform.
We continue to seek out new partners to adopt our existing products and strategize on new products to complement our platform and core products, which we believe will have an impact on the continued growth of our business.
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Credit Risk Management
A critical component of our business model is the ability to effectively manage the repayment risk inherent in allowing consumers to pay over time, as we absorb the costs of all credit losses on the credit we extend to our consumers. The provision for credit losses is a significant component of our operating expenses, and excessive exposure to consumer repayment failure may impact our results of operations. To that end, a team of Sezzle engineers and risk specialists oversee our proprietary systems, identify transactions with an elevated risk of fraud, assess the credit risk of the consumer, assign spending limits, and manage the ultimate receipt of funds. Because our consumers settle a portion of the purchase value upfront at the point of sale, we believe repayment risk is more limited relative to other traditional forms of unsecured consumer credit.
We believe our systems and processes are currently effective and allow for predominantly accurate, real-time decisions in connection with the consumer transaction approval process. As the availability of data on consumer repayment behavior grows, we believe we can better optimize our systems and ability to make real-time consumer repayment capability decisions over time. Optimizing repayment capacity decisions of our current and future consumer base is a critical component of our operations, and the optimization of our risk management strategy may influence both our profitability and our provision for credit losses and related charge-offs. We also have a collection strategy where we utilize third-party collection agencies, in addition to our internal collections process, which further helps us lower our loss rates and manage credit risk.
Maintaining our Capital-Efficient Strategy
Maintaining our funding strategy and efficient use of capital is important for the ability to grow our business. We have designed a funding strategy that we believe allows us to scale our business and drive rapid growth. Due to the short-term nature of our products, we are able to recycle capital quickly and create a multiplier effect on our committed capital. We primarily rely on revolving credit facilities to fund our receivables over time, and do not currently require additional equity contributions to directly fund product growth.
General Economic Conditions and Regulatory Climate
Our business depends on consumers transacting with merchants, which is affected by changes in general economic conditions. For example, the retail sector is affected by macroeconomic conditions such as unemployment, interest rates, consumer confidence, economic recessions, public health crises, or extended periods of uncertainty or volatility—all of which may influence consumer spending, and suppliers’ and retailers’ focus and investment in outsourcing solutions. This may subsequently impact our ability to generate income. Additionally, in weaker economic environments, consumers may have less disposable income to spend, and may be less likely to purchase products by utilizing our services. This could also cause our credit losses to increase due to consumers’ failure to repay the loans originated on the Sezzle Platform. Our industry is further impacted by numerous consumer finance and protection regulations, both domestic and international, and the prospects of new regulations, including the cost to comply with such regulations, that have an ongoing impact on our results of operations and financial performance. In addition, the political and policy goals of elected and appointed officials may change over time, including as a result of the U.S. midterm elections in November 2026, which could affect the legislative, rulemaking, supervisory, and enforcement priorities applicable to consumer financial services, and the federal regulatory approach that has prevailed since 2025 may not continue or may be reversed, while state regulators and attorneys general have increased, and may continue to increase, their focus on BNPL providers.
Seasonality
We experience seasonality as a result of the spending patterns of our consumers. Total revenue and TTV in the fourth quarter have historically been strongest for us, in line with consumers generally spending more during the holiday shopping season. These seasonal volumes have typically been accompanied by increased charge-offs when compared to the prior three quarters. Increased charge-offs accompanying higher seasonal volumes typically result in an increase in the provision for credit losses on an absolute basis and as a percentage of TTV.
21
Key Operating Metrics
Total Transaction Volume
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Total Transaction Volume | $ | 1,398,249 | $ | 1,036,734 | $ | 361,515 | 34.9 | % | $ | 3,754,727 | $ | 2,755,220 | $ | 999,507 | 36.3 | % | |||||||||||||||||||
TTV is defined as the total dollar amount of transactions on the Sezzle Platform during the applicable period. TTV does not represent revenue earned by us, is neither a component of our income, nor included within our financial results prepared in accordance with U.S. GAAP. However, we believe that TTV is a useful operating metric to both us and our investors in assessing the volume of transactions that take place on the Sezzle Platform, including our Sezzle Premium and Sezzle Anywhere products, which is an indicator of the utilization and strength of the Sezzle Platform.
The increase in TTV was driven by increased usage of our Sezzle Anywhere and Sezzle Premium subscription products, as well as the launch of SezzleCash.
Beginning this quarter, TTV replaces Gross Merchandise Volume (“GMV”). Because our products have diversified, TTV includes platform volume related to SezzleCash and Sezzle Send, which GMV did not. Prior periods have been recast to reflect the expanded scope of TTV and adjustments to purchase-volume measurement.
Active Consumers and Active Subscribers
| As of | Change | ||||||||||||||||
| September 30, 2026 | December 31, 2025 | # | % | ||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||
| Active Consumers | 3,169 | 3,049 | 120 | 3.9 | % | ||||||||||||
| Active Subscribers | 955 | 670 | 285 | 42.6 | % | ||||||||||||
Active Consumers is defined as unique consumers who had at least one transaction through the Sezzle platform in the last twelve months. Active Subscribers is defined as unique consumers with an active subscription for either Sezzle Premium or Sezzle Anywhere as of the end of the period. The increase in Active Consumers and Active Subscribers is attributed to increased marketing and advertising initiatives, as well as new product releases.
22
Components of Results of Operations
Total Revenue
Our total revenue is classified into two categories, based on ASC recognition criteria: lending-based income and revenue from contracts with customers.
Lending-Based Income
Lending-based income relates to net origination fees on financing receivables we originate, premiums and discounts on financing receivables we purchase, and delinquency fees on financing receivables we hold. This is primarily comprised of merchant processing fees on orders that result in a financing receivable, delinquency fees, and other ancillary consumer fees, such as fees to reschedule installment due dates and nonrefundable fees assessed for using Sezzle On-Demand. Merchant processing fees are based on a percentage of the merchant-specific volume passing through our platform plus a fixed fee per transaction. Lending-based income, other than delinquency fees, is initially recorded as a reduction to notes receivable, net, within the consolidated balance sheets. Such income is subsequently recognized over the average duration of the related note receivable using the interest method. Delinquency fees include fees assessed to consumers who fail to make a timely principal payment or their payment method fails when attempting to make an installment payment, and are recognized at the time the fee is charged to the consumer, to the extent they are reasonably collectible.
Revenue from Contracts with Customers
We earn revenue from contracts with customers via partners. This revenue primarily includes interchange fees earned through our virtual card and promotional incentives with third parties. We have an agreement with a card-issuing partner to facilitate the issuance of virtual cards to be used by our consumers at checkout. We earn virtual card interchange fees when a consumer uses a virtual card to complete a purchase. Such interchange fees are established by the applicable payment network, are assessed to the merchant’s acquiring bank, and are remitted to the card-issuing partner that issues our virtual cards, which in turn remits to us the portion of those fees to which we are contractually entitled. Our customer in this arrangement is our card-issuing partner, and our performance obligation is to facilitate and process the underlying card transaction. The performance obligation is satisfied at the point in time the transaction is settled by the payment network, at which time the related revenue is recognized.
We earn promotional incentives from third-party platforms and brand partners for directing consumer traffic or transaction volume to specified merchants or brands. Revenue is recognized at the point in time the performance obligation is fulfilled, which is when a sale is made or traffic is directed to the merchant or brand. Consideration under these arrangements is generally determined based on the volume of consumer traffic or transaction activity in the period.
Revenue from contracts with customers primarily relates to subscription revenue and certain consumer fees. We earn revenue from two paid subscription services, Sezzle Premium and Sezzle Anywhere, for a fixed fee paid at the beginning of the subscription period. Sezzle Premium allows consumers to shop at select large, non-integrated premium merchants, along with other benefits. Sezzle Anywhere allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions. These performance obligations comprise a series of distinct services that are substantially the same; therefore, such revenue is recognized straight-line over the subscription period. All performance obligations related to these subscriptions are fully satisfied within one year of receiving payment. Payment received for performance obligations not yet satisfied are recorded as deferred revenue within the consolidated balance sheets until such performance obligations are satisfied.
Revenue from contracts with customers also includes revenue from fees assessed when consumers make a scheduled payment using a card or load funds into their Sezzle Balance. Such consumer fees relate to a single performance obligation to process the related payment, which is satisfied, and the related revenue is recognized, at the point in time the transaction is processed.
Personnel
Personnel primarily comprises all compensation paid to employees, contractor payments, employer-paid payroll taxes and employee benefits, equity- and incentive-based compensation, and other employee-related expenses.
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Transaction Expense
Transaction expense primarily comprises processing fees paid to third parties to process debit, credit and ACH payments received from consumers, merchant affiliate program and partnership fees, consumer communication costs, consumer and merchant support–related costs, and third-party fraud losses. We incur merchant affiliate program and partnership fees when consumers make purchases with merchants who either were referred by another merchant or are associated with partner platforms with which we have a contractual agreement. We incur consumer communication costs when we notify the consumer about the transaction status and upcoming payments. Communications are primarily made via text message and email directly to the consumer.
Third-Party Technology and Data
Third-party technology and data primarily includes cloud-based infrastructure, fraud prevention, obtaining underwriting data, and other third-party services to support our operations.
Marketing, Advertising, and Tradeshows
Marketing, advertising, and tradeshows primarily comprises costs related to marketing, sponsorships, advertising, attending tradeshows, promotions, and co-marketing the Sezzle brand with our merchants.
General and Administrative
General and administrative expenses are primarily comprised of professional service fees, depreciation and amortization, insurance premiums, travel, meals, and entertainment costs. Professional service fees include legal, compliance, audit, tax, and consulting services to support the growth of our company.
Provision for Credit Losses
We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on notes receivable from consumers. The allowance for credit losses is determined based on our current estimate of expected credit losses over the remaining contractual term and incorporates evaluations of known and inherent risks in our portfolio, historical credit losses, and current economic conditions. In estimating the allowance for credit losses, we utilize a roll rate analysis of delinquent and current notes receivable. A roll rate analysis is a technique used to estimate the likelihood that a loan progresses through various stages of delinquency and eventually charges off. We segment our notes receivable into delinquency statuses and semi-monthly vintages for the purpose of evaluating historical performance and determining the future likelihood of default. We regularly assess the adequacy of our allowance for credit losses and adjust the allowance as necessary to reflect changes in the credit risk of our notes receivable. Any adjustment to the allowance for credit losses is recognized in net income through the provision for credit losses on our consolidated statements of operations and comprehensive income. While we believe our allowance for credit losses is appropriate based on the information available, actual losses could differ from our estimate.
Net Interest Expense
We incur interest expense on a continuous basis as a result of draws on our revolving line of credit to fund consumer notes receivable as well as our Delayed Settlement Incentive Program, whereby merchants may delay their payments owed by us in exchange for daily incentive payments. The interest paid on borrowings under our line of credit is based on SOFR. Daily incentives paid to merchants under the Delayed Settlement Incentive Program are based on a fixed interest rate.
Income Tax Expense
Income tax expense consists of income taxes in various jurisdictions, primarily U.S. federal and state income taxes, and also the other foreign jurisdictions in which we operate. Tax effects of transactions reported in the consolidated financial statements consist of taxes currently due. Additionally, we record deferred taxes related primarily to differences between the basis of receivables, property and equipment, equity based compensation, and accrued liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
24
Results of Operations
Total Revenue
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Lending-based income | $ | 73,532 | $ | 59,315 | $ | 14,217 | 24.0 | % | $ | 199,063 | $ | 153,921 | $ | 45,142 | 29.3 | % | |||||||||||||||||||
Revenue from contracts with customers | 92,971 | 57,481 | 35,490 | 61.7 | % | 252,662 | 166,489 | 86,173 | 51.8 | % | |||||||||||||||||||||||||
| Total revenue | $ | 166,503 | $ | 116,796 | $ | 49,707 | 42.6 | % | $ | 451,725 | $ | 320,410 | $ | 131,315 | 41.0 | % | |||||||||||||||||||
Lending-based income primarily increased as a result of consumer-derived income, which totaled $62.1 million and $46.6 million for the three months ended September 30, 2026 and 2025, respectively, and $166.6 million and $114.3 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in consumer-derived income when comparing the three months ended September 30, 2026 and 2025 was driven by the increase in TTV, resulting in a higher number of consumer fees charged. The increase in consumer-derived income when comparing the nine months ended September 30, 2026 and 2025 was driven by the increase in TTV, resulting in a higher number of consumer fees charged. This contributed to approximately $37.4 million of the increase. In addition, higher fee prices contributed approximately $13.8 million to the increase. Lending-based income also included merchant- and partner-derived income of $11.5 million and $12.7 million for the three months ended September 30, 2026 and 2025, respectively, and $32.5 million and $39.6 million for the nine months ended September 30, 2026 and 2025, respectively.
Revenue from contracts with customers included merchant- and partner-derived income of $30.4 million and $20.9 million for the three months ended September 30, 2026 and 2025, respectively, and $83.1 million and $51.4 million for the nine months ended September 30, 2026 and 2025, respectively. The increase was a result of higher TTV on our virtual card products and promotional incentive revenue in the current period. Revenue from contracts with customers also increased as a result of consumer-derived revenue, which totaled $62.6 million and $36.6 million for the three months ended September 30, 2026 and 2025, respectively, and $169.5 million and $115.1 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in consumer-derived revenue when comparing the three months ended September 30, 2026 and 2025 was primarily driven by a greater number of consumers subscribed to Sezzle Premium and Sezzle Anywhere, contributing to approximately $17.1 million of the increase. The increase in consumer-derived revenue when comparing the nine months ended September 30, 2026 and 2025 was also primarily driven by a greater number of consumers subscribed to Sezzle Premium and Sezzle Anywhere, contributing to approximately $40.0 million of the increase.
Personnel
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Personnel | $ | 16,804 | $ | 14,320 | $ | 2,484 | 17.3 | % | $ | 46,196 | $ | 41,049 | $ | 5,147 | 12.5 | % | |||||||||||||||||||
The increase in personnel was driven by overall growth in our workforce, an increase in profit-sharing incentive plan expenses, and the issuance of additional equity-based compensation during the current year. Recorded within personnel, equity-based compensation totaled $2.9 million and $2.4 million for the three months ended September 30, 2026 and 2025, respectively, and $6.4 million and $5.2 million for the nine months ended September 30, 2026 and 2025, respectively.
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Transaction Expense
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Transaction expense | $ | 18,342 | $ | 17,435 | $ | 907 | 5.2 | % | $ | 57,600 | $ | 46,995 | $ | 10,605 | 22.6 | % | |||||||||||||||||||
The increase in transaction expense was driven by payment processing costs from a higher number of payments processed in the current year, in line with TTV. Payment processing costs include benefits of $3.7 million for the three months ended September 30, 2026, related to incentives earned through our payment network. Payment processing costs totaled $15.8 million and $16.4 million for the three months ended September 30, 2026 and 2025, respectively, and $52.6 million and $43.9 million for the nine months ended September 30, 2026 and 2025, respectively. The rest of transaction expense was comprised of affiliate and partner fees, third-party fraud losses, consumer communication, and consumer and merchant support–related costs.
Third-Party Technology and Data
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Third-party technology and data | $ | 6,496 | $ | 3,705 | $ | 2,791 | 75.3 | % | $ | 15,818 | $ | 10,507 | $ | 5,311 | 50.5 | % | |||||||||||||||||||
The increase in expense was driven by higher utilization of cloud-based infrastructure and other third-party services to support the scaling of the Sezzle Platform as a result of higher TTV and our expanded suite of product offerings.
Marketing, Advertising, and Tradeshows
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Marketing, advertising, and tradeshows | $ | 15,893 | $ | 8,775 | $ | 7,118 | 81.1 | % | $ | 46,535 | $ | 22,893 | $ | 23,642 | 103.3 | % | |||||||||||||||||||
The increase in marketing, advertising, and tradeshow costs was from the continued expansion of initiatives to promote consumer acquisition, retention, and engagement, including the issuance of Sezzle Spend and Sezzle Points to consumers. The increase was also a result of testing different levels of marketing effort to determine optimal strategies. We expect to realize the benefits of this marketing investment in future periods.
General and Administrative
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| General and administrative | $ | 7,051 | $ | 4,823 | $ | 2,228 | 46.2 | % | $ | 15,379 | $ | 11,800 | $ | 3,579 | 30.3 | % | |||||||||||||||||||
The increase was primarily from higher professional service fees related to the overall growth of the business and investment in Company strategic projects, offset against lower operating costs associated with our loan origination partner funding virtual card transactions.
26
Provision for Credit Losses
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | $ | 37,666 | $ | 32,177 | $ | 5,489 | 17.1 | % | $ | 81,949 | $ | 65,624 | $ | 16,325 | 24.9 | % | |||||||||||||||||||
The increase in the provision for credit losses is generally consistent with the growth in TTV, with any deviations a result of changes in expected performance on the current year portfolio compared to the prior year. As a percentage of total revenue, the provision for credit losses was 22.6% and 27.5% for the three months ended September 30, 2026 and 2025, respectively, and 18.1% and 20.5% for the nine months ended September 30, 2026 and 2025, respectively.
We expect that increases in TTV and revenue will likely result in higher absolute amounts of credit losses. Additionally, we expect changes in our underwriting strategy to affect the amount of credit losses as a percentage of total revenue. However, tightening or loosening our credit standards that apply to our consumers may impact both total revenue and credit losses to different extents, potentially causing changes in credit losses as a percentage of total revenue. Our underwriting strategy continues to evolve and, therefore, it is challenging to predict the effect changes in our underwriting would have on the amount of future credit losses as a percentage of total revenue.
Net Interest Expense
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Net interest expense | $ | 2,781 | $ | 3,923 | $ | (1,142) | (29.1) | % | $ | 9,046 | $ | 10,338 | $ | (1,292) | (12.5) | % | |||||||||||||||||||
Net interest expense decreased as a result of entering into a new line of credit agreement on May 7, 2026, which carries a lower interest rate than our previous line of credit.
Income Tax Expense
| For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Income tax expense | $ | 13,591 | $ | 4,961 | $ | 8,630 | 174.0 | % | $ | 39,224 | $ | 20,871 | $ | 18,353 | 87.9% | ||||||||||||||||||||
Our effective income tax rate for the three months ended September 30, 2026 and 2025 was 22.1% and 15.7%, respectively. Our effective income tax rate for the nine months ended September 30, 2026 and 2025 was 21.9% and 18.8%, respectively. Income tax expense includes $2.0 million and $2.5 million of excess tax benefits recorded on equity-based compensation for the three months ended September 30, 2026 and 2025, respectively, and $5.6 million and $6.9 million of excess tax benefits recorded on equity-based compensation for the nine months ended September 30, 2026 and 2025, respectively.
27
Liquidity and Capital Resources
For the nine months ended September 30, 2026 and 2025, our net income was $139.9 million and $90.4 million, respectively. As of September 30, 2026, our principal sources of liquidity were cash, cash equivalents, restricted cash, the unused borrowing capacity on our line of credit, and certain cash flows from operations.
As of September 30, 2026, we had cash and cash equivalents of $70.1 million, compared to $64.1 million as of December 31, 2025. Our cash and cash equivalents were held primarily for working capital requirements and the continued investment in our business. As of September 30, 2026 and December 31, 2025, we had restricted cash of $37.7 million and $38.5 million, respectively.
As of September 30, 2026 and December 31, 2025, we had working capital of $326.2 million and $262.1 million, respectively. The increase in working capital was primarily a result of the growth in cash and cash equivalents, as well as notes receivable, net, driven by higher TTV. Additionally, as of September 30, 2026 and December 31, 2025 we had an unused borrowing capacity on our line of credit of $169.3 million and $73.5 million, respectively.
We believe that our existing cash, cash equivalents, restricted cash, our unused borrowing capacity on our line of credit, and certain cash flows from operations will be sufficient to meet our working capital and investment requirements beyond the next twelve months.
Factors Affecting Liquidity and Capital Resources
While we believe that our business will be able to generate enough cash flow from operations and that future borrowings will be available to us in an amount sufficient to enable us to fund our liquidity needs, we cannot provide any assurance. Our ability to meet these needs depends on current economic conditions and other factors, many of which are beyond our control. Material factors that could affect our liquidity and capital resources are consumer delinquencies and defaults, declines in consumer purchases, an inability to access fundraising, macroeconomic conditions, material changes in interest rates, and instability of financial institutions. If our capital is insufficient to satisfy our liquidity requirements, we will need to seek additional equity or debt financing. In an increasing interest rate environment, our ability to raise equity or incur debt could be limited, our borrowing costs could increase, we could be subject to tighter covenants, or we could be required to pledge additional collateral as security. If we are unable to raise additional capital or generate the necessary cash flows, our results of operations and financial condition could be materially and adversely impacted.
Cash Flows
The following table summarizes our cash flows:
| For the nine months ended September 30, | ||||||||
| (As restated) | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Net Cash Provided from Operating Activities | $ | 227,930 | $ | 139,274 | ||||
| Net Cash Used for Investing Activities | (145,591) | (85,759) | ||||||
| Net Cash Used for Financing Activities | (76,720) | (17,978) | ||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 5,619 | $ | 35,537 | ||||
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Operating Activities
Our largest source of operating cash is receipts from consumers, and our largest use of operating cash is payments to merchants. Other primary uses of cash from operating activities are for personnel, payment processing costs, and interest payments.
During the nine months ended September 30, 2026, net cash provided from operating activities totaled $227.9 million, driven by our $139.9 million net income adjusted for $89.7 million of non-cash adjustments such as credit losses, equity based compensation, deferred income taxes, and depreciation and amortization, offset against cash outflows of $1.7 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $12.8 million increase in other assets related to the timing of payments to taxing authorities, the timing of receipts from merchants and vendors, as well as higher delinquency fees assessed in the current period not yet collected. Offset against this was a $5.7 million increase in other liabilities, driven by timing of payments to vendors and an increase in collections of consumer down payments on unpurchased originating partner receivables. During the nine months ended September 30, 2026, cash payments for personnel-related expenses totaled $42.5 million, cash payments for processing costs totaled $51.1 million, cash interest payments totaled $11.8 million, and cash paid for income taxes totaled $47.3 million.
During the nine months ended September 30, 2025, net cash provided from operating activities totaled $139.3 million, driven by our $90.4 million net income adjusted for $74.1 million of non-cash adjustments such as credit losses, equity based compensation, deferred income taxes, and depreciation and amortization, offset against cash outflows of $25.3 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $15.1 million increase in other assets related to the timing of payments to taxing authorities and vendors, as well as higher delinquency fees assessed in the current period not yet collected. A $11.4 million decrease in merchant accounts payable related to the timing of payments to merchants and a $1.1 million decrease in other payables related to the timing of payments to vendors and taxing authorities also contributed to our cash outflows from operating activities. During the nine months ended September 30, 2025, cash payments for personnel-related expenses totaled $40.7 million, cash payments for processing costs totaled $47.7 million, cash interest payments totaled $11.2 million, and cash paid for income taxes totaled $25.3 million.
Investing Activities
Net cash used for investing activities was $145.6 million and $85.8 million for the nine months ended September 30, 2026 and 2025, respectively. Cash outflows for investing activities were from purchases and originations of notes receivable, net of repayments; purchasing computer equipment; and payments of salaries to employees who create capitalized internal-use software.
Financing Activities
Net cash used for financing activities during the nine months ended September 30, 2026 and 2025 was $76.7 million and $18.0 million, respectively.
Our net cash used for financing activities during the nine months ended September 30, 2026 was primarily driven by repurchases of common stock totaling $39.4 million, net payments to our line of credit totaling $37.3 million, and payment of debt issuance costs totaling $1.2 million related to our new line of credit. Repurchases of common stock made under our stock repurchase plan totaled $28.0 million, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans. Offset against these cash outflows were proceeds from stock option exercises totaling $1.1 million.
Our net cash used for financing activities during the nine months ended September 30, 2025 was comprised of repurchases of common stock totaling $34.6 million, offset against net proceeds from our line of credit totaling $13.0 million and proceeds from stock option exercises totaling $3.7 million. Repurchases of common stock were made under our stock repurchase plan totaled $23.5 million, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vesting restricted stock units issued under our equity incentive plans.
Line of Credit
Refer to Note 7. Line of Credit on the accompanying Notes to the Consolidated Financial Statements for discussion about our lines of credit.
29
Commitments and Contingencies
Refer to Note 8. Commitments and Contingencies on the accompanying Notes to the Consolidated Financial Statements for discussion about our direct obligation to purchase loans from our originating partner and loss contingencies.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. These principles require us to make certain estimates and judgments that affect the amounts reported in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that management believes to be reasonable. Our actual results may differ materially from our estimates because of certain accounting policies requiring significant judgment. To the extent that there are material differences between our estimates and actual results, our future consolidated financial statements will be affected.
We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to our allowance for credit losses. We believe this estimate has the greatest risk of affecting our consolidated financial statements; therefore, we consider this to be our critical accounting policy and estimate. Refer to Note 1. Principal Business Activity and Significant Accounting Policies within the Notes to Consolidated Financial Statements and “Critical Accounting Policies and Estimates” within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K for a complete discussion of our significant accounting policies and critical accounting estimates.
New Accounting Pronouncements
Refer to Note 1. Significant Accounting Policies on the accompanying notes to our consolidated financial statements for discussion about recent accounting pronouncements.
Off Balance Sheet Arrangements
As of September 30, 2026, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources, except as follows:
Our originating partner originates and holds certain loans that are not recorded on our consolidated balance sheets. We service these loans and are required to purchase them from our originating partner when they are charged off. We maintain cash collateral with our originating partner in support of these obligations. We also pay our originating partner a variable fee based on the outstanding balance of these loans, and we are required to purchase the loans that remain outstanding upon expiration or termination of the program. As a result, these arrangements may require us to use cash, including if the credit performance of the loans deteriorates.
30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks during our ordinary course of business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices, interest rates, and foreign currency exchange rates. Our primary risk exposure is the result of fluctuations in interest rates and foreign currency exchange rates. Management establishes policies and programs around our investing and funding activities in order to mitigate market risks. We continuously monitor risk exposures.
Interest Rate Risk
We are exposed to interest rate risk primarily from our revolving line of credit. As of September 30, 2026 and December 31, 2025, we had a revolving line of credit facility of $300 million and $225 million, respectively, available to us. We are obligated to pay interest on borrowings under our line of credit as well as other customary fees, including an unused commitment fee. Borrowings under our line of credit bear interest at a floating rate based on the U.S. Federal Reserve’s Secured Overnight Financing Rate (“SOFR”); therefore, we are exposed to risks related to fluctuations in SOFR to the extent of our outstanding borrowings. As of September 30, 2026 and December 31, 2025, we had $104.0 million and $141.3 million, respectively, outstanding under our line of credit. For the nine months ended September 30, 2026, a 100 basis point hypothetical adverse change in SOFR during the year would have resulted in an additional $1.0 million of interest expense recorded within net interest expense on our consolidated statements of operations and comprehensive income, based on actual borrowings on our line of credit during the nine months ended September 30, 2026.
Interest rates may also adversely impact our consumers’ spending levels and ability to repay outstanding amounts owed to us. Higher interest rates could lead to larger payment obligations for consumers under other lenders, such as mortgages and credit cards, which may reduce our consumers’ ability to remain current on their installment plans with us. This may lead to increased delinquencies, charge-offs, and credit losses on our notes receivable, which would have an adverse effect on our net income.
Foreign Currency Risk
During the ordinary course of business, we enter into certain transactions denominated in the Canadian dollar, which exposes us to foreign currency exchange rate risk. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to revaluing monetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded. We considered historical trends in foreign currency exchange rates and concluded it was reasonably possible that a 10% change in exchange rates could occur in the near term. If a hypothetical 10% foreign currency exchange rate change was applied to total monetary assets and liabilities denominated in currencies other than the functional currency of the entities in which they were recorded at the balance sheet date, it would not have a material impact on our financial results. At this time, we have not entered into derivatives or other financial instrument transactions in an attempt to hedge our foreign currency exchange risk due to its immaterial nature. In the future, we may enter into such transactions should our exposure become more substantial.
We are also subject to foreign currency exchange risk related to translation, as a number of our subsidiaries have functional currencies other than the U.S. Dollar. Translation from these foreign currencies to the U.S. Dollar is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss on the consolidated balance sheets. A hypothetical adverse 10% change in all of our subsidiaries’ functional currencies against the U.S. Dollar compared to the exchange rate during the nine months ended September 30, 2026 and 2025 would have resulted in an additional foreign currency translation adjustment of approximately $1.5 million.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of September 30, 2026, Sezzle conducted an evaluation, under supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act).
Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level, due to the material weakness described in Management’s Annual Report on Internal Control over Financial Reporting as disclosed in the Company’s 2025 Form 10-K. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Management previously identified a material weakness in internal control over financial reporting as we did not design and maintain effective controls to evaluate the appropriate classification of the cash flows related to our notes receivable. This material weakness resulted in the restatement of our Consolidated Statement of Cash Flows for the year ended December 31, 2024, as well as a material misclassification of the Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024, six months ended June 30, 2025 and 2024, and nine months ended September 30, 2025 and 2024. If not remediated, this material weakness could result in misstatements of the aforementioned cash flow statements or related disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
Remediation Plan
To remediate the material weakness in its internal control over financial reporting related to the classification of notes receivable in our Consolidated Statements of Cash Flows, we continue to execute upon the enhanced control over the classification of our notes receivable we introduced during the three months ended June 30, 2026. While the control we implemented has now operated as designed over the previous two quarters, the material weakness cannot be considered remediated until the control has operated for a sufficient period of time and management has concluded, through testing, that the control is operating effectively. We expect to conclude on the operating effectiveness of this control next quarter.
Changes in Internal Control Over Financial Reporting
As of September 30, 2026, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated our internal control over financial reporting. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that no changes in our internal control over financial reporting occurred during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as set forth below and discussed in Note 8. Commitments and Contingencies on the accompanying notes to our consolidated financial statements, we are not currently involved in any material legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party or of which any of their property is subject.
On June 9, 2025, we filed a lawsuit against Shopify, Inc., in the U.S. District Court for the District of Minnesota asserting federal and state antitrust violations. The lawsuit alleges that Shopify has been engaging and continues to engage in monopolistic and anticompetitive business practices in order to stifle competition for “buy now, pay later” service options on Shopify’s e-commerce platform. Sezzle is seeking an injunction to prevent Shopify from continuing its anticompetitive conduct and to restore competition and consumer choice. Sezzle is also seeking damages, which could be tripled under applicable laws. Shopify denied the allegations and filed a motion to dismiss the complaint and a hearing on such motion was held on December 8, 2025. On May 11, 2026, the court granted in part and denied in part Shopify’s motion. The court dismissed, without prejudice, Sezzle’s claim of unlawful tying under Section 1 of the Sherman Act and its parallel claim under Minnesota antitrust law to the extent that claim asserts the same tying theory. The court denied the motion in all other respects, and Sezzle’s remaining claims, including its claims of monopolization and attempted monopolization under Section 2 of the Sherman Act, unlawful restraint of trade under Section 1 of the Sherman Act, and its parallel claims under Minnesota antitrust law and the Minnesota Deceptive Trade Practices Act, are proceeding. The outcome of this litigation, including the timing of any resolution, cannot be predicted with certainty.
While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will have a material adverse effect on our consolidated balance sheets, operations and comprehensive income, or cash flows.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:
Our applications for a national bank charter and federal deposit insurance may be delayed, denied, or approved subject to conditions, and even if approved, we may not realize the anticipated benefits of operating a bank.
On October 22, 2026, we submitted an application to the Office of the Comptroller of the Currency (the “OCC”) to charter a de novo national bank, Sezzle Bank, N.A. (the “Bank”), and an application to the Federal Deposit Insurance Corporation (the “FDIC”) for deposit insurance. We also expect to apply to the Board of Governors of the Federal Reserve System for approval for Sezzle Inc. to become a bank holding company. Regulatory approval of these applications is subject to a number of requirements, including minimum capital and liquidity requirements, compliance and risk management requirements, management and governance standards, and a determination that the Bank’s proposed activities are legally permissible, among others. The applications are also subject to public comment, and third parties may oppose them. Our applications may be denied, regulatory approval may be delayed or subject to conditions that we are unable or unwilling to satisfy, and there may be changes in applicable laws, regulatory policy, or supervisory expectations, including as a result of changes in agency priorities, that affect the review of our applications or the Bank’s operations. The Bank will not commence operations unless and until all required approvals are received and any conditions are satisfied, and until then we will continue to rely on our existing bank partner relationships.
If the Bank opens, it will be subject to extensive regulation, supervision, and examination by the OCC and the FDIC, and will introduce additional operational complexity, including the need to build and maintain bank-specific infrastructure, risk management, compliance, and reporting capabilities. Establishing and operating the Bank will require us to contribute significant capital to the Bank and is likely to result in other new costs, which may be significant and could reduce or offset some or all of the anticipated benefits of the bank charter. In addition, we have incurred, and will continue to incur, costs in pursuing the charter, which we may not recover if our applications are not approved or if we decide not to pursue them. For these and other reasons, we may be unable to fully realize the benefits, efficiencies, cost reductions, or funding advantages that we expect from obtaining a bank charter, and our business, financial condition, and results of operations may be adversely affected.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2026, we withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans. The table below presents information with respect to such common stock purchases made by us during the three months ended September 30, 2026, as follows:
| Issuer Purchases of Equity Securities | ||||||||||||||
| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs(2) | ||||||||||
| July 1, 2026 through July 31, 2026 | — | $ | — | — | $ | 72,037,469 | ||||||||
| August 1, 2026 through August 31, 2026 | 51,886 | 118.65 | — | 72,037,469 | ||||||||||
| September 1, 2026 through September 30, 2026 | 3,378 | 118.04 | — | 72,037,469 | ||||||||||
| Total | 55,264 | $ | 118.61 | — | $ | 72,037,469 | ||||||||
(1)55,264 shares were surrendered to satisfy minimum statutory tax obligations under our equity incentive plans.
(2)On December 12, 2025, the Board of Directors authorized a stock repurchase program to repurchase up to $100 million of our outstanding shares. This program commenced on December 12, 2025 and does not have a fixed expiration date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1(c) and/or non-Rule 10b5-1 Trading Arrangements
During the quarter ended September 30, 2026, none of the officers (as defined in Exchange Act Rule 16a-1(f)) or directors of the Company adopted or terminated
On August 27, 2026 , Justin Krause , the Company’s Principal Accounting Officer , adopted a Rule 10b5-1 trading arrangement (the “Krause Plan”) that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The Krause Plan provides for the potential sale of up to 36,000 shares of the Company’s common stock, between an estimated start date of November 26, 2026, until termination of the Krause Plan on November 25, 2027 , or earlier if all transactions under the Krause Plan are completed.
However, our officers (as defined in Exchange Act Rule 16a-1(f)) and directors may adopt 10b5-1 Plans or non-Rule 10b5-1 trading arrangements in the future.
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ITEM 6. EXHIBITS
| Exhibit | Incorporated by Reference | Filed | ||||||||||||||||||||||||||||||
| Number | Exhibit Description | Form | File Number | File Date | Herewith | |||||||||||||||||||||||||||
10.1 | 8-K | 001-41781 | 1/29/2026 | |||||||||||||||||||||||||||||
| 10.2 | 8-K | 001-41781 | 5/12/2026 | |||||||||||||||||||||||||||||
| 10.3 | 8-K | 001-41781 | 5/12/2026 | |||||||||||||||||||||||||||||
| 10.4 | X | |||||||||||||||||||||||||||||||
| 10.5 | X | |||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||
| 32.1 | X | |||||||||||||||||||||||||||||||
| 32.2 | X | |||||||||||||||||||||||||||||||
| 101.INS | XBRL Instance Document | X | ||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||||||||||||||
* Indicates a management contract or compensation plan, contract, or arrangement.
35
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 thereunto duly authorized.
| SEZZLE INC. | ||||||||
Dated: November 4, 2026 | By: | /s/ Charles Youakim | ||||||
| Charles Youakim | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| By: | /s/ Lee Brading | |||||||
| Lee Brading | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
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Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Charles Youakim, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Sezzle Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’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 registrant’s internal control over financial reporting.
Date: November 4, 2026
/s/ Charles Youakim
Charles Youakim
Principal Executive Officer
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Lee Brading, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Sezzle Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’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 registrant’s internal control over financial reporting.
Date: November 4, 2026
/s/ Lee Brading
Lee Brading
Principal Financial Officer
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
AS ADOPTED PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Sezzle Inc., a Delaware corporation (“the Company”), for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: November 4, 2026
/s/ Charles Youakim
Charles Youakim
Principal Executive Officer
Exhibit 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
AS ADOPTED PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Sezzle Inc., a Delaware corporation (“the Company”), for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: November 4, 2026
/s/ Lee Brading
Lee Brading
Principal Financial Officer
Exhibit 10.4
Certain identified information in this document has been excluded because it is both (i) not material and (ii) is the type of information that the Company customarily and actually treats as private or confidential. This document has been marked with “[***]” to indicate where omissions have been made.
WEBBANK
and
SEZZLE INC.
SECOND AMENDED AND RESTATED MARKETING AND SERVICING AGREEMENT
Dated as of August 12, 2026
SCHEDULES AND EXHIBITS
SCHEDULE 1 Definitions
SCHEDULE 2 Preapproved Marketing
SCHEDULE 5(l) FBO Deposit Account Servicing Terms
SCHEDULE 6(a)(1) Program Governance Committee
SCHEDULE 6(a)(2) Compliance Management System
SCHEDULE 6(a)(3) BSA Program
SCHEDULE 6(a)(4) ID Theft Red Flags Program
SCHEDULE 6(a)(5) Privacy Program
SCHEDULE 6(a)(6) Complaint Management Program
SCHEDULE 6(a)(7) Information Security Program
SCHEDULE 6(a)(8) Business Continuity Program
SCHEDULE 6(a)(9) Vendor Management Program
SCHEDULE 6(a)(10) Unclaimed Property Program
SCHEDULE 14 Payments
SCHEDULE 22 Disbursement Costs
EXHIBIT A Required Controls
This SECOND AMENDED AND RESTATED MARKETING AND SERVICING AGREEMENT (this “Agreement”), dated as of August 12, 2026 (“Effective Date”), is made by and between WEBBANK, an FDIC-insured, Utah state-chartered industrial bank having its principal location in Salt Lake City, Utah (“Bank”), and SEZZLE INC., a Delaware corporation, having its
principal location in Minneapolis, Minnesota
(“Company”).
principal location in Minneapolis, Minnesota
(“Company”).
WHEREAS, Bank is in the business of originating, providing and financing both consumer and commercial credit products and deposit products throughout the United States;
WHEREAS, Company has developed a technology-enabled payments platform that facilitates payments between consumers and merchants for retail purchases made through Company’s merchant network or directly via Company’s online and mobile platforms;
WHEREAS, Bank desires to: (i) provide credit and extend Loans to qualified Borrowers who reside in the Territory to finance retail purchases made by Borrowers on Company’s merchant network or Company’s online and mobile platforms; (ii) issue Cards to disburse Loan Proceeds associated with payments made to Merchants; and (iii) provide access to Deposit Accounts to qualified Applicants;
WHEREAS, the Parties desire that Bank (i) provide credit and extend Loans and Cards and (ii) provide Deposit Accounts, in each case to qualified Applicants residing in the Territory submitting Applications through Company’s online and mobile platform, and that Company provide to Bank, and Bank receive from Company, certain marketing, Application processing, and account processing services in connection with the Applications, Loans and Deposit Accounts;
WHEREAS, the Parties have entered into that certain Amended and Restated Marketing and Servicing Agreement, dated as of September 26, 2024, setting forth each Party’s rights and obligations related to the offering of a loan program (the “Existing Program Agreement”); and
WHEREAS, the Parties now wish to amend and restate the Existing Program Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions and mutual covenants and agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Company mutually agree as follows:
1. Definitions; Effectiveness.
(a) The capitalized terms used in this Agreement shall be defined as set forth in Schedule 1, and the rules of construction set forth in Schedule 1 shall apply to this Agreement.
(b) This Agreement shall be effective as of the Effective Date, and as of the Effective Date shall supersede and replace the Existing Program Agreement. This Agreement shall not operate as to render invalid or improper any action heretofore taken under the Existing Program Agreement.
2. Marketing of the Program, Loans and Deposit Accounts. At its own cost, Company shall produce the Cards and promote and otherwise market the Program, Loans and Deposit Accounts on behalf
1
of and in the name of Bank. Company shall be responsible for producing all documentation used in the Program, including, but not limited to, all Marketing Materials, Applications, Loan Agreements, Deposit Account Agreements, adverse action notices, customer disclosures, billing statements, and collection notices, subject to Bank’s review and approval as further described below. In performing such promotion and other marketing services, Company may use any sales channel, form of media or media channel that has been approved by Bank, provided that Company shall discontinue the use of any sales channel, form of media or media channel if directed to do so by Bank to the extent that a change is required by Applicable Laws, necessitated by safety and soundness considerations, or required by the direction of a Regulatory Authority. The design of the Card, Loans and Deposit Accounts and any changes thereto, are subject to the prior approval of Bank. Bank agrees that Company may refer to Bank and the Program in Marketing Materials, upon the condition that any Marketing Materials referencing Bank or the Program or associated with or relating to the Program (and any changes in such materials) must receive the prior written approval of Bank, which is not to be unreasonably withheld, conditioned or delayed. Marketing Materials shall be approved and changed only (a) with the prior written consent of both Parties, or (b) upon written notice provided by Bank to Company to the extent that a change is required by Applicable Laws, necessitated by safety and soundness
considerations, or required by the direction of a Regulatory Authority. Company shall ensure that all Marketing Materials, including the Card design, comply with Applicable Laws and are accurate and not misleading in all material respects. The requirements of this Section 2 apply to both Company-created Marketing Materials and Merchant-created Marketing Materials. The terms set forth in Schedule 2 are incorporated into this Section 2 as if fully set forth herein.
considerations, or required by the direction of a Regulatory Authority. Company shall ensure that all Marketing Materials, including the Card design, comply with Applicable Laws and are accurate and not misleading in all material respects. The requirements of this Section 2 apply to both Company-created Marketing Materials and Merchant-created Marketing Materials. The terms set forth in Schedule 2 are incorporated into this Section 2 as if fully set forth herein.
3. Extension of Credit; Establishment of Deposit Accounts.
(a) Bank agrees to make Loans available, in accordance with the Credit Policy, to qualifying Applicants located in the Territory. Certain Loans may be disbursed via multiple Loan Disbursements, the sum of which will equal the maximum Loan amount (“Maximum Loan Amount”) extended to each Borrower (such Loans are defined as “Multiple Disbursement Loans,” while Loans with a single disbursement are defined as “Single Disbursement Loans”). All Loans shall be originated by Bank using the Company’s services described herein. Bank will fund extensions of credit that meet the underwriting criteria of the Credit Policy utilizing Company’s, or its Bank approved designee’s, issuance, scoring and authorization and Settlement system. Company acknowledges that approval of an Application involves, among other things, the establishment of a Loan with Bank. A Loan creates a creditor-borrower relationship between Bank and Borrower which involves Bank’s extension of credit, the disbursement of proceeds, and the right to collect payments. Bank, in its sole discretion, may deny any Application in good faith and in accordance with Applicable Laws.
(b) Bank agrees to establish one or more omnibus deposit accounts (each, an “FBO Deposit Account”) to hold Deposit Funds. The FBO Deposit Account with respect to the Sezzle Balance Deposit Account Program shall be titled “WebBank as agent for the benefit of its Sezzle Balance customers”. The Parties agree that all Deposit Accounts established pursuant to the terms of this Agreement shall be established and maintained as sub-accounts of the FBO Deposit Account in accordance with the terms of this Agreement, including this Section 3(b), Section 5(l) and Schedule 5(l). All funds deposited or transferred into the FBO Deposit Account must be in U.S. Dollars. Neither the FBO Deposit Account nor the Deposit Accounts shall accrue interest. The FBO Deposit Account shall be used solely to hold funds of Accountholders. The Parties acknowledge and agree that all funds held in the FBO Deposit Account belong to Accountholders; will be held by Bank as agent for the benefit of Accountholders; shall not be paid at any time
2
to Company; and shall be kept separate by Bank from all other accounts maintained by Bank for any Person. Company shall have no right, title, or interest in the FBO Deposit Account, or the funds held therein, or any Deposit Account.
(c) Bank agrees to make Deposit Accounts available in accordance with the Deposit Policy to qualifying Applicants located in the Territory. All Deposit Accounts shall be
established by Bank using Company’s services described herein. Company acknowledges that the establishment of a Deposit Account creates a debtor (Bank) - creditor
(Accountholder) relationship between Bank and the respective Accountholder, which includes Bank holding funds and originating transactions from or to the Deposit Accounts. Bank, in its sole discretion, may deny any Application for a Deposit Account in good faith in accordance with Applicable Laws.
established by Bank using Company’s services described herein. Company acknowledges that the establishment of a Deposit Account creates a debtor (Bank) - creditor
(Accountholder) relationship between Bank and the respective Accountholder, which includes Bank holding funds and originating transactions from or to the Deposit Accounts. Bank, in its sole discretion, may deny any Application for a Deposit Account in good faith in accordance with Applicable Laws.
4. Documents, Credit Policy and Deposit Policy. The Bank will offer (i) Loans in accordance with the Credit Policy, the form of Application, including disclosures required by Applicable Laws, and the form of Loan Agreement and privacy policy and (ii) Deposit Accounts in accordance with the Deposit Policy, the form of Application, including disclosures required by Applicable Laws, and the form of Deposit Account Agreement and privacy policy (collectively, the “Finance Materials”). The initial form of each of the Finance Materials shall be agreed in writing by the Parties, and multiple versions may be in effect at any time. The Credit Policy and/or the Deposit Policy may be changed (a) with the prior written consent of both Parties, or (b) by Bank upon at least thirty (30) days’ written notice provided by Bank to Company (unless a shorter period is required by Applicable Laws, in which case Bank shall provide notice as soon as reasonably practicable) to the extent that a change is (i) required by Applicable Laws, (ii) necessitated by safety and soundness considerations, or (iii) required by the direction of a Regulatory Authority. Notwithstanding anything to the contrary in this Agreement, no change may be made to either the Credit Policy or the Deposit Policy unless each such change has been approved by Bank’s board of directors or its designee, in its sole discretion. The Finance Materials other than the Credit Policy and the Deposit Policy may be changed (a) with the prior written consent of both Parties, (b) upon written notice provided by Bank to Company to the extent that a change is required by Applicable Laws, necessitated by safety and soundness considerations, or (c) required by the direction of a Regulatory Authority. The Parties acknowledge that each Loan Agreement and all other documents referring to the creditor for the Program shall identify Bank as the creditor for the Loans. Company shall ensure that the Finance Materials comply with Applicable Laws. Except for the Finance Materials and the Marketing Materials, Company shall not refer to Bank or to matters associated with or relating to the Program without the express written consent of Bank, including in press releases and other public statements.
5. Processing and Origination.
(a) As service provider for Bank, Company shall process Applications from Applicants for Deposit Accounts and Loans on behalf of Bank (including retrieving credit reports) to determine whether the Applicant meets the eligibility criteria set forth in the Deposit Policy and/or Credit Policy. As service provider for Bank, Company shall respond to all inquiries from Applicants regarding the Application process.
(b) Following Bank’s request, Company shall forward to Bank mutually agreed information including name, physical address, social security number or employer identification number, and date of birth (if applicable) regarding Applicants who meet the eligibility criteria set forth in the Deposit Policy and/or Credit Policy, as applicable. Company shall have no discretion to override the Credit Policy with respect to any Applications.
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(c) Subject to the terms of this Agreement, Bank shall approve, establish and fund Loans, subject to the terms of the Loan Agreement, with respect to Applicants who meet the eligibility criteria set forth in the Credit Policy. Subject to the terms of this Agreement, Bank shall establish Deposit Accounts, subject to the terms of the Account Agreement, with respect to Applicants who meet the eligibility criteria set forth in the Deposit Policy.
(d) On behalf of Bank, and pursuant to procedures mutually agreed to by the Parties, Company shall provide and produce (i) adverse action notices to Applicants who do not meet the Deposit Policy and/or Credit Policy, as applicable, or are otherwise denied by Bank and provide Account Agreements and/or Loan Agreements, as applicable, with regard to Applications that are approved by Bank, (ii) any Card, and (iii) any other Applicant, Accountholder or Borrower communications.
(e) Company shall hold and maintain, as custodian for Bank, all documents of Bank pertaining to Deposit Accounts and Loans. At Bank’s request, Company shall provide Bank with prompt access to the originals or copies of such documents in accordance with Bank’s request, and the obligation set forth in this sentence shall survive the expiration or termination of this Agreement, for a period equal to the time that Bank is required by Applicable Laws to retain or have access to such documents. Company shall provide Bank with connectivity to its (and its subcontractors’) systems to enable continuous, unrestricted, real-time access to the information pertaining to Loans, provided that with respect to subcontractors’ systems, it shall be limited to the same type of access to information that Company is provided, and Deposit Accounts, including, for the avoidance of doubt, the FBO Deposit Account File, in the format required by Bank from time to time and such access shall be provided by Company including in the event of an interruption to Company’s (or any of its service providers) business, Company’s (or any of its service providers) insolvency, or bankruptcy. Company’s Business Continuity Program shall include backup recordkeeping and technical capabilities to ensure compliance with this Section 5(e). Company shall develop and maintain internal controls to accurately determine the respective beneficial ownership interests associated with each Deposit Account and conduct reconciliations against the beneficial ownership records no less frequently than the close of each Business Day. Company shall ensure that Bank has access to all information pertaining to Deposit Accounts and Loans, including for the avoidance of doubt, the FBO Deposit Account File, whether held by Company or its service providers. At least once annually, Company shall cooperate with and bear the expenses of an audit to verify that Company’s (and/or its service providers’) records are accurate and complete consistent with the requirements of this Section 5(e) with respect to Deposit Accounts, to be conducted by a third-party audit firm that is selected and engaged by, and reports to, Bank (provided, that Company shall only be required to bear the expenses of one records audit annually, and such other audits as may be required to follow up on specific issues identified, because of Company’s noncompliance, breach or default under any of the Program Documents, because of Company’s request for a significant modification of the Program, because of changes in Applicable Laws, because of safety and soundness considerations, or because required by the direction of a Regulatory Authority). The scope of each such audit shall be determined by Bank and Bank shall receive all draft and final reports from the audit firm and shall be included in any meetings or correspondence related to the audit. The auditor shall deliver the final audit report to Bank, and Bank shall provide a copy of the report to Company. Unless otherwise required by Applicable Laws, Company may not share the report with any other Person without the consent of Bank. Company shall take action to correct errors or
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deficiencies identified in any report or audit described in this Section 5(e), and shall develop, with the approval of Bank, a schedule for the correction of such errors and deficiencies. Bank shall use reasonable efforts to coordinate any audits with audits of other programs of Bank and Company. Any Confidential Information contained in such audit report shall remain the Confidential Information of the party providing such underlying information and subject to the restrictions on disclosure in Section 19.
(f) Company shall be solely responsible for filing and maintaining any Accountholder-facing and Borrower-facing security agreements, financing statements, and other lien
recordations, if any, in connection with each product under the Program. As a service provider for the origination of each product under the Program, Company’s obligations include the payment of any taxes (and performance of and compliance with associated requirements) imposed directly on the products under the Program, the Account Agreements or the Loan Agreements, or associated with the creation or execution of the products under the Program, the Account Agreements or the Loan Agreements. Without Bank’s consent, during the period when any Loans or Deposit Accounts are owned by Bank, Company will not take any action which would adversely affect Bank’s ownership interest in the Loans or Deposit Accounts then owned by Bank, and Company will take all actions that are reasonably necessary to effect and maintain Bank’s ownership interest in such Loans and such Deposit Accounts.
recordations, if any, in connection with each product under the Program. As a service provider for the origination of each product under the Program, Company’s obligations include the payment of any taxes (and performance of and compliance with associated requirements) imposed directly on the products under the Program, the Account Agreements or the Loan Agreements, or associated with the creation or execution of the products under the Program, the Account Agreements or the Loan Agreements. Without Bank’s consent, during the period when any Loans or Deposit Accounts are owned by Bank, Company will not take any action which would adversely affect Bank’s ownership interest in the Loans or Deposit Accounts then owned by Bank, and Company will take all actions that are reasonably necessary to effect and maintain Bank’s ownership interest in such Loans and such Deposit Accounts.
(g) Without Bank’s consent, Company shall not create or suffer to exist (by operation of law or otherwise, and except as may be created by Bank) any lien, encumbrance or security interest upon or with respect to any of the Loans or Deposit Accounts owned by Bank which adversely affects Bank’s ownership interest in the Loans or Deposit Accounts. Company shall immediately notify Bank of the existence of any such unauthorized lien, encumbrance or security interest and shall defend the right, title and interest in, to and under the Loans and Deposit Accounts against all claims of third parties.
(h) Pursuant to Section 24, as Bank reasonably requires and upon reasonable advance written notice to Company, Bank will periodically audit Company for compliance with the terms of this Section 5 and the Agreement as a whole, including compliance with the standards set forth herein for Loan origination and Deposit Account establishment.
(i) Bank will provide Company with access to the Program BIN(s) or ICA(s), as applicable, and allow Company to interact directly with the Network to the extent reasonably necessary for Company to fulfill its obligations with respect to the Program, and Bank shall remain in good standing with the Network. The Company will initially designate the Network for the launch of the Program, and may elect to change the Network once during the term, subject to such advance notice and other requirements as may be required by the Networks.
(j) Company shall perform the obligations described in this Section 5 in accordance with Applicable Laws, including its own obligations and any obligations it is performing on behalf of Bank (e.g., as ODFI or RDFI under the Network Rules for the ACH Network (“ODFI” and “RDFI” as defined therein)). Company shall maintain in effect all qualifications required under requirements of Applicable Laws in order to perform its obligations under this Agreement and shall comply in all respects with all requirements of Applicable Laws in connection with the performance of its obligations hereunder.
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(k) Bank will oversee, supervise, and establish such controls as may be reasonably necessary to oversee and supervise Company’s marketing, promotion, administration, and servicing of the Program, and other duties performed by Company under the Program. Bank shall have the right to review and approve Company’s policies and procedures that address such activities and all customer-facing materials in the Program.
(l) Company shall comply with the additional terms related to the establishment and maintenance of the FBO Deposit Account and Deposit Accounts set forth on Schedule 5(l), which are incorporated into this Section 5(l) as if fully set forth herein.
(m) Company (directly or through a third-party service provider approved by Bank in its sole discretion) shall, on behalf of Bank, obtain Accountholder authorizations for Transactions in accordance with, and authorize, accept, reject, return or otherwise process
Transactions, in each case in compliance with Applicable Laws and the Finance Materials. Company shall ensure that the FBO Deposit Account and the respective Deposit Account has on deposit sufficient funds to cover each Transaction (including in consideration of all other Transactions) and Company shall use commercially reasonable efforts to not authorize (and shall reject or otherwise decline to authorize or approve) any Transaction that would cause any Deposit Account to have a negative balance; provided, however, Company may permit Deposit Accounts to have negative balances solely to the extent permitted by Bank and in accordance with the Deposit Policy. Company shall provide Bank with reports on a daily basis of any negative balances in a Deposit Account.
Transactions, in each case in compliance with Applicable Laws and the Finance Materials. Company shall ensure that the FBO Deposit Account and the respective Deposit Account has on deposit sufficient funds to cover each Transaction (including in consideration of all other Transactions) and Company shall use commercially reasonable efforts to not authorize (and shall reject or otherwise decline to authorize or approve) any Transaction that would cause any Deposit Account to have a negative balance; provided, however, Company may permit Deposit Accounts to have negative balances solely to the extent permitted by Bank and in accordance with the Deposit Policy. Company shall provide Bank with reports on a daily basis of any negative balances in a Deposit Account.
The Parties shall agree on terms to be included in the Deposit Policy regarding the number of days a Deposit Account may maintain a negative balance prior to closure. Prior to or at the time of Deposit Account closure, if such Deposit Account has a negative balance, Company shall pay to Bank the total amount of such negative balance by wire transfer (or such other method as agreed to by the Parties) to a deposit account designated by Bank from time to time. Company shall ensure that a negative balance in any Deposit Account shall not impact funds availability to other Accountholders. Following the Effective Date, the Parties agree to reasonably cooperate to establish mutually agreed procedures to facilitate Company’s collection of negative balances. Company shall comply, and shall ensure that each Transaction complies, with the applicable Network Rules.
6. Compliance with Applicable Laws; Required Controls. In the performance of its obligations under this Agreement, Company shall comply with Applicable Laws and shall operate and maintain the Required Controls. Company shall develop the Required Controls in order to ensure that the Program is offered in compliance with Applicable Laws, and that Bank offers the Program in a safe and sound manner. The Required Controls shall be developed by Company and approved by Bank and shall not be changed without the prior written consent of both Parties, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that Bank may require changes to one or more of the Required Controls following written notice provided to Company but without Company’s prior written consent, to the extent that such change is required by Applicable Laws, to the extent that Bank determines such change is necessitated by safety and soundness concerns, or pursuant to the direction of a Regulatory Authority of Bank.
(a) Without limiting the foregoing, Company shall develop, implement and maintain the Required Controls in accordance with applicable guidance of Bank’s Regulatory Authorities:
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(1) a Program Governance Committee that includes the requirements outlined in Schedule 6(a)(1);
(2) a Compliance Management System that includes the requirements outlined in Schedule 6(a)(2);
(3) a BSA Program that includes the requirements outlined in Schedule 6(a)(3);
(4) an ID Theft Red Flags Program that includes the requirements outlined in Schedule 6(a)(4);
(5) a Privacy Program that includes the requirements outlined in Schedule 6(a)(5);
(6) a Complaint Management Program that includes the requirements outlined in Schedule 6(a)(6);
(7) an Information Security Program that includes the requirements outlined in Schedule 6(a)(7);
(8) a Business Continuity Program that includes the requirements outlined in Schedule 6(a)(8);
(9) a Vendor Management Program that includes the requirements outlined in Schedule 6(a)(9); and
(10) an Unclaimed Property Program that includes the requirements outlined in Schedule 6(a)(10), which shall be developed and implemented within the time period set forth in Schedule 6(a)(10).
Company shall maintain a regulatory change management process and reasonably cooperate with Bank to update the foregoing and add controls as needed to address changes in Applicable Laws.
(b) Company shall cooperate with one annual compliance audit of the Program, and one annual information security audit of the Program, and shall bear or reimburse Bank for the commercially reasonable expenses of such audits. Company shall cooperate with any additional third-party compliance or information security audits of the Program as may be requested by Bank from time to time, and shall bear the commercially reasonable expenses for such additional audits to the extent such additional audits are necessary due to (i) changes in Applicable Laws, (ii) safety and soundness concerns of Bank, (iii) Company’s noncompliance, breach or default under any of the Program Documents, (iv) the direction of a Regulatory Authority, or (v) Company’s request for a significant modification of the Program. Each audit contemplated by this Section 6(b) shall be conducted by a reputable third-party audit firm that is selected and engaged by, and reports to Bank. The scope of each audit shall be determined by Bank in consultation with Company, and may include the activities of significant third-party vendors
supporting the Program. The auditor shall deliver to Bank all draft and final reports and Bank shall be included in all meetings and correspondence related to the audit. Bank shall provide a copy of the final report to Company. Bank may waive the requirement for an information security audit if Company already has an established information security audit process that is acceptable to Bank. Company may not share the report with any other Person (other than Company’s attorneys and accountants, subject to the provisions of Section 19) without the consent of Bank. Company shall promptly take action to correct any errors or deficiencies identified in any report or audit described in this Section 6(b) (other than errors or deficiencies that, based on the mutual determination of the Parties, need not be corrected), and shall develop, with the approval of Bank, a schedule for the correction of such errors and deficiencies.
supporting the Program. The auditor shall deliver to Bank all draft and final reports and Bank shall be included in all meetings and correspondence related to the audit. Bank shall provide a copy of the final report to Company. Bank may waive the requirement for an information security audit if Company already has an established information security audit process that is acceptable to Bank. Company may not share the report with any other Person (other than Company’s attorneys and accountants, subject to the provisions of Section 19) without the consent of Bank. Company shall promptly take action to correct any errors or deficiencies identified in any report or audit described in this Section 6(b) (other than errors or deficiencies that, based on the mutual determination of the Parties, need not be corrected), and shall develop, with the approval of Bank, a schedule for the correction of such errors and deficiencies.
(c) Company shall cooperate with and bear the expenses of a review of each critical model used in connection with the Program and the associated model governance, and
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validation of each model on an appropriate schedule, to be conducted by a third-party review firm that is selected and engaged by, and reports to Bank or, with Bank’s written approval, to be conducted by qualified individuals at Company that are independent from the development and use of the model. The scope of the review shall be determined by Bank after consultation with Company. The review firm shall deliver to Bank all draft and final reports and shall be included in all meetings and correspondence related to the review. Bank shall provide a copy of the report to Company. Company may not share the report with any other Person without the consent of Bank.
(d) Company shall report monthly to Bank in a form determined by Bank, on Complaints relating to all aspects of the Program and the steps taken by Company to address such Complaints.
(e) Company shall report to Bank promptly upon identifying any actual, threatened or suspected violation of Applicable Laws or the Required Controls concerning the Program (a “Reportable Event”), and Company shall cooperate with and report to Bank regarding the investigation of the Reportable Event. Company shall undertake remediation and disclosure of a Reportable Event in accordance with a plan that is agreed to by Bank.
(f) Company shall provide to Bank, on a monthly basis in writing, a report by the compliance officer of the results of all audits and reviews of the Program and all significant issues related to the Program since the last report, as well as Company’s resolutions of such issues (if applicable).
(g) Company shall provide to Bank a certification letter signed by its compliance officer and/or such other officer(s) as Bank may require, not later than thirty (30) days after the end of each quarter, in a form provided by Bank, that it is complying with its obligations under the Program Documents.
(h) Company shall comply, and promptly provide information requested by Bank in order to comply, with any reporting requirements of the Utah Department of Financial
Institutions, the Federal Deposit Insurance Corporation, the Financial Crimes
Enforcement Network, or other Regulatory Authority applicable to either Party’s performance of this Agreement.
Institutions, the Federal Deposit Insurance Corporation, the Financial Crimes
Enforcement Network, or other Regulatory Authority applicable to either Party’s performance of this Agreement.
7. Regulatory Inquiries, Elevated Complaints and Litigation.
(a) Each Party shall notify the other Party within five (5) Business Days after becoming aware of any Regulatory Inquiry or Elevated Complaint.
(b) Company shall provide Bank with all documentation relating to the Regulatory Inquiry or Elevated Complaint. Company shall obtain Bank’s prior approval for any response to a Regulatory Inquiry or Elevated Complaint and for any other communication between Company and a Regulatory Authority. Company shall cooperate in good faith and provide such assistance, at Bank’s request, to permit Bank to promptly resolve or address any Regulatory Inquiry or Elevated Complaint, or other investigation, proceeding or Complaint involving Bank.
(c) Company shall notify Bank within three (3) Business Days of any litigation relating to the Program in which Bank is a named party, and provide monthly updates on all Program-related litigation to Bank and as otherwise requested by Bank. Company legal
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counsel or chief compliance officer also will provide a quarterly written update to Bank’s General Counsel on civil investigative demands, regulatory subpoenas, significant examination findings, other investigations and material litigation relevant to the Program.
(d) Each Party shall provide assistance as requested by the other Party to enable the other Party to respond to any subpoenas, legal notices, civil investigative demands, or other legal process received by the other Party that are related to the Program.
8. Third-Party Service Providers.
(a) Company may use third-party service providers in the performance of its obligations under this Agreement, to the extent permitted by and in accordance with the terms of the Vendor Management Program, and subject to Bank’s prior written approval of each “Critical Vendor,” as such term is defined in the Vendor Management Program (which approval shall not be unreasonably withheld or delayed).
(b) Company shall provide Bank with the results of the due diligence and oversight activities performed as part of the Vendor Management Program.
(c) Company shall ensure that all Critical Vendors that directly or indirectly support the Program are engaged through written contracts that include contractual requirements that are consistent with good practices for institutions that service or administer portfolios of cards, loans and deposit accounts. Contracts for such Critical Vendors shall be reviewed and approved by senior management of Company and, upon request of Bank, subject to review and approval by Bank.
(d) Company agrees to be fully responsible for the acts and omissions of all third-party vendors, including the third-party vendors’ compliance with the terms of this Agreement and all Applicable Laws, and Company shall cause each third-party vendor to perform its obligations in a manner that fully complies with the terms of this Agreement as if Company performed such obligations directly. Company shall cause each material third-party vendor to cooperate with Bank’s exercise of any audit or other rights under this Agreement.
(e) Upon reasonable request of Bank, Company shall cause a Critical Vendor to enter into a mutually acceptable three-party agreement to document the relationship among the Parties and such Critical Vendor.
(f) Upon request by Bank, for good cause specified by Bank in its reasonable discretion, Company shall terminate or suspend a third-party vendor from supporting the Program.
Prior to termination or suspension, Company may request that Bank reconsider its request, and the Parties shall thereafter meet expeditiously to discuss Company’s request in good faith; provided, however, that Bank shall retain ultimate discretion to require suspension of a vendor from the Program or termination for good cause. In the event of a termination of a Critical Vendor that directly or indirectly supports the Program, Company shall develop a termination plan to protect Bank assets and Confidential Information (such termination plan to be provided to and approved by Bank).
9. Privacy; Information Security Incidents.
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(a) Each Party shall use and share NPI only in a manner that complies with Applicable Laws and the privacy policies of Bank and Company, as applicable.
(b) Company shall make NPI of Borrowers, Accountholders and Applicants available to Bank for purposes of Bank satisfying its legal obligations in connection with the Program.
(c) To the extent required by Applicable Laws, Company shall deliver the initial and annual privacy notices of Bank and Company in a form and manner agreed by the Parties.
(d) Each Party shall maintain data security and disaster recovery protections that comply with Applicable Law and are consistent with industry standards for the banking and consumer lending and deposit industry as applicable to the activities and obligations of the Parties pursuant to the Program Documents.
(e) Each Party shall immediately notify the other Party of any Information Security Incident.
The Party experiencing the Information Security Incident will fully cooperate with the other Party in investigating any Information Security Incident and will take action promptly to investigate the Information Security Incident, to identify, mitigate, and remediate the effects of the Information Security Incident and to implement any other reasonable and appropriate measures in response to the Information Security Incident.
The Party experiencing the Information Security Incident will also provide the other Party with all available information regarding an Information Security Incident to assist the other Party in implementing its information security response program and, if applicable, in notifying affected Applicants, Accountholders or Borrowers. Company shall be responsible for all costs related to investigating, responding to, and remediating any Information Security Incident, and notifying affected Applicants, Accountholders or Borrowers. Any notification to affected Applicants, Accountholders or Borrowers shall be subject to the advance consent of Bank.
10. Ownership and Customer Relationships.
(a) The approval of an Application creates a customer relationship between Bank and the Borrower or Accountholder, as applicable. Company also establishes a customer relationship with the Borrower or Accountholder, as applicable, as the servicer of the Loan or Deposit Account, as applicable, or by other services offered by Company. The Parties recognize that because each Party has a customer relationship with the Borrowers, Accountholders and Applicants, as applicable, the Parties co-own and may use the NPI of Borrowers, Accountholders and Applicants in accordance with Applicable Law, each Party’s privacy policy and the Program’s privacy policy.
(b) Bank shall continue to own the Loan, Deposit Account and the customer relationship with the Borrower, unless and until either relationship is transferred pursuant to another agreement with Company or a third party. Company shall not take any action that interferes with or is inconsistent with Bank’s customer relationship with the Borrower or Accountholder, as applicable, and Company shall provide any disclosures or other materials necessary to maintain the customer relationship between Bank and the Borrower or Accountholder, as applicable. Company may, at its own expense and subject to the Program privacy policy and Applicable Laws, solicit Applicants, Accountholders and/or Borrowers with offerings of any goods and services from Company and parties other than Bank that do not compete with the Program, except as otherwise expressly
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provided in Section 43, provided, however, that in the event that Company uses Bank’s name and/or Proprietary Materials in connection with such offerings, Company shall obtain Bank’s prior consent for such use (which consent shall not be unreasonably withheld, conditioned or delayed).
(c) Bank may not solicit Applicants, Accountholders and/or Borrowers with offerings of goods and services that compete with the Program. Bank may, at its own expense and subject to the Program privacy policy and Applicable Laws, solicit Applicants,
Accountholders and/or Borrowers with offerings of goods and services that do not compete with the Program. Bank shall not share a list of Company’s customers with any other buy now pay later companies.
Accountholders and/or Borrowers with offerings of goods and services that do not compete with the Program. Bank shall not share a list of Company’s customers with any other buy now pay later companies.
(d) Notwithstanding Subsections 10(c) and 10(d), (i) either Party may make solicitations for goods and services to the public, which may include one or more Applicants,
Accountholders or Borrowers; provided, that such Party does not (A) target such solicitations to specific Applicants, Accountholders and/or Borrowers, (B) use or permit a third party to use any list of Applicants, Accountholders and/or Borrowers in connection with such solicitations, or (C) refer to or otherwise use the name of the other Party; and (ii) neither Party shall be obligated to redact the names of Applicants, Accountholders and/or Borrowers from marketing lists acquired from third parties (e.g., subscription lists) that such Party uses for solicitations.
Accountholders or Borrowers; provided, that such Party does not (A) target such solicitations to specific Applicants, Accountholders and/or Borrowers, (B) use or permit a third party to use any list of Applicants, Accountholders and/or Borrowers in connection with such solicitations, or (C) refer to or otherwise use the name of the other Party; and (ii) neither Party shall be obligated to redact the names of Applicants, Accountholders and/or Borrowers from marketing lists acquired from third parties (e.g., subscription lists) that such Party uses for solicitations.
11. Funding Loans; Deposit Account Settlement.
(a) For the disbursement of Loan Proceeds in a manner agreed upon by the Parties other than disbursement of Loan Proceeds via any Card, Company will provide a Funding Statement to Bank by e-mail or as otherwise mutually agreed by the Parties by 12:00 noon
Mountain Time on each Funding Date. With respect to the disbursement of Loan Proceeds via any Card, Company will provide a Funding Statement to Bank by e-mail or as otherwise mutually agreement by the Parties by 12:00 noon Mountain Time on each Funding Date, to compare against the drawdown request from the Network and allow the Bank to confirm the drawdown request from the Network. Subject to timely receipt of the Funding Statement, Bank shall initiate disbursement of Loan Proceeds on each Funding Date on behalf of the Borrowers in accordance with the instructions on the Funding Statement. The form of the Funding Statement shall be mutually determined by the Parties and may be modified by the Parties from time to time.
Mountain Time on each Funding Date. With respect to the disbursement of Loan Proceeds via any Card, Company will provide a Funding Statement to Bank by e-mail or as otherwise mutually agreement by the Parties by 12:00 noon Mountain Time on each Funding Date, to compare against the drawdown request from the Network and allow the Bank to confirm the drawdown request from the Network. Subject to timely receipt of the Funding Statement, Bank shall initiate disbursement of Loan Proceeds on each Funding Date on behalf of the Borrowers in accordance with the instructions on the Funding Statement. The form of the Funding Statement shall be mutually determined by the Parties and may be modified by the Parties from time to time.
(b) In connection with the disbursement of Loan Proceeds via any Card, (i) by the Funding Time on each Funding Date, Bank shall transfer the total funding amount, as identified on the drawdown request from the Network, to the Network, and (ii) Company will reconcile the Funding Statement for each day with the drawdown request from the Network, and provide such reconciliation to Bank.
(c) For the avoidance of doubt, upon disbursement of the funding amount in accordance with Section 11(a) and (b), Bank’s obligation to provide funds to Company’s Merchants is fully satisfied. Company shall indemnify and hold harmless Bank for any liability associated with (i) non-delivery of Loan Proceeds to the extent Bank complies with wire/ACH instructions in the applicable reports and (ii) the incorrect, unauthorized or otherwise erroneous delivery of Loan Proceeds to the extent Bank complies with wire/ACH instructions in the applicable reports.
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(d) Subject to the Schedules and Exhibits attached hereto, at no time may the total amount of the Single Disbursement Loans, Receivables on Multiple Disbursement Loans and Retention Loans held by Bank exceed the Program Threshold Amount; provided, however, Bank understands that based on historic product sales patterns, the Company may incur seasonal fluctuations and/or growth in the Program and agrees that Company may request an increase in the Program Threshold Amount based on anticipated seasonal fluctuations or growth in the Program, and Bank will consider in good faith such requests from Company.
(e) To the extent that the aggregate principal balance of Single Disbursement Loans, Receivables on Multiple Disbursement Loans and Retention Loans held by Bank or its Affiliates (net of sold Receivables) would exceed the Program Threshold Amount following the funding of any Loans, Bank may elect not to fund such Single
Disbursement Loans, Receivables on Multiple Disbursement Loans and Retention Loans; provided, however, Bank understands that based on historic product sales patterns, the Company may incur seasonal fluctuations and/or growth in the Program and agrees that Company may request an increase in the Program Threshold Amount based on
anticipated seasonal fluctuations or growth in the Program, and Bank will consider in good faith such requests from Company. For the avoidance of doubt, it shall be a breach of this Agreement for Company to exceed the Program Threshold Amount without obtaining Bank’s prior written consent. With respect to Retention Loans, at no time may the total amount of the Retention Loans held by Bank exceed the Retention Loan RTA.
Disbursement Loans, Receivables on Multiple Disbursement Loans and Retention Loans; provided, however, Bank understands that based on historic product sales patterns, the Company may incur seasonal fluctuations and/or growth in the Program and agrees that Company may request an increase in the Program Threshold Amount based on
anticipated seasonal fluctuations or growth in the Program, and Bank will consider in good faith such requests from Company. For the avoidance of doubt, it shall be a breach of this Agreement for Company to exceed the Program Threshold Amount without obtaining Bank’s prior written consent. With respect to Retention Loans, at no time may the total amount of the Retention Loans held by Bank exceed the Retention Loan RTA.
(f) The obligation of Bank to disburse the total funding amount, as provided in Sections 11(a), (b) and (h), is subject to the satisfaction of the following conditions precedent immediately prior to each disbursement by Bank:
(1) the representations and warranties of Company set forth in the Program Documents shall be true and correct in all material respects at the time of and immediately prior to each such disbursement by Bank as though made as of the time Bank disburses such amount; and
(2) the obligations of Company set forth in the Program Documents to be performed prior to each such disbursement by Bank shall have been performed prior to each such disbursement.
(g) If Company, as servicer for Bank, agrees to cancel a Loan which is then owned by Bank and refund interest and fees to Borrower, at the request of a Borrower, Company shall ensure that the original principal amount of the Loan is promptly returned to Bank.
(h) By 7:00 AM Mountain Time on each Business Day, Company shall provide a report to Bank of the amount of Loan Proceeds disbursed through Cards on the prior Business Day (and any subsequent non-Business Days), including the total amount of such Loan Proceeds.
(i) The obligation of Bank to originate, accept, or execute Transactions as provided in this Section 11, is subject to the satisfaction of the following conditions precedent
immediately prior to each initiation of an Transaction by Bank:
immediately prior to each initiation of an Transaction by Bank:
(1) the representations and warranties of Company set forth in the Program Documents shall be true and correct in all material respects at the time of or
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prior to the initiation of such transaction by Bank as though made as of the time as of the time such transaction is completed; and
(2) the obligations of Company set forth in the Program Documents to be performed prior to the initiation of each such transaction by Bank shall have been
performed in all material respects prior to each such transaction.
performed in all material respects prior to each such transaction.
12. Appointment of Servicer.
(a) From and after the Effective Date, by and until the earlier of: (i) such date as all Loans become Liquidated Loans and all Deposit Accounts are closed; or (ii) this Agreement is terminated in accordance with Section 18 (and subject to the survival of terms as provided therein), Bank appoints and contracts with Company as an independent contractor, subject to the terms of this Agreement, for the servicing of the Loans, FBO Deposit Account and the Deposit Accounts.
(b) Company shall establish and maintain a Servicing File with respect to each Loan, Deposit Account and the FBO Deposit Account in order to service such Loan, Deposit Account and the FBO Deposit Account pursuant to this Agreement. Company shall maintain the Servicing Files, the Loan Documents and the Account Documents electronically and such files and documents may be accessed at the Servicer Physical Address or such other physical location as designated by Company in writing; provided, however, in no event shall physical or electronic copies of Servicing Files be housed outside the continental United States. To the extent that original documents are not required for purposes of realization of Loan Proceeds or the establishment of Deposit Accounts, documents maintained by Company may be in digital format. Company may release from its custody the contents of any Servicing File only to Bank or such other Persons as Bank may authorize; provided, that, Company may (i) use the contents of any Servicing File in the performance of its obligations under this Agreement and in the conduct of its business generally (subject to the confidentiality provisions of this Agreement and the
requirements of Applicable Laws), (ii) use, deliver and release the contents of any Servicing File to Bank, (iii) use, deliver or release copies of any such data, information or documents to its accountants, counsel or advisors, to regulators or other Regulatory Authorities, or to other Persons to the extent reasonably necessary and appropriate to comply with Applicable Laws, terms of this Agreement or respond to subpoenas or other appropriate demands in connection with any action, proceeding, arbitration or
investigation in any forum of or before any Regulatory Authority, and (iv) use, deliver and release the contents of any Servicing File as permitted by the Loan and Receivables Sale Agreement and Section 18(l) of this Agreement.
requirements of Applicable Laws), (ii) use, deliver and release the contents of any Servicing File to Bank, (iii) use, deliver or release copies of any such data, information or documents to its accountants, counsel or advisors, to regulators or other Regulatory Authorities, or to other Persons to the extent reasonably necessary and appropriate to comply with Applicable Laws, terms of this Agreement or respond to subpoenas or other appropriate demands in connection with any action, proceeding, arbitration or
investigation in any forum of or before any Regulatory Authority, and (iv) use, deliver and release the contents of any Servicing File as permitted by the Loan and Receivables Sale Agreement and Section 18(l) of this Agreement.
(c) Each Servicing File is and shall be held in trust by Company on behalf of and for the benefit of Bank. The ownership of each Loan Document, each Account Document and the contents of the Servicing File shall be vested in Bank, and the ownership of all records and documents with respect to the related Loan or Deposit Account prepared by or which come into the possession or control of Company shall immediately vest in Bank and shall be retained and maintained, in trust, by Company at the will of Bank in such custodial capacity only. Each Servicing File shall be maintained electronically and shall be appropriately identified or recorded to reflect the ownership of the related Loan or Deposit Account by Bank.
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(d) Company shall obtain and maintain a backup servicing agreement for the Loans with a backup servicer that (i) meets the Servicing Standard and the Accepted Servicing Practices and (ii) is acceptable to Company and Bank, and Company shall ensure that Bank is a party to or beneficiary of such agreement. Company shall, within one hundred eighty (180) days after the Effective Date, obtain and thereafter maintain a backup servicing agreement for the Deposit Accounts with a backup servicer that (i) meets the Servicing Standard and the Accepted Servicing Practices, (ii) is capable of performing the applicable obligations set forth in Schedule 5(l) and (iii) is acceptable to Company and Bank (such acceptance not to be unreasonably withheld, conditioned or delayed), and Company shall ensure that Bank is a party to or beneficiary of such agreement. Company shall bear all costs and expenses associated with each backup servicing agreement. On each Business Day, Company shall deliver a copy of each Servicing File and FBO Deposit Account File to Bank via such secure method as may be agreed by Company and Bank. Company shall (i) if requested by Bank, on a daily basis deliver to Bank any applicable updates to such Servicing File, (ii) on a daily basis deliver to Bank any applicable updates to such FBO Deposit Account File, and (iii) provide such other cooperation as is reasonably requested by Bank, in each case as Bank reasonably believes is necessary and appropriate to obtain portfolio monitoring services, via such secure method as may be agreed by Company and Bank. Bank may designate a third party to receive the information described in this Subsection 12(d).
13. Servicing Obligations.
(a) Company, as an independent contractor, shall service and administer each Loan and Deposit Account from and after the date that such Loan is originated or Deposit Account is established, as applicable, until the earlier of (i) such date as such Loan becomes a Liquidated Loan, (ii) the Deposit Account is closed, or (iii) this Agreement is terminated in accordance with Section 18 (and subject to the survival of terms as provided therein), in accordance with Applicable Laws, the Accepted Servicing Practices and the terms of this Agreement and consistent with customary, reasonable and usual standards of practice for institutions that service or administer portfolios of similar consumer loans and deposit accounts or, if a higher standard, that degree of skill and attention the Company exercises with respect to all comparable accounts that it services for itself or others and, in all cases, in accordance with Applicable Laws (such standard of care being the “Servicing Standard”), and shall have full power and authority to do any and all things in connection with such servicing and administration as limited by the terms of this Agreement and Servicing Standard. Company’s general obligations with respect to the servicing of Loans, FBO Deposit Account and Deposit Accounts hereunder shall include, but not be limited to, the following:
(1) Setting up and maintaining a bank account, address, or other electronic or physical facility to which Borrower is instructed to send payments due under the terms of each Loan;
(2) Preparing and sending, as applicable, welcome packages, periodic statements, and other communications;
(3) Investigating and resolving billing disputes and other Borrower inquiries;
(4) Crediting Loans and Deposit Accounts with respect to unauthorized charges;
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(5) Processing refunds and adjustments;
(6) Attempting to collect Borrower payments due under the terms of each Loan;
(7) Correctly remitting Loan Proceeds on each Loan in accordance with Section 14;
(8) Correctly disbursing or withdrawing funds from the Deposit Accounts;
(9) Providing customer service, including maintaining a toll-free number (staffed between normal business hours during its regular business days) for Borrowers and Accountholders to call with inquiries with respect to the Loans and Deposit Accounts, and responding to such inquiries;
(10) Interfacing with the Network for the proper operation of the Program, and following applicable Network requirements;
(11) Investigating delinquencies and maintaining collection procedures for delinquencies;
(12) Sending adverse action notices when required by Applicable Laws, including when a Borrower’s credit limit is reduced;
(13) Sending privacy notices (if applicable), and other necessary legal and regulatory notices and disclosures;
(14) Processing payments provided by Borrowers on the Loans and processing deposits by Accountholders with respect to the Deposit Accounts; and
(15) With respect to the FBO Deposit Account and Deposit Accounts, the servicing obligations set forth in Schedule 5(l).
(b) With respect to any returns or cancellations accepted by any Merchant, or customer refunds provided by any Merchant, for a purchase that was originally financed via a Loan, Company shall, to the extent of the outstanding balance of the Loan with respect to such Loan, pay the refund amount to the Person owning and holding such Loan within three (3) Business Days after receiving the funds relating to such refund. Company shall ensure that any amounts paid as provided in the foregoing sentence are credited to the applicable Loan.
(c) Company shall ensure that all monetary adjustments and/or credits agreed upon by Company in resolving any customer dispute regarding merchandise or services purchased via a Deposit Account or Loan shall promptly be communicated to the Person owning and holding the Deposit Account or Loan at the time of the adjustment. The procedures for applying such adjustments and/or credits to the Loans and Deposit Accounts shall be mutually agreed upon by the Parties in writing and incorporated into the Servicing Materials.
(d) The Accepted Servicing Practices may be changed only at the direction of or with the consent of Bank.
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(e) Company may grant, permit or facilitate any Modification for any Loan or Deposit Account; provided that such Modification is consistent with the Servicing Standard and the Accepted Servicing Practices. Upon request, and with the frequency and in the format requested by Bank, Company shall notify Bank of any Modification granted, permitted or facilitated by Company. Company shall not charge any Accountholder or Borrower any fees on a Loan or Deposit Account not contemplated in the Loan Documents or Account Documents, respectively, unless approved by Bank.
(f) Without limiting the generality of the foregoing, Company is hereby authorized and empowered to execute and deliver on behalf of Bank, all notices or instruments of satisfaction, cancellation or termination, or of partial or full release, discharge and all other comparable instruments, with respect to the Loans and Deposit Accounts; provided, however, that Company shall not be entitled to release, discharge, terminate, cancel or close any Loan (or the related Loan Documents) or any Deposit Account (or the related Account Documents), unless in a manner consistent with the Servicing Standard and the Accepted Servicing Practices. Company shall not permit any rescission or cancellation of any Loan, except as ordered by a court of competent jurisdiction or other Regulatory Authority, or as required by Applicable Laws, or as contemplated by the Accepted Servicing Practices. If reasonably required by Company, Bank shall furnish Company with any powers of attorney and other documents reasonably necessary or appropriate to enable Company to carry out its servicing and administrative duties under this Agreement and Company shall indemnify and hold Bank harmless for any costs, liabilities or expenses incurred by Bank in connection with any use of such power of attorney by Company or its agents in breach of this Agreement.
(g) Company shall take no action under this Agreement or any other agreement or instrument contemplated hereby, nor omit to take any action under any such agreement or
instrument, which in each case would result in a breach or impair the rights of Bank in respect of any Loan or any Deposit Account, except in accordance with the terms of this Agreement. Company shall not reschedule, revise or defer any payments due on any Loan or on any Deposit Account, except in accordance with the Accepted Servicing Practices, as required by Applicable Laws, or as permitted by this Agreement.
instrument, which in each case would result in a breach or impair the rights of Bank in respect of any Loan or any Deposit Account, except in accordance with the terms of this Agreement. Company shall not reschedule, revise or defer any payments due on any Loan or on any Deposit Account, except in accordance with the Accepted Servicing Practices, as required by Applicable Laws, or as permitted by this Agreement.
(h) All materials, documents, communications, forms, templates, policies, and procedures used by Company to service Loans, the Deposit Accounts and the FBO Deposit Account (“Servicing Materials”) shall be subject to the advance approval of Bank. The Servicing Materials may be changed only: (a) with the prior written consent of both Parties; (b) upon written notice provided by Bank to Company to the extent that a change is required by Applicable Laws, necessitated by safety and soundness considerations, or required by the direction of a Regulatory Authority.
(i) Company shall ensure that all Servicing Materials, and its servicing of Loans, the Deposit Accounts and the FBO Deposit Account, shall comply with Applicable Laws, and shall be accurate and not misleading in all material respects.
(j) Company shall maintain in effect all qualifications required under requirements of Applicable Laws in order to service properly each Loan, the FBO Deposit Account and each Deposit Account, and shall comply in all respects with all requirements of
Applicable Laws in connection with the performance of its obligations hereunder, except to the extent that the failure to maintain such qualifications or to comply with such requirements would not have a material adverse effect on Bank, the collectability or
Applicable Laws in connection with the performance of its obligations hereunder, except to the extent that the failure to maintain such qualifications or to comply with such requirements would not have a material adverse effect on Bank, the collectability or
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enforceability of the Loans, the validity or status of the Deposit Accounts, or Company’s ability to perform its obligations under this Agreement. Company shall at all times preserve and keep in full force and effect its existence and all rights, franchises, permits and licenses material to its business.
(k) On behalf of Bank, Company shall prepare and file all tax reporting, information statements and other tax reports for Accountholders and Borrowers which are required to be provided to or made for the related Accountholders and Borrowers, and shall provide Bank with such information concerning Deposit Accounts and Loans as (i) is reasonably necessary for Bank to prepare its federal income tax return as Bank may reasonably request in writing from time to time, and (ii) Company prepares for purchasers generally in the ordinary course of its business.
14. Collection of Payments, Liquidation of Loans and Closure of Deposit Accounts.
(a) Continuously from the initial Funding Date of a Loan until the date each Loan becomes a Liquidated Loan, or otherwise ceases to be subject to this Agreement, in accordance with the Servicing Standard and the Accepted Servicing Practices, Company shall use commercially reasonable efforts to collect all Loan Payments, and any other payments due under each of the Loans when the same shall become due and payable.
(b) Promptly following any Loan satisfying the charge off criteria as set forth in the Charge Off Policy, Company shall, in accordance with the Charge Off Policy, charge off the related Loan (the date of such charge-off being the “Charge Off Date” and each such Loan, a “Charged Off Loan”). Company shall continue to service each Charged Off Loan following the Charge Off Date in accordance with this Agreement and the Accepted Servicing Practices. Company may facilitate the sale and transfer of Charged Off Loans only in accordance with the Accepted Servicing Practices.
(c) Company shall allocate all proceeds of collections on the Loans to the owners of the Loans.
(d) The terms set forth in Schedule 14 are incorporated into this Section 14 as if fully set forth herein.
(e) In the event that a Borrower files any bankruptcy proceedings, Company will follow the Servicing Standard and the Accepted Servicing Practices and shall to the extent required by the Accepted Servicing Practices represent Bank’s interest in any bankruptcy proceedings relating to the Borrower. Any action by Company will be in accordance with the Servicing Standard and the Accepted Servicing Practices.
(f) Promptly following any Deposit Account satisfying the closure criteria as set forth in the Deposit Policy, Company shall, in accordance with the Deposit Policy, close the related Deposit Account (the date of such charge-off being the “Closure Date” and each such Deposit Account, a “Closed Deposit Account”). Company shall continue to service each Closed Deposit Account following the Closure Date in accordance with this Agreement and the Accepted Servicing Practices.
(g) With respect to Sezzle Cash Loans and Sezzle Send Loans, Company shall deposit, or cause to be deposited, all collections on Sezzle Cash Loans and Sezzle Send Loans held by Bank to the First Premier Account or such other bank account as shall be mutually
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agreed by Bank and Company (the “Collections Account”) at the Depository Bank. Company hereby grants Bank a first priority and continuing security interest in and to the Collections Account and the funds therein and the proceeds thereof, and agrees to take such steps as Bank may reasonably require to perfect or protect such security interest. Company represents that, as of the date of the Agreement, the Collections Account is not subject to any claim, lien, security interest or encumbrance (other than the interests of Bank and the Depository Bank). Company shall not allow any other Person to have any claim, lien, security interest, or encumbrance on the Collections Account. Bank shall have all of the rights and remedies of a secured party under Applicable Laws with respect to the Collections Account and the funds therein or proceeds thereof, and shall be entitled to exercise those rights and remedies in its discretion. The Parties and the Depository Bank shall enter into a deposit account control agreement (“DACA”) governing the Collections Account, which DACA shall be in a form acceptable to and agreed upon by Bank.
(h) With respect to Sezzle Balance Deposit Accounts and Sezzle Send Loans, the following additional terms shall apply:
(1) Loads: An Accountholder may load funds to their Sezzle Balance Deposit Account from a linked debit card or bank account, subject in all respects to the terms and conditions of this Agreement, Applicable Law and the flow of funds mutually agreed upon by the Parties. Card-funded loads shall be processed through a Third-Party Deposit Service Provider in accordance with the Agreement.
(2) Withdrawals: An Accountholder may may withdraw funds from their Sezzle Balance Deposit Account via the following methods, subject in all respects to the terms and conditions of the Agreement, Applicable Law and the flow of funds mutually agreed upon by the Parties:
(a) ACH Withdrawal. An Accountholder may initiate a transfer of available funds from their Sezzle Balance Deposit Account to a linked external bank account via ACH. Company shall prepare and provide to Bank an accurate and complete ACH file of all ACH withdrawal transactions in the format required by the ACH Network on each Business Day. Bank shall submit each ACH file to the applicable ACH Operator and shall settle with the applicable ACH Operator in accordance with the
applicable Network Rules. Standard ACH withdrawals shall be free of charge to Accountholders. Company shall be responsible and liable for, and Bank shall have no liability with respect to, any losses related to ACH entries processed hereunder based on instructions provided by Company.
applicable Network Rules. Standard ACH withdrawals shall be free of charge to Accountholders. Company shall be responsible and liable for, and Bank shall have no liability with respect to, any losses related to ACH entries processed hereunder based on instructions provided by Company.
(b) Instant Payout via TabaPay. An Accountholder may elect to withdraw available funds from their Sezzle Balance Deposit Account to a linked debit card via TabaPay’s push-to-debit rails. Company shall facilitate all such transactions through TabaPay as an approved Critical Vendor under the Program. Bank shall have no liability with respect to the delivery of funds via TabaPay’s push-to-debit rails, and Company shall be responsible and liable for any losses related to such withdrawals processed hereunder, including but not limited to all losses, errors and
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delays associated with TabaPay’s processing of instant payout transactions.
15. Financing. Company shall cooperate with and support Bank’s efforts to obtain financing for the Loans held by Bank, including through securitizations and participations. Company will enter into servicing agreements on similar business terms as those set forth herein, and other commercially reasonable arrangements, in connection with such transactions.
16. Representations and Warranties.
(a) Bank hereby represents and warrants, as of the Effective Date, or covenants, as applicable, to Company that:
(1) Bank is an FDIC-insured, Utah state-chartered industrial bank duly organized and validly existing and in good standing under the laws of its formation, and has full corporate power and authority to execute, deliver, and perform its obligations under this Agreement; the execution, delivery and performance of this Agreement have been duly authorized, and are not in conflict with and do not violate the terms of the charter or bylaws of Bank and will not result in a material breach of or constitute a default under, or require any consent under, any indenture, loan or agreement to which Bank is a party;
(2) All approvals, authorizations, consents, and other actions by, notices to, and filings with, any Person required to be obtained for the execution, delivery, and performance of this Agreement by Bank, have been obtained;
(3) This Agreement constitutes a legal, valid, and binding obligation of Bank, enforceable against Bank in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or other similar laws now or hereafter in effect, including the rights and obligations of receivers and conservators under 12 U.S.C. §§ 1821(d) and (e), which may affect the
enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
reorganization, moratorium, receivership, conservatorship or other similar laws now or hereafter in effect, including the rights and obligations of receivers and conservators under 12 U.S.C. §§ 1821(d) and (e), which may affect the
enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
(4) There are no proceedings or investigations pending or, to the best knowledge of Bank, threatened against Bank (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by Bank pursuant to this Agreement, or (iii) that would have a materially adverse financial effect on Bank or its operations if resolved adversely to it
(5) Bank is not Insolvent;
(6) Bank meets the requirements to be considered “adequately capitalized” as defined in the Federal Deposit Insurance Act and applicable regulations promulgated thereunder; and
(7) The Proprietary Materials Bank licenses to Company pursuant to Section 20, and their use as contemplated by this Agreement, do not violate or infringe upon, or constitute an infringement or misappropriation of, any U.S. patent, copyright or U.S. trademark, service mark, trade name or trade secret of any
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Person or entity and Bank has the right to grant the licenses set forth in Section 20 below.
(b) Company hereby represents and warrants, as of the Effective Date, or covenants, as applicable, to Bank that:
(1) Company is a corporation, duly organized and validly existing in good standing under the laws of its formation, and has full power and authority to execute, deliver, and perform its obligations under this Agreement; the execution, delivery, and performance of this Agreement have been duly authorized, and are not in conflict with and do not violate the terms of the articles or bylaws of Company and will not result in a material breach of or constitute a default under or require any consent under any indenture, loan, or agreement to which Company is a party;
(2) All approvals, authorizations, consents, and other actions by, notices to, and filings with any Person required to be obtained for the execution, delivery, and performance of this Agreement by Company, have been obtained;
(3) This Agreement constitutes a legal, valid, and binding obligation of Company, enforceable against Company in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect, which may affect the enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity); There are no proceedings or investigations pending or, to the best knowledge of Company, threatened against Company (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by Company pursuant to this Agreement, or (iii) that would have a materially adverse financial effect on Company or its
operations if resolved adversely to it;
reorganization, moratorium, or other similar laws now or hereafter in effect, which may affect the enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity); There are no proceedings or investigations pending or, to the best knowledge of Company, threatened against Company (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by Company pursuant to this Agreement, or (iii) that would have a materially adverse financial effect on Company or its
operations if resolved adversely to it;
(4) Company is not Insolvent;
(5) The execution, delivery and performance of this Agreement by Company, the Finance Materials, the Servicing Materials, the Marketing Materials, and servicing strategies shall all comply with Applicable Laws;
(6) Neither Company nor any Control Person has been convicted of a crime, or has agreed to or entered into a pretrial diversion or similar program, or is under indictment, in each case in connection with a dishonest act or a breach of trust or money laundering, as set forth in Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829(a);
(7) The Proprietary Materials Company licenses to Bank pursuant to Section 20, and their use as contemplated by this Agreement, do not violate or infringe upon, or constitute an infringement or misappropriation of, any U.S. patent, copyright or U.S. trademark, service mark, trade name or trade secret of any Person or entity and Company has the right to grant the license set forth in Section 20 below;
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(8) Company is a servicer of consumer loans and consumer deposit accounts, with the facilities, procedures and experienced personnel or arrangements with appropriate third-party service providers and/or collection agents necessary for the sound servicing of Loans, the Deposit Accounts and the FBO Deposit Account hereunder, and Company (itself or through such third-party service providers and/or agents) has the ability to perform in all material respects its covenants and obligations contained in this Agreement;
(9) Company’s responsibilities under this Agreement will be performed by qualified personnel or agents in a professional manner in accordance with the standards of care, skill, knowledge and diligence consistent with recognized and sound practices and procedures for the servicing of consumer loans and consumer deposit accounts;
(10) All information maintained by the Company for Bank through
Company’s platform, or provided by Company to Bank in connection with a Loan, FBO Deposit Account or a Deposit Account relating to the servicing of each Loan, the FBO Deposit Account and Deposit Account is true, correct and consistent, in all material respects, with the information obtained or generated by Company in connection with the servicing of each such Loan, FBO Deposit Account or Deposit Account;
Company’s platform, or provided by Company to Bank in connection with a Loan, FBO Deposit Account or a Deposit Account relating to the servicing of each Loan, the FBO Deposit Account and Deposit Account is true, correct and consistent, in all material respects, with the information obtained or generated by Company in connection with the servicing of each such Loan, FBO Deposit Account or Deposit Account;
(11) The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of Company;
(12) Company is not an investment company as defined in, or subject to regulation under, the U.S. Investment Company Act of 1940;
(13) No Regulatory Authority has imposed any penalties, fines or sanctions on Company with respect to the servicing of loans or the servicing of deposit accounts; Company has not done anything to prevent or impair a Loan from being valid, binding and enforceable against the Borrower thereunder; and
(14) There are no proceedings existing, pending or, to the knowledge of Company, threatened in writing against Company before any Regulatory Authority which would reasonably be expected to have a material adverse effect with respect to Company, the Loans, the Deposit Accounts or the FBO Deposit Account.
(c) Company hereby represents and warrants to Bank as of each Funding Date that:
(1) For each Loan: (i) to Company’s knowledge after due inquiry, all information in the related Application was true and correct as of the date such Application was approved; (ii) assuming the mental and legal capacity of the Borrower, as applicable (and Company has no knowledge that the Borrower lacks mental or legal capacity, as applicable), the Loan will be fully enforceable and all required disclosures to Applicants and Borrowers have been delivered in compliance with Applicable Laws, and the Loan will not be subject to any defense, counterclaim, recoupment or right of setoff or rescission; (iii) the Loan Agreement and all other Loan Documents are genuine and legally binding and enforceable, conform to the requirements of the Program and were prepared in conformity with Applicable
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Laws and the Required Controls, and represent the entire agreement between Bank and Company (on the one hand) and the Borrower (on the other hand) with respect to the Loan; (iv) if the Applicant is a natural person, the Applicant is of sufficient age to enter into, execute and deliver the Loan Agreement; (v) the terms, covenants and conditions of the Loan have not been waived, altered, impaired, modified or amended in any respect by Company; (vi) all necessary approvals required to be obtained by Company have been obtained; (vii)
payments of the Loans and late fees are payable to Bank and its successors and assigns in legal tender of the United States, and are made by the applicable Borrower and not by Company or any of its Affiliates; (viii) unless otherwise agreed to in writing by Bank, the Loan does not contain any provision pursuant to which monthly payments are paid by any source other than the Borrower or that may constitute a “buydown” provision; (ix) the billing address of the related Borrower and any bank account used for payments via ACH transfers on the Loan are each located in the United States; (x) Company has fulfilled all of its obligations (if any) with respect to the origination of the Loan; (xi) Company has not advanced funds, or induced, solicited or knowingly received any advance of funds from a party other than the applicable Borrower, directly or indirectly, for the payment of any amount required by the Loan; (xii) any automated data processing systems used by or on behalf of Company in connection with Loan origination comply with Applicable Laws; and (xiii) nothing exists as to the Company or its business that would prohibit the sale of the Loans by Bank (except as expressly provided in the Program Documents);
payments of the Loans and late fees are payable to Bank and its successors and assigns in legal tender of the United States, and are made by the applicable Borrower and not by Company or any of its Affiliates; (viii) unless otherwise agreed to in writing by Bank, the Loan does not contain any provision pursuant to which monthly payments are paid by any source other than the Borrower or that may constitute a “buydown” provision; (ix) the billing address of the related Borrower and any bank account used for payments via ACH transfers on the Loan are each located in the United States; (x) Company has fulfilled all of its obligations (if any) with respect to the origination of the Loan; (xi) Company has not advanced funds, or induced, solicited or knowingly received any advance of funds from a party other than the applicable Borrower, directly or indirectly, for the payment of any amount required by the Loan; (xii) any automated data processing systems used by or on behalf of Company in connection with Loan origination comply with Applicable Laws; and (xiii) nothing exists as to the Company or its business that would prohibit the sale of the Loans by Bank (except as expressly provided in the Program Documents);
(2) For each Deposit Account: (i) to the Company’s knowledge after due inquiry, all information in the related Application was true and correct as of the date such Application was approved; (ii) assuming the mental and legal capacity of the Accountholder, as applicable (and Company has no knowledge that the
Accountholder lacks mental or legal capacity, as applicable), the Deposit Account will be fully enforceable and all required disclosures to Applicants and Accountholders have been delivered in compliance with Applicable Laws; (iii) the Account Agreement and all other Account Documents are genuine and legally binding and enforceable, conform to the requirements of the Program and were prepared in conformity with Applicable Laws and the Required Controls, and represent the entire agreement between Bank and Company (on the one hand) and the Accountholder (on the other hand) with respect to the Deposit Account; (iv) if the Applicant is a natural person, the Applicant is of sufficient age to enter into, execute and deliver the Account Agreement; (v) the terms, covenants and conditions of the Deposit Account have not been waived, altered, impaired, modified or amended in any respect by Company; (vi) all necessary approvals required to be obtained by Company have been obtained; (vii) the billing address of the related Accountholder and any bank account used for deposits via ACH transfers to the Deposit Account are each located in the United States; (viii) Company has fulfilled all of its obligations (if any) with respect to the establishment and opening of the Deposit Account; and (ix) any automated data processing systems used by or on behalf of Company in connection with Deposit Account establishment and opening comply with Applicable Laws.
Accountholder lacks mental or legal capacity, as applicable), the Deposit Account will be fully enforceable and all required disclosures to Applicants and Accountholders have been delivered in compliance with Applicable Laws; (iii) the Account Agreement and all other Account Documents are genuine and legally binding and enforceable, conform to the requirements of the Program and were prepared in conformity with Applicable Laws and the Required Controls, and represent the entire agreement between Bank and Company (on the one hand) and the Accountholder (on the other hand) with respect to the Deposit Account; (iv) if the Applicant is a natural person, the Applicant is of sufficient age to enter into, execute and deliver the Account Agreement; (v) the terms, covenants and conditions of the Deposit Account have not been waived, altered, impaired, modified or amended in any respect by Company; (vi) all necessary approvals required to be obtained by Company have been obtained; (vii) the billing address of the related Accountholder and any bank account used for deposits via ACH transfers to the Deposit Account are each located in the United States; (viii) Company has fulfilled all of its obligations (if any) with respect to the establishment and opening of the Deposit Account; and (ix) any automated data processing systems used by or on behalf of Company in connection with Deposit Account establishment and opening comply with Applicable Laws.
(3) For each Loan: (i) the Company’s services with respect to such Loan were performed in accordance with the Credit Policy, (ii) Company used the form of Application as approved from time to time in accordance with Section 4, (iii)
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such Loan is evidenced by a Loan Agreement that is in the form of Loan Agreement approved from time to time in accordance with Section 4;
(4) For each Deposit Account: (i) the Company’s services with respect to such Deposit Account were performed in accordance with the Deposit Policy, (ii) Company used the form of Application as approved from time to time in accordance with Section 4, and (iii) each such Deposit Account and is evidenced by an Account Agreement that is in the form of Account Agreement approved from time to time in accordance with Section 4;
(5) Each Borrower listed on a Funding Statement is eligible for a Loan as determined under the Credit Policy in effect on the date of creation of the Loan and is eligible for a Loan under the Credit Policy, as in effect on the date of such Loan;
(6) Each Accountholder listed on the FBO Deposit Account File is eligible for a Deposit Account under the Deposit Policy in effect from time to time;
(7) The origination of the Loan will, assuming performance by Bank of its obligations under this Agreement, comply with all Applicable Laws;
(8) The information on the FBO Deposit Account File, each ACH file and other Deposit Account, Loan and Transaction related information delivered to Bank is true and correct in all respects
(9) Company has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Loans nor authorized the filing of, and is not aware of, any financing statements against the Company or Bank that include a description of collateral covering any portion of the Loans (except for Loans that have been sold by Bank under the Program Documents and any financing statement filed pursuant to the sale); the Loan Agreement or other record that constitutes or evidences a Loan does not and shall not have any marks or notations indicating that it has been pledged, assigned or otherwise conveyed to any Person (except for Loans that have been sold by Bank under the Program Documents and any financing statement filed pursuant to the sale) or as directed by Bank, provided clause (5) shall not limit Company’s ability to transfer, securitize or otherwise transact on the Loans owned by Company pursuant to the Loan and Receivables Sale Agreement;
(10) Assuming performance by Bank of its obligations under this Agreement, all right, title and interest to each Loan shall, upon origination of such Loan, as applicable, be vested in Bank, free of any interest of Company except as
provided in the Program Documents and except for any Liens or encumbrances created by Bank, and Bank shall be the sole legal and beneficial owner of such Loan, and have the right to assign, sell and transfer such Loan, free and clear of any Lien or encumbrance (except for Liens, encumbrances, or security interest created by Bank) in connection with a securitization or otherwise;
provided in the Program Documents and except for any Liens or encumbrances created by Bank, and Bank shall be the sole legal and beneficial owner of such Loan, and have the right to assign, sell and transfer such Loan, free and clear of any Lien or encumbrance (except for Liens, encumbrances, or security interest created by Bank) in connection with a securitization or otherwise;
(11) The Loan was not opened and is not subject to, and any Loan has not been originated in and is not subject to, the laws of any jurisdiction under which the sale, transfer, assignment, setting over, conveyance or pledge of such Loan
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(or an economic interest therein) would be unlawful, void, or voidable (assuming the purchaser has any license required by Applicable Laws);
(12) Company has not entered into any agreement with the Borrower that prohibits, restricts or conditions the assignment of such Loan (or an economic interest therein) (other than any prohibitions, restrictions or conditions arising under Applicable Laws);
(13) All information provided by Company to Bank in connection with a Loan is true and correct (other than information provided by a Borrower, credit reporting agency or subcontractor to Company, which is true and correct to Company’s knowledge);
(14) The information on each Funding Statement is true and correct in all respects;
(15) Company is in compliance with all obligations and agreements under the Program Documents;
(16) The origination, acceptance, rejection, or execution of each Transaction by Bank, in conformance with the respective instructions received from Company (including each ACH file), will comply with the Accountholder’s instructions, all Applicable Laws, the terms of this Agreement and the Finance Materials;
(17) All Transactions originated, accepted, or executed by Bank with respect to the FBO Deposit Account are to or from bank accounts located in the Territory and are in U.S. Dollars;
(18) No Transaction originated, accepted, or executed by Bank will cause the FBO Deposit Account or any individual Deposit Account to have a negative balance except as otherwise agreed by the Parties and in accordance with the Finance Materials; and
(19) Applicable Laws, including applicable requirements of Regulatory Authorities, have been satisfied to ensure the applicability of pass-through FDIC deposit insurance for the benefit of each Accountholder, including that Company has maintained accurate and complete records identifying each Accountholder’s ownership interest in the FBO Deposit Account sufficient to support such pass- through deposit insurance; provided, that this Subsection 16(c)(19) shall not apply to the extent any failure to satisfy such requirements results solely from Bank’s titling of the FBO Deposit Account in a manner inconsistent with the requirements of this Agreement.
(d) The representations and warranties of Bank and Company contained in this Section 16, except those representations and warranties contained in Subsections 16(a)(4), 16(b)(4) and 16(c), are made continuously throughout the term of this Agreement. In the event that any investigation or proceeding of the nature described in Subsections 16(a)(4), 16(b)(4) or 16(b)(14) is instituted or threatened against a Party, such Party shall promptly notify the other Party of the pending or threatened investigation or proceeding.
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17. Indemnification.
(a) Company agrees to defend, indemnify, and hold harmless Bank and its Affiliates, and the officers, directors, employees, representatives, shareholders, agents, and attorneys of such entities (the “Bank Indemnified Parties”) from and against any and all Losses that Bank incurs to the extent arising from or relating to Bank’s participation in the Program (including Company’s violation of Applicable Laws, Company’s breach of any
obligation in the Program Documents and any Third-Party Deposit Service Provider’s acts and omissions), except in each case to the extent of Losses directly caused by Bank’s gross negligence or willful misconduct with respect to Bank’s obligations under the Program Documents; provided that Company is not in breach of any of its obligations under the Program Documents (including any compliance obligations thereunder), other documents governing the Program, or any other agreement with Bank.
obligation in the Program Documents and any Third-Party Deposit Service Provider’s acts and omissions), except in each case to the extent of Losses directly caused by Bank’s gross negligence or willful misconduct with respect to Bank’s obligations under the Program Documents; provided that Company is not in breach of any of its obligations under the Program Documents (including any compliance obligations thereunder), other documents governing the Program, or any other agreement with Bank.
(b) Bank agrees to defend, indemnify, and hold harmless Company from and against any and all Losses that Company incurs to the extent arising from or relating to the Program and arising directly from Bank’s gross negligence or willful misconduct with respect to Bank’s obligations under the Program Documents, except in each case to the extent of Losses caused by (i) Company’s (or its representatives’) gross negligence or willful misconduct, or (ii) Company’s breach of the Program Documents (including any compliance obligations thereunder), other documents governing the Program, or any other agreement with Bank, including Company’s obligations relating to compliance with Applicable Laws.
(c) Company and the Bank Indemnified Parties are sometimes referred to herein as the “Indemnified Parties,” and Company or Bank, as indemnitor hereunder, is sometimes referred to herein as the “Indemnifying Party.”
(d) To the extent permitted by Applicable Laws, any Indemnified Party seeking
indemnification hereunder shall promptly notify the Indemnifying Party, in writing, of any notice of the assertion by any third party of any claim or of the commencement by any third party of any legal or regulatory proceeding, arbitration or action, or if the Indemnified Party determines the existence of any such claim or the commencement by any third party of any such legal or regulatory proceeding, arbitration or action, whether or not the same shall have been asserted or initiated, in any case with respect to which the Indemnifying Party is or may be obligated to provide indemnification (an “Indemnifiable Claim”), specifying in reasonable detail the nature of the claim and, if known, the amount or an estimate of the amount of the Losses; provided, that failure to promptly give such notice shall only limit the liability of the Indemnifying Party to the extent of the actual prejudice, if any, suffered by the Indemnifying Party as a result of such failure. The Indemnified Party shall provide to the Indemnifying Party as promptly as practicable thereafter information and documentation reasonably requested by the Indemnifying Party to defend against the Indemnifiable Claim.
indemnification hereunder shall promptly notify the Indemnifying Party, in writing, of any notice of the assertion by any third party of any claim or of the commencement by any third party of any legal or regulatory proceeding, arbitration or action, or if the Indemnified Party determines the existence of any such claim or the commencement by any third party of any such legal or regulatory proceeding, arbitration or action, whether or not the same shall have been asserted or initiated, in any case with respect to which the Indemnifying Party is or may be obligated to provide indemnification (an “Indemnifiable Claim”), specifying in reasonable detail the nature of the claim and, if known, the amount or an estimate of the amount of the Losses; provided, that failure to promptly give such notice shall only limit the liability of the Indemnifying Party to the extent of the actual prejudice, if any, suffered by the Indemnifying Party as a result of such failure. The Indemnified Party shall provide to the Indemnifying Party as promptly as practicable thereafter information and documentation reasonably requested by the Indemnifying Party to defend against the Indemnifiable Claim.
(e) The Indemnifying Party shall have ten (10) days after receipt of any notification of an Indemnifiable Claim (a “Claim Notice”) to notify the Indemnified Party in writing of the Indemnifying Party’s election to assume the defense of the Indemnifiable Claim and, through counsel of the Indemnifying Party’s own choosing, and at its own expense, to commence the settlement or defense thereof, and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith if such cooperation is so requested and the request is reasonable; provided that the Indemnifying Party shall hold the
25
Indemnified Party harmless from all its reasonable and documented out-of-pocket expenses, including reasonable external attorneys’ fees, incurred in connection with the Indemnified Party’s cooperation; provided, further, that if the Indemnifiable Claim relates to a matter before a Regulatory Authority of Bank, and Company is the Indemnifying Party, Bank may elect, upon written notice to Company, to assume the defense of the Indemnifiable Claim at the cost of and with the cooperation of Company. If the
Indemnifying Party assumes responsibility for the settlement or defense of any such claim, (i) the Indemnifying Party shall permit the Indemnified Party to participate at the Indemnified Party’s expense (for which no claim of Losses shall be made) in such settlement or defense through counsel chosen by the Indemnified Party; provided that, in the event that both the Indemnifying Party and the Indemnified Party are defendants in the proceeding and the Indemnified Party has reasonably determined and notified the Indemnifying Party that representation of both parties by the same counsel would be inappropriate due to the actual or potential differing interests between them, then the reasonable fees and expenses of one separate counsel for all Indemnified Parties in the aggregate shall be borne by the Indemnifying Party; and (ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the Indemnified Party’s consent, except that the Indemnifying Party may settle any Indemnifiable Claim upon notice to the
Indemnified Party if the settlement involves only the payment of money damages and no admission of liability by any Person and no injunctive relief, and the settlement is subject to a confidentiality provision prohibiting disclosure of the terms of the settlement.
Indemnifying Party assumes responsibility for the settlement or defense of any such claim, (i) the Indemnifying Party shall permit the Indemnified Party to participate at the Indemnified Party’s expense (for which no claim of Losses shall be made) in such settlement or defense through counsel chosen by the Indemnified Party; provided that, in the event that both the Indemnifying Party and the Indemnified Party are defendants in the proceeding and the Indemnified Party has reasonably determined and notified the Indemnifying Party that representation of both parties by the same counsel would be inappropriate due to the actual or potential differing interests between them, then the reasonable fees and expenses of one separate counsel for all Indemnified Parties in the aggregate shall be borne by the Indemnifying Party; and (ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the Indemnified Party’s consent, except that the Indemnifying Party may settle any Indemnifiable Claim upon notice to the
Indemnified Party if the settlement involves only the payment of money damages and no admission of liability by any Person and no injunctive relief, and the settlement is subject to a confidentiality provision prohibiting disclosure of the terms of the settlement.
(f) If the Indemnifying Party does not notify the Indemnified Party in writing within ten (10) days after receipt of the Claim Notice that it elects to undertake the defense of the Indemnifiable Claim described therein, or if the Indemnifying Party fails to contest vigorously any such Indemnifiable Claim, or if Bank elects to control the defense of an Indemnifiable Claim before a Regulatory Authority as permitted by Section 17(e), then, in each case, the Indemnified Party shall have the right, upon reasonable written notice to the Indemnifying Party, to contest, settle or compromise the Indemnifiable Claim in the exercise of its reasonable discretion; provided that the Indemnified Party shall notify the Indemnifying Party in writing prior thereto of any compromise or settlement of any such Indemnifiable Claim and shall consider in good faith and discuss with the Indemnifying Party any objection to the settlement the Indemnifying Party may express. No action taken by the Indemnified Party pursuant to this paragraph (f) shall deprive the
Indemnified Party of its rights to indemnification pursuant to this Section 17.
Indemnified Party of its rights to indemnification pursuant to this Section 17.
(g) All amounts due under this Section 17 shall be payable not later than ten (10) days after receipt of the written demand therefor.
18. Term and Termination.
(a) This Agreement shall have an initial term beginning on the Program Launch Date and ending on the fifth (5th) anniversary of the Program Launch Date (the “Initial Term”) and shall renew automatically for successive terms of one (1) year (each a “Renewal Term,” and together with the Initial Term, the “Term”), unless either Party provides notice of non-renewal to the other Party at least one hundred eighty (180) days prior to the end of the Initial Term or any then-current Renewal Term or this Agreement is earlier
terminated in accordance with the provisions hereof.
terminated in accordance with the provisions hereof.
(b) This Agreement shall terminate immediately upon the expiration or earlier termination of the Loan and Receivables Sale Agreement.
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(c) Bank shall have the right to terminate this Agreement immediately upon written notice to Company if:
(1) Bank determines that its continued participation in the Program would be in violation of Applicable Laws, or Bank’s continued participation in the Program has been prohibited by order or injunction of any court or Regulatory Authority;
(2) Bank determines that a change in Applicable Laws or any judicial decision of a court having jurisdiction over Bank or any interpretation of a Regulatory Authority would have a material adverse effect on the rights or obligations of Bank under this Agreement or the financial condition of Bank;
(3) a Regulatory Authority with jurisdiction over Bank has provided, formally or informally, concerns about the Program and Bank, after consulting with outside legal counsel, determines, in its sole discretion, that its rights and remedies under this Agreement are not sufficient to protect Bank fully against the potential consequences of such concerns;
(4) Bank determines that there is a substantial financial, reputational, regulatory or other risk of continuing to participate in the Program, or continuing to do business with Company, or Bank determines that any depository institution accepting deposits in connection with Company’s Program offering presents financial, reputational, regulatory or other risk (including by receiving any consent order or sanction by a Regulatory Authority);
(5) a fine or penalty of at least [***] has been assessed against Bank by a Regulatory Authority in connection with the Program, including as a result of a consent order or stipulated judgment;
(6)(i) Company defaults on its obligation to make a payment to Bank as provided in Section 2 of the Loan and Receivables Sale Agreement or Section 14 of this Agreement and fails to cure such default within one (1) Business Day of
receiving notice of such default from Bank; (ii) Company defaults on its
obligation to make a payment to Bank as provided in Section 2 of the Loan and Receivables Sale Agreement or Section 14 of this Agreement more than once in any three (3) month period; or (iii) Company fails to maintain the collateral account as required by the Loan and Receivables Sale Agreement;
receiving notice of such default from Bank; (ii) Company defaults on its
obligation to make a payment to Bank as provided in Section 2 of the Loan and Receivables Sale Agreement or Section 14 of this Agreement more than once in any three (3) month period; or (iii) Company fails to maintain the collateral account as required by the Loan and Receivables Sale Agreement;
(7) Bank incurs any Loss and is not able to obtain indemnification for such Loss under Section 17(a) due to the application of Applicable Laws that limit or restrict Bank’s ability to seek such indemnification, or if Bank if precluded by a Regulatory Authority from seeking such indemnification;
(8)(i) there is a material adverse change in the financial condition of Company including any breach of or event of default under, or any failure to comply with the terms, conditions, or covenants (in each case, regardless of whether such breach, event of default, or failure to comply is asserted or waived by any other Person) of any credit or debt facility of Company or parent (whether now existing or arising in the future) (each, a “Company Credit Facility”), or (ii) Company fails to provide reasonable evidence of its ability to renew, extend, or
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replace a Company Credit Facility at least thirty (30) days prior to a maturity thereof;
(9) Company has not presented any Applications for new Loans or Deposit Accounts in the immediately preceding thirty (30) days;
(10) there is a Change of Control of Company, and Bank determines in good faith that Bank should not continue to do business with Company and such Person as a result of such Change in Control because of competitive, regulatory, safety and soundness, reputational or financial concerns, then Bank shall have the right to terminate this Agreement following written notice of termination to Company. Such written notice of termination shall be delivered by Bank to Company within sixty (60) days of delivery to Bank of the COC Notice and set forth in reasonable detail the rationale of such determination. Bank’s obligation to provide Company with a written notice of termination within sixty (60) days of delivery to Bank of the COC Notice does not begin until (i) Bank receives sufficient information to make a determination regarding whether Bank should continue to do business with Company; and (ii) Company has provided Bank with all information requested by Bank. Such notice of termination will be contingent effective on the closing of such Change of Control;
(11) Company materially breaches any agreement with a Critical Vendor in connection with the Program;
(12) a judgment, fine or penalty of at least [***] has been assessed against Company; or
(13) Company breached any of the Financial Covenants.
Prior to termination of Agreement pursuant to Section (c)(1), (c)(2) or (c)(3), Bank will meet with Company and consider in good faith any changes, modifications or additions to the Program and/or the Program Documents; provided that to the extent Bank determines in its sole discretion that such modifications, changes or additions are not sufficient to protect Bank, Bank may terminate immediately upon written notice to Company. Notwithstanding the foregoing, Bank may terminate this Agreement immediately upon written to Company pursuant to such sections to the extent required by Applicable Laws or a Regulatory Authority, or necessitated by safety and soundness concerns.
(d) A Party shall have the right to terminate this Agreement immediately upon written notice to the other Party in any of the following circumstances:
(1) any representation or warranty made by the other Party in this Agreement shall be incorrect in any material respect and shall not have been corrected within thirty (30) Business Days after written notice thereof has been given to such other Party;
(2) the other Party shall default in the performance of any obligation or undertaking under this Agreement and such default shall continue for thirty (30) Business Days after written notice thereof has been given to such other Party;
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(3) the other Party shall have a receiver or conservator appointed for it, shall commence a voluntary case or other proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts under any
bankruptcy, insolvency, receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or
reorganization, or other relief with respect to itself or its debts under any
bankruptcy, insolvency, receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or
(4) an involuntary case or other proceeding, whether pursuant to banking regulations or otherwise, shall be commenced against the other Party seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, and such case or proceeding has not been stayed or dismissed within sixty (60) days after filing; or an order for relief shall be entered against the other Party under the federal bankruptcy laws as now or hereafter in effect.
(e) Bank shall have the right to terminate this Agreement or suspend performance of its obligations under the Program immediately upon written notice to Company in any of the following circumstances:
(1) there is a material adverse change in the financial condition of Company. A material adverse change in financial condition includes (i) any breach of or event of default under, or any failure to comply with the terms, conditions, or
covenants (in each case, regardless of whether such breach, event of default, or failure to comply is asserted or waived by any other Person) of any Company Credit Facility, or (ii) Company’s failure to provide reasonable evidence of its ability to renew, extend, or replace a Company Credit Facility at least thirty (30) days prior to a maturity thereof;
covenants (in each case, regardless of whether such breach, event of default, or failure to comply is asserted or waived by any other Person) of any Company Credit Facility, or (ii) Company’s failure to provide reasonable evidence of its ability to renew, extend, or replace a Company Credit Facility at least thirty (30) days prior to a maturity thereof;
(2) a court or a Regulatory Authority having jurisdiction orders or issues an injunction that prohibits a Party from continuing to participate in the Program; or
(3) Bank has been advised by legal counsel that a change in Applicable Laws or any judicial decision of a court having jurisdiction over Bank, the Company, or the Program, or any interpretation or position (formal or informal) of a Regulatory Authority creates a material risk that Bank’s continued performance under this Agreement would violate Applicable Laws.
Bank shall not terminate this Agreement pursuant to this Section 18(e) unless Bank first seeks to discuss with Company modifications to the Program to avoid the need for such termination and the Parties are unable to agree to such modifications.
(f) In the event Company either acquires or becomes a depository institution, Company may terminate the Program upon ninety (90) days prior written notice to Bank; provided that Company may not terminate the Program sooner than twenty-four (24) months following
29
the Program Launch Date. In the event of a termination pursuant to this Section 18(f), Company shall pay Bank a termination fee equal to (i) [***] if such termination occurs in the third Program Year; (ii) [***] if such termination occurs in the fourth Program Year; and (iii) [***] if the termination occurs in the fifth Program Year; provided, however, that if Company is in breach of any of its obligations under the Program Documents at the time of such termination, Company shall pay Bank the greater of (i) the [***] and (ii) the termination fees set forth in this Section 18(f). Company agrees that it will support an orderly wind down of the Program, including supporting any audits, exams, and expenses that may be reasonably required or incurred by Bank.
(g) In addition to any other rights or remedies available to the Bank under this Agreement or by law, Bank shall have the right to suspend performance of its obligations under this Agreement, including, but not limited to, Bank’s funding of any Loan (as required under Section 11 of this Agreement) during the period commencing with the occurrence of any monetary default by Company including but not limited to the failure to make a payment required by Section 2 of the Loan and Receivables Sale Agreement or Section 14 of this Agreement, and in any case ending when such condition has been cured. Notwithstanding such suspension right, Bank may terminate this Agreement as provided in Section (c), (d), or (e) of this Section 18.
(h) Bank shall not be obligated to approve Applications, fund any Loan or establish any Deposit Account after termination or during any suspension of this Agreement.
(i) The termination of this Agreement either in part or in whole shall not discharge any Party from any obligation incurred prior to such termination.
(j) If this Agreement is terminated prior to the end of the Term, then Company shall pay to Bank at the effective date of such termination an amount equal [***] immediately prior to such termination. This Section 18(j) shall not apply to any termination of this Agreement by Company pursuant to (i) Sections 18(d) or 18(f) and (ii) Sections 18(c)(1), 18(c)(2), 18(c) (3), 18(c)(4), 18(e)(2) and 18(e)(3) so long as the Company is not otherwise in breach of any of its obligations under of the Program Documents.
(k) As soon as is reasonably practicable after either Party provides a termination or non-renewal notice, Company shall provide to Bank in writing a proposed transition or wind-down plan, detailing (i) whether any aspect of the Program is to be wound down or transferred to Company or its designee(s) (the “Successor”); and (ii) a proposed timeline, which shall designate a date as of which the Program shall be wound down or transferred from Bank to the Successor. Subject to the foregoing, Bank and Company shall meet promptly thereafter to review such proposed plan and to determine a mutually acceptable transition or wind-down plan; provided, however, that if Bank and Company fail to reach mutual agreement on the transition or wind-down plan within thirty (30) days after the date of notice of termination or non-renewal or such later time as may otherwise be mutually agreed upon by both parties, Bank shall establish such a plan that is appropriate for the Card aspect of the Program. The wind-down or transition of the Program shall occur as soon as is reasonably possible before the termination or expiration of the Agreement; provided, that upon the mutual agreement of the parties, which agreement shall not be unreasonably withheld or delayed, the Term of the Agreement may be
30
extended by up to six (6) months, solely for the purpose of completing the wind-down or transition. The economic terms of the Agreements shall remain in effect during the wind-down period.
(l) Following the expiration or earlier termination of this Agreement, to the extent that Bank continues to own any Loans or Deposit Accounts, Bank may elect to continue to have Company service the Loans, the Deposit Accounts and the FBO Deposit Account pursuant to Sections 12, 13 and 14 of this Agreement, or Bank may elect to terminate such servicing.
(m) The following terms of this Agreement shall survive the expiration or earlier termination of this Agreement:
(1) Sections 7(c), 17, 18, 19, 26 and 36 shall survive indefinitely;
(2) The provisions in Section 6(a)(3) addressing the retention and
availability of records shall survive for the period that Bank is required by Applicable Laws to retain such records; and
availability of records shall survive for the period that Bank is required by Applicable Laws to retain such records; and
(3) Sections 6, 7, 10(c), 10(d) and 10(e) shall survive during the period that Bank continues to own any Loans or Deposit Accounts.
19. Confidentiality.
(a) Each Party agrees that Confidential Information of the other Party (“Disclosing Party”) shall be used by such Party solely in the performance of its obligations and exercise of its rights pursuant to the Program Documents. Except as required by Applicable Laws or legal process, neither party (each a “Restricted Party”) shall disclose Confidential Information of the Disclosing Party to third parties; provided, however, that the Restricted Party may disclose Confidential Information of the other Party (i) to the Restricted Party’s Affiliates, agents, representatives or subcontractors for the sole purpose of fulfilling the Restricted Party’s obligations under this Agreement (as long as the Restricted Party exercises reasonable efforts to prohibit any further disclosure by its Affiliates, agents, representatives or subcontractors), provided that in all events, the Restricted Party shall be responsible for any breach of the confidentiality obligations hereunder by any of its Affiliates, agents (other than Company as agent for Bank), representatives or subcontractors, (ii) to the Restricted Party’s auditors, accountants and other professional advisors, or to a Regulatory Authority, (iii) to any other third party as mutually agreed in writing by the Parties or (iv) with consent of the Disclosing Party. In addition, each Party agrees that the other Party may share Confidential Information with potential acquirers including the other party to a sale of assets (including Loans, Receivables, or economic interests in the Loans), or to any lender or potential lender (including in connection with the issuance of debt securities) to such Party solely to the extent required to facilitate such transactions and due diligence associated with such transactions, provided that the potential party to such transaction is subject to written non-disclosure obligations and limitations on use only for the actual or prospective transaction.
(b) A Party’s Confidential Information shall not include information that:
(1) is generally available to the public;
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(2) has become publicly known, without fault on the part of the Restricted Party who now seeks to disclose such information, subsequent to the Restricted Party acquiring the information;
(3) was otherwise known by, or available to, the Restricted Party prior to entering into this Agreement; or
(4) becomes available to the Restricted Party on a non-confidential basis from a Person, other than a Party to this Agreement, who is not known by the Restricted Party after reasonable inquiry to be bound by a confidentiality agreement with the Disclosing Party or otherwise prohibited from transmitting the information to the Restricted Party.
(c) Upon written request or upon the termination of this Agreement, each Party shall, within thirty (30) days, return to the other Party all Confidential Information of the other Party in its possession that is in written form, including by way of example, but not limited to, reports, plans, and manuals; provided, however, that either Party may maintain in its possession all such Confidential Information of the other Party required to be maintained under Applicable Laws relating to the retention of records for the period of time required thereunder.
(d) In the event that a Restricted Party is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information of the Disclosing Party, the Restricted Party will provide the Disclosing Party with prompt notice of such request(s) so that the Disclosing Party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Party’s compliance with the provisions of this Agreement. In the event that the Disclosing Party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the Disclosing Party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information of the Disclosing Party which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information of the Disclosing Party so furnished as the Restricted Party would exercise in assuring the confidentiality of any of its own Confidential Information.
interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information of the Disclosing Party, the Restricted Party will provide the Disclosing Party with prompt notice of such request(s) so that the Disclosing Party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Party’s compliance with the provisions of this Agreement. In the event that the Disclosing Party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the Disclosing Party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information of the Disclosing Party which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information of the Disclosing Party so furnished as the Restricted Party would exercise in assuring the confidentiality of any of its own Confidential Information.
20. Proprietary Material. Each Party (“Licensing Party”) hereby provides the other Party (“Licensee”) with a non-exclusive right and license to use and reproduce the Licensing Party’s name, logo, registered trademarks and service marks (“Proprietary Material”) on the Applications, Loan Agreements, Account Agreements, Marketing Materials, and otherwise in connection with the fulfillment of Licensee’s obligations under this Agreement; provided, however, that (i) the Licensee shall at all times comply with written instructions provided by the Licensing Party regarding the use of the Licensing Party’s Proprietary Material, and (ii) Licensee acknowledges that, except as specifically provided in this Agreement, it will acquire no interest in the Licensing Party’s Proprietary Material. Upon termination of this Agreement, Licensee will cease using Licensing Party’s Proprietary Material. Bank may use Company’s Proprietary Materials in materials describing Bank’s business, such as its website and investor presentations, subject to Company’s prior written consent which shall not be unreasonably withheld. Notwithstanding anything in this Agreement to the contrary, Bank shall not share with any other partner of the Bank or allow any such partner to use any of the Marketing Materials, Servicing Materials,
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Finance Materials, Applications, Loan Agreements, Loan Documents, Loan Document Package, Account Agreements, Account Documents and Deposit Account Document Package developed by Bank and Company for use in connection with the Program without Company’s prior written permission.
21. Relationship of Parties. Bank and Company agree that in performing their responsibilities pursuant to this Agreement, they are in the position of independent contractors. This Agreement is not intended to create, nor does it create and shall not be construed to create, a relationship of partner or joint venturer or any association for profit between and among Bank and Company.
22. Expenses.
(a) Except as set forth herein, each Party shall bear the costs and expenses of performing its obligations under this Agreement.
(b) Company shall bear all costs and expenses related to the Program, and to the extent necessary, reimburse Bank for any such documented, out-of-pocket costs and expenses incurred in the issuing, originating/enrolling, establishing and servicing of the Loans, the Cards, the FBO Deposit Account and the Deposit Accounts, including the costs and expenses related to pulling credit reports and performing screening. Company will reimburse Bank for any hard costs associated with the Program including, but not limited to, wire transfer fees, ACH fees, payment processing, bank fees, Network fees (including the cost of the Program BIN(s) and ICA(s), as applicable, and including any proportional amount of such expenses or fees that apply to the Program as well as to other programs of Bank, regardless of whether the Bank’s counterparty actually pays such expenses or fees), and out-of-pocket expenses incurred by Bank in the performance of on-site reviews of Company’s (including material third-party vendors’ and subcontractors’) financial condition, operations, and internal controls as set forth in Schedule 22. Bank will use commercially reasonable efforts to control costs and expenses and cooperate with Company to avoid duplicative sourcing of services related to the Program.
(c) Each Party shall be responsible for payment of any federal, state, or local taxes or assessments associated with the performance of its obligations under this Agreement and for compliance with all filing, registration and other requirements with regard thereto; provided, however, that Company shall be solely responsible for the payment of any taxes (and performance of and compliance with associated requirements) imposed directly on any of the Loans, Loan Documents, FBO Deposit Account, Deposit Accounts or Account Documents, such as the Florida documentary stamp tax (to the extent applicable).
(d) Company shall reimburse Bank for all reasonable, documented and out-of-pocket third-party bank fees incurred by Bank in connection with the performance of this Agreement, provided that any such third-party fees shall be invoiced by Bank at Bank’s actual cost and shall not include any corporate allocations, administrative fees or Bank mark-ups.
(e) Company shall be responsible for all of Bank’s reasonable ongoing out-of-pocket outside counsel fees related to the Program, including Bank’s attorneys’ fees and expenses in connection with the preparation, negotiation, execution, and delivery of the Program Documents; any amendment, modification, administration, collection, or enforcement of the Program Documents; or any modification of the Finance Materials or other
documents or disclosures related to the Program; or any dispute or litigation arising out
documents or disclosures related to the Program; or any dispute or litigation arising out
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of or related to the Program (except in the case of litigation between Bank and Company, in which case Bank will refund the outside counsel fees for which Company has
previously provided indemnification if Company is the prevailing party in litigation not subject to further appeal) (collectively, “Legal Fees”). Company shall be responsible for all of Bank’s reasonable out-of-pocket costs and expenses for any other third-party professional services related to the Program, including the services of any third-party compliance, credit or technology specialists in connection with ongoing examinations, inspections, and audits of Company or the Program that Bank may require from time to time. Bank will provide to Company regular monthly invoices detailing such fees and expenses (which may be redacted to preserve confidentiality or privilege). Except for Legal Fees, Bank shall use commercially reasonable efforts to control third-party costs and expenses related to the Program and cooperate with Company to avoid duplicative sourcing of services related to the Program.
previously provided indemnification if Company is the prevailing party in litigation not subject to further appeal) (collectively, “Legal Fees”). Company shall be responsible for all of Bank’s reasonable out-of-pocket costs and expenses for any other third-party professional services related to the Program, including the services of any third-party compliance, credit or technology specialists in connection with ongoing examinations, inspections, and audits of Company or the Program that Bank may require from time to time. Bank will provide to Company regular monthly invoices detailing such fees and expenses (which may be redacted to preserve confidentiality or privilege). Except for Legal Fees, Bank shall use commercially reasonable efforts to control third-party costs and expenses related to the Program and cooperate with Company to avoid duplicative sourcing of services related to the Program.
(f) All fees payable pursuant to this Section 22 (other than amounts the payment of which is otherwise provided for under this Agreement) may be paid by wire or ACH, as
determined by the Company, but shall be paid pursuant to the terms of the Bank’s invoice. Bank may assess a service charge of [***] per month on any amounts due under this Agreement that are thirty (30) days past due.
determined by the Company, but shall be paid pursuant to the terms of the Bank’s invoice. Bank may assess a service charge of [***] per month on any amounts due under this Agreement that are thirty (30) days past due.
(g) Bank may set-off, combine, consolidate or otherwise appropriate and apply (i) any assets of Company held by Bank or (ii) any indebtedness or other liabilities at any time owing by Bank to Company, as the case may be, against or on account of any obligations owed by Company to Bank under the Program Documents.
23. Examination. Company agrees to submit to any examination that may be required by a Regulatory Authority having jurisdiction over Bank, during regular business hours and upon reasonable prior notice (or otherwise, if required by the Regulatory Authority), and to otherwise provide reasonable cooperation to Bank in responding to such Regulatory Authority’s inquiries and requests related to the Program.
24. Site Visits. Company, upon reasonable prior notice from the Bank, agrees to submit to an inspection of its books, records, accounts, and facilities relevant to the Program, from time to time, during regular business hours. All expenses of inspection shall be borne by Company, and Company shall reimburse Bank for reasonable, documented out-of-pocket expenses incurred by Bank in the performance of periodic on-site reviews of Company’s financial condition, operations and internal controls. Company shall store all documentation and electronic data related to its performance under this Agreement and shall make such documentation and data available during any inspection by Bank. Company shall make available to Bank such information,
documentation, and data as may be requested by Bank from time to time to conduct testing, reviews, or other evaluations of Company or the Program.
documentation, and data as may be requested by Bank from time to time to conduct testing, reviews, or other evaluations of Company or the Program.
25. Reports, Data, and Information Requirements. Company shall provide to Bank the reports identified in the reports schedule that is provided by Bank, annual budgets and forecasts of Company and the Program, together with any required supporting documentation, and such other reports as Bank may reasonably request from time to time. Company shall comply with the formatting and technical guidance provided by Bank for submitting reports. Bank may request additional data fields and/or modifications to the templates for reporting, and Company shall implement such additions or modifications within thirty (30) days. Bank may request new report templates and Company shall implement such new reports within sixty (60) days. All templates and template changes must be approved in writing by Bank.
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26. Governing Law; Waiver of Jury Trial. This Agreement, including all issues concerning the validity of the Agreement, the construction of its terms, and the interpretation, performance, and enforcement of the rights and duties of the Parties, shall be governed by, interpreted, and enforced in accordance with the laws of the State of Utah, without giving effect to the rules, policies, or principles thereof with respect to conflicts of laws that would require the application of any other law. Without limiting the generality of the foregoing, the Parties agree the laws of the State of Utah shall govern the entire relationship between and among the Parties, including without limitation, all issues or claims arising out of, relating to, in connection with, or incident to this Agreement, whether such claims are based in tort, contract, or arise under statute or in equity.
The Parties acknowledge and agree that this Agreement is made and performed in the State of Utah. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR CLAIM (WHETHER BASED UPON CONTRACT, TORT, EQUITY OR OTHERWISE) ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S
ENTERING INTO THIS AGREEMENT.
ENTERING INTO THIS AGREEMENT.
27. Severability. Any provision of this Agreement that is deemed invalid, illegal, or unenforceable in any jurisdiction, shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability, without affecting in any way the remaining portions hereof in such jurisdiction or rendering such provision or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. All terms and conditions of this Agreement will be deemed enforceable to the fullest extent permissible under Applicable Law, and, when necessary, the court is authorized to reform any and all terms or conditions to give them such effect.
28. Assignment. This Agreement and the rights and obligations created under it shall be binding upon and inure solely to the benefit of the Parties and their respective successors, and permitted assigns. Neither Party may assign or transfer this Agreement without the prior written consent of the other Party. Notwithstanding the foregoing, all assignments of rights by Company are prohibited under this Section, whether they are voluntary or involuntary, by merger,
consolidation, Change of Control, dissolution, operation of law, or any other manner. For purposes of this Section, “merger” refers to any merger in which Company participates, regardless of whether it is the surviving entity or not. Company may not delegate any
performance under this Agreement without the prior written consent of Bank. Any purported assignment of rights or delegation of performance in violation of this Section is void. No assignment of rights or delegation of performance under this Section shall relieve a Party of its obligations under this Agreement.
consolidation, Change of Control, dissolution, operation of law, or any other manner. For purposes of this Section, “merger” refers to any merger in which Company participates, regardless of whether it is the surviving entity or not. Company may not delegate any
performance under this Agreement without the prior written consent of Bank. Any purported assignment of rights or delegation of performance in violation of this Section is void. No assignment of rights or delegation of performance under this Section shall relieve a Party of its obligations under this Agreement.
29. Third Party Beneficiaries. This Agreement is not intended to and does not confer any rights or remedies upon any Person other than the Parties. Nothing contained herein shall be construed as creating a third-party beneficiary relationship between either Party and any other Person.
30. Notices. All notices and other communications that are required or may be given in connection with this Agreement shall be in writing and shall be deemed received (a) on the day delivered, if delivered by hand; (b) on the day transmitted, if transmitted by e-mail with receipt confirmed; or (c) three (3) Business Days after the date of mailing to the other Party, if mailed first-class mail postage prepaid, at the following address, or such other address as either Party shall specify in a notice to the other:
To Bank: WebBank
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Attn: [***]
P.O. Box 757
Portsmouth NH 03802
Tel. [***]
Email: [***]
P.O. Box 757
Portsmouth NH 03802
Tel. [***]
Email: [***]
With copies to: WebBank
Attn: [***]
P.O. Box 757
Portsmouth NH 03802
Email: [***]
Attn: [***]
P.O. Box 757
Portsmouth NH 03802
Email: [***]
To Company: Sezzle Inc.
Attn: [***]
700 Nicollet Mall, Suite 640
Minneapolis, MN 55402
Tel.: [***]
Email: [***]
700 Nicollet Mall, Suite 640
Minneapolis, MN 55402
Tel.: [***]
Email: [***]
With copy to: Sezzle, Inc.
Attn: [***]
700 Nicollet Mall, Suite 640
Minneapolis, MN 55402
Tel.: [***]
700 Nicollet Mall, Suite 640
Minneapolis, MN 55402
Tel.: [***]
Email: [***]
31. Amendment and Waiver. This Agreement may not be amended orally, but only by a written instrument signed by all Parties that identifies itself as an amendment to this Agreement. No failure or delay in exercising any right or remedy or requiring the satisfaction of any condition under this Agreement, and no course of dealing between the Parties, operates as a waiver or estoppel of any right, remedy, or condition. All waivers must be in writing and signed by the Party against whom the waiver is to be enforced. A waiver made in writing on one occasion is effective only in that instance and only for the purpose that it is given and is not and is not to be construed as a waiver on any future occasion or against the other Party. To the extent any course of dealing, act, omission, failure, or delay in exercising any right or remedy under this Agreement constitutes the election of an inconsistent right or remedy, that election does not constitute a waiver of any right or remedy or limit or prevent the subsequent enforcement of any Agreement provision. No single or partial exercise of any right or remedy under this Agreement precludes the simultaneous or subsequent exercise of any other right or remedy. The rights and remedies of the Parties set forth in this Agreement are not exclusive of, but are cumulative to, any rights or remedies now or subsequently existing at law, in equity, or by statute.
32. Entire Agreement. The Program Documents constitute the final agreement between the Parties. The Program Documents are the complete and exclusive expression of the Parties’ agreement on the matters contained therein. All prior and contemporaneous negotiations and agreements between the Parties on the matters contained in the Program Documents are expressly merged into and superseded by the Program Documents. The provisions of the Program Documents may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings. In entering into the Program Documents, neither Party has relied upon any statement, representation, warranty, or agreement of the other Party except for those expressly contained in
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the Program Documents. There are no conditions precedent to the effectiveness of this Agreement other than the execution hereof by the Parties and those conditions expressly stated in this Agreement.
33. Counterparts; Electronic Signatures. This Agreement may be executed and delivered by the Parties in any number of counterparts, and by different parties on separate counterparts, each of which counterpart shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. This Agreement may be executed and delivered by facsimile, as an attachment to an electronic mail message in .pdf, .jpeg, .TIFF or similar electronic format, or by electronic signature (including DocuSign, AdobeSign, and
ContractWorks), which will be considered originals and legally binding for all purposes. Each Party agrees that any such electronically transmitted signature shall be valid and binding on such Party to the same extent as a manual signature.
ContractWorks), which will be considered originals and legally binding for all purposes. Each Party agrees that any such electronically transmitted signature shall be valid and binding on such Party to the same extent as a manual signature.
34. Interpretation. The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments thereto, and the same shall be construed neither for nor against either Party, but shall be given a reasonable interpretation in accordance with the plain meaning of its terms and the intent of the Parties.
Agreement or any amendments thereto, and the same shall be construed neither for nor against either Party, but shall be given a reasonable interpretation in accordance with the plain meaning of its terms and the intent of the Parties.
35. Force Majeure. If any Party is unable to carry out the whole or any part of its obligations under this Agreement by reason of a Force Majeure Event, then the performance of the obligations under this Agreement of such Party as they are affected by such cause shall be excused during the continuance of the inability so caused, except that should such inability not be remedied within thirty (30) days after the date of such cause, the Party not so affected may at any time after the expiration of such thirty (30) day period, during the continuance of such inability, terminate this Agreement upon giving written notice to the other Party and without payment of a termination fee or other penalty. To the extent that the Party not affected by a Force Majeure Event is unable to carry out the whole or any part of its obligations under this Agreement because a prerequisite obligation of the Party so affected has not been performed, the Party not affected by a Force Majeure Event also is excused from such performance during such period. A “Force Majeure Event” as used in this Agreement shall mean an unanticipated event that is not reasonably within the control of the affected Party or its subcontractors including, but not limited to, acts of God, acts of governmental authorities, strikes, war, riot, pandemic, and any other causes of such nature, and which by exercise of reasonable due diligence, such affected Party or its subcontractors could not reasonably have been expected to avoid, overcome or obtain, or cause to be obtained, a commercially reasonable substitute therefor. No Party shall be relieved of its obligations hereunder if its failure of performance is due to removable or remediable causes which such Party fails to remove or remedy using commercially reasonable efforts within a reasonable time period. Either Party rendered unable to fulfill any of its obligations under this Agreement by reason of a Force Majeure Event shall give prompt notice of such fact to the other Party, followed by written confirmation of notice, and shall exercise due diligence to remove such inability with all reasonable dispatch.
36. Jurisdiction; Venue. Each Party hereby submits to the exclusive jurisdiction of the federal and state courts in Salt Lake City, Utah (and appellate courts thereof) in connection with any dispute related to this Agreement or any matter contemplated hereby. Each Party irrevocably and unconditionally waives any objection to the laying of such venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
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37. Insurance. Company agrees to maintain customary insurance coverage on the terms and conditions reasonably specified from time to time by Bank at all times during the term of this Agreement, to provide an annual update of all insurance coverages, and to notify Bank promptly of any cancellation or lapse of any such insurance coverage. Insurance policies required to be maintained hereunder shall be procured from insurance companies reasonably acceptable to Bank. Company shall provide evidence of its insurance coverages in the form of certificates of insurance promptly following the Effective Date and at each policy renewal or replacement.
38. Prohibition on Tie-In Fees. Company shall not directly or indirectly impose or collect any fees, charges or remuneration on Applicants, Accountholders or Borrowers relating to the processing or approval of an Application, the establishment of a Loan, the establishment of a Deposit Account, or the disbursement of Loan Proceeds, unless such fee, charge or remuneration is set forth in the Finance Materials, or approved in writing by Bank.
39. Headings. Captions and headings in this Agreement are for convenience of reference only, are not to be deemed part of this Agreement, and do not affect the construction or interpretation of this Agreement.
40. Manner of Payments. Unless the manner of payment is expressly provided herein, all payments under this Agreement shall be made by wire or ACH transfer to the bank accounts designated by the respective Parties. Notwithstanding anything to the contrary contained herein, neither Party shall be excused from making any payment required of it under this Agreement as a result of a breach or alleged breach by the other Party of any of its obligations under this Agreement or any other agreement, provided that the making of any payment hereunder shall not constitute a waiver by the Party making the payment of any rights it may have under the Program Documents or by law.
41. Referrals. Neither Party has agreed to pay any fee or commission to any agent, broker, finder, or other person for or on account of such person’s services rendered in connection with this Agreement that would give rise to any valid claim against the other Party for any commission, finder’s fee or like payment.
42. Financial Covenants, Statements and Reporting.
(a) Company, shall, at all times during the Term, satisfy each of the following financial covenants (the “Financial Covenants”):
(1) Minimum Tangible Net Worth. Company shall maintain a Tangible Net Worth at least equal to the greater of (i) $100.0 million, [***]
(2) Maximum Leverage Ratio. Company shall maintain a Leverage Ratio not to exceed the lesser of [***]
(3) Net Liquidity Minimum. Company shall maintain Unrestricted Cash in an amount at least equal to the greater of [***]
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(b) Company will report monthly to Bank, in a form and substance reasonably acceptable to Bank, regarding origination and portfolio performance, its performance of services under the Program Documents, including compliance activities, and permit Bank to audit Company with regard to same.
(c) To the extent that such reports are not filed with the U.S. Securities and Exchange Commission and publicly available on the EDGAR system as part of the quarterly or annual reports of Company, Company shall provide Bank the following: (i) an unaudited monthly financial statement (which includes Company, its parent, and their subsidiaries), which shall, at a minimum, include a balance sheet, income statement, and statement of cash flows, within thirty (30) days after the end of each month, certified by the chief executive officer, chief financial officer, treasurer, or controller of Company as fairly presenting the financial condition, results of operations, and cash flows of Company, its parent, and their subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments; (ii) concurrently with the delivery of monthly financial statements, Company shall provide a monthly update on the Merchant Interest Program balance as of the end of each fiscal month; (iii) an unaudited consolidated (which includes Company, its parent, and their subsidiaries) quarterly financial statement, which shall, at a minimum, include a consolidated balance sheet, consolidated income statement, and consolidated statement of cashflows within forty-five (45) days after the end of each fiscal quarter, certified by the chief executive officer, chief financial officer, treasurer or controller of Company as fairly presenting the financial condition, results of operations and cash flows of Company, its parent, and their subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments; (iv) concurrently with the delivery of quarterly financial statements, Company shall provide a list of all merchants in the Merchant Interest Program and their respective outstanding balances at the end of each fiscal quarter; (v) an audited annual financial statement, which shall, at a minimum, include a balance sheet, income statement, statement of cash flows, a statement of stockholders’ equity, the accountants’ letter to management and an unqualified opinion, within ninety (90) days following the end of Company’s fiscal year that is audited by an independent certified public accountant and certified, without any qualifications, by such accountants to have been prepared in accordance with GAAP, and with no emphasis of matter or other disclosure regarding Company’s ability to continue as a going concern (regardless of whether such accountants conclude that Company management’s plans are sufficient to alleviate the determination that substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time); (vi) concurrently with the delivery of the financial statements, a completed compliance certificate covering the financial covenants set forth in Section 42(a), signed by the chief executive officer, chief financial officer, treasurer, or controller of Company; (vii) concurrently with the delivery of any annual financial statements, a narrative report of management’s discussion and analysis for the reporting period, and setting forth, in reasonable detail, in comparative form the corresponding periods of the previous fiscal year; (viii) by December 1 of each year, annual projections for Company for the subsequent year on a consolidated basis including estimated annual Program volume and the number of Loans for such year; and (ix) by March 1 of each year, an annual budget approved by Company’s Board of Directors for the current year on a consolidated basis.
(d) Company shall provide to Bank, at the same time such materials are provided to Company’s lender(s), as applicable, and at such other times as reasonably requested by Bank, a copy of the covenant compliance certificate, reporting packages, borrowing base
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certificates, and other similar reporting under any Company Credit Facility used to support or that may be used to support the Program (“Supporting Company Credit Facility”). Company shall provide to Bank immediate notice of any amendment to or breach of, failure to comply with the terms, conditions, or covenants of; or event of default under any Supporting Company Credit Facility. Company shall provide to Bank advance notice of, and copies of drafts of, any amendments, loan agreements,
promissory notes, security agreements, and other documents or instruments relating to any Supporting Company Credit Facility, and shall provide final signed copies of any such documents or instruments to Bank upon execution thereof.
promissory notes, security agreements, and other documents or instruments relating to any Supporting Company Credit Facility, and shall provide final signed copies of any such documents or instruments to Bank upon execution thereof.
(e) For any Company Credit Facility that is not a Supporting Company Credit Facility, the Parties shall work in good faith to agree to reporting standards reasonably acceptable to Bank that also address any confidentiality or legal conflicts with Company’s existing lender(s).
(f) Company shall provide written notice to Bank of any expected or anticipated Change of Control of Company (“COC Notice”) not later than thirty (30) Business Days prior to the anticipated effective date of such Change of Control and such COC Notice shall include the name of the Person acquiring Control of Company.
43. Exclusivity.
(a) Bank shall be the exclusive issuer of (a) Card (including virtual cards) products, (b) on-demand products, (c) consumer installment loans that require or permit repayment over two or more installments, however named or structured (including, for the avoidance of doubt, “Pay-in-4”, “Pay-in-2” and “Pay-in-5” consumer loans), and (d) cash advance loans (including, for the avoidance of doubt, Sezzle Cash Loans), in each case that are marketed or serviced by Company or its Affiliates during the Term in the Territory, [***]
(b) [***]
(c) [***]
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(d) [***]
44. Card-Funded Top-Up Settlement.
(a) Company shall ensure that each Third-Party Deposit Service Provider maintains in effect all qualifications required under Applicable Laws in order to perform its obligations and complies in all respects with all requirements of Applicable Laws in connection with the performance of such obligations. Each Third-Party Deposit Service Provider shall be designated as a Critical Vendor for purposes of the Vendor Management Program under this Agreement.
(b) Company shall make Bank whole for any settlement shortfall resulting from a failure by a Third-Party Deposit Service Provider to deliver settlement funds to Bank within the applicable settlement window, such payment to be made within two (2) Business Days of Bank’s demand. In the event Bank subsequently receives settlement funds from a Third-Party Deposit Service Provider associated with an Overdue Amount that Company has already paid, Bank shall promptly return such Overdue Amount to Company.
(c) Company shall provide Bank with weekly reports setting forth the daily Outstanding Settlement Exposure for each day of the prior week and shall promptly notify Bank if the Outstanding Settlement Exposure exceeds the Exposure Threshold at any time. In the event the Outstanding Settlement Exposure exceeds the Exposure Threshold, the Parties shall promptly meet and negotiate in good faith to determine whether additional collateral or other risk mitigants are appropriate to address such exposure.
(d) Notwithstanding the foregoing, in the event of any breach of the Financial Covenants set forth in Section 42 of this Agreement, Company shall provide Bank with additional cash collateral in an amount equal to the highest daily Outstanding Settlement Exposure reported for the prior week (the “Exposure Collateral”), which amount shall be trued up on a weekly basis to reflect the highest daily Outstanding Settlement Exposure for each subsequent week for so long as such breach remains uncured. Such Exposure Collateral shall be held and administered on the same terms as the Collateral Account set forth in Section 26 of the Loan and Receivables Sale Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized officers as of the date first written above.
WEBBANK
By: /s/ Jason Lloyd
Name: Jason Lloyd
Title: President & CEO
Name: Jason Lloyd
Title: President & CEO
SEZZLE INC.
By: /s/ Charlie Youakim
Name: Charlie Youakim
Name: Charlie Youakim
Title: CEO
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Schedule 1
I. Definitions
“1-Month Term SOFR” shall have the meaning set forth in Schedule 14.
“Accepted Servicing Practices” means the servicing practices as agreed in writing by the Parties and modified from time to time pursuant to Section 13(d).
“Account Agreement” means the document containing the terms and conditions of a Deposit Account, including all disclosures required by Applicable Law.
“Account Documents” means, with respect to any Deposit Account, each of the Deposit Account documents included in the Deposit Account Document Package.
“Accountholder” means an Applicant or other Person for whom Bank has established a Deposit Account.
“Account Network” means the ACH Network and any other funds transfer network agreed by the Parties for use in connection with the Program.
“ACH” means the Automated Clearinghouse.
“ACH Network” means the electronic funds transfer network governed by the Nacha Operating Rules and administered by Nacha.
“Account Network Transaction” means a credit or debit transaction, or any non-monetary or other entry utilizing an Account Network.
“ACH Transaction” means an Entry (as such term is defined in the Account Network Rules for the ACH Network) to or from the FBO Deposit Account authorized by an Accountholder with respect to such Accountholder’s Deposit Account.
“Acquisition” means any transaction or series of transactions in which Company is directly or indirectly acquired by one or more third parties. This definition applies to any circumstance in which Company is acquired by any means, including, without limitation, a transaction or series of transactions in which one or more third parties (i) acquires all or substantially all of Company’s assets; (ii) acquires all or substantially all of Company’s equity; or (iii) acquires Company by merger.
“Affiliate” means, with respect to a Party, a Person who directly or indirectly controls, is controlled by or is under common control with the Party. For the purpose of this definition, the term “control” (including with correlative meanings, the terms controlling, controlled by and under common control with) means the power to direct the management or policies of such Person, directly or indirectly, through the ownership of twenty-five percent (25%) or more of a class of voting securities of such Person.
“Agreement” shall have the meaning set forth in the introductory paragraph.
“Applicable Laws” means all federal, state and local laws, statutes, regulations, orders and guidance applicable to a Party or relating to or affecting any aspect of the Program including the Loans, the Deposit Accounts, the FBO Deposit Account, the Cards, the Marketing Materials, and the Finance
1
Materials, and all requirements of any Regulatory Authority having jurisdiction over a Party, as any such laws, statutes, regulations, orders, requirements and guidance may be amended and in effect from time to time during the term of this Agreement.
“Applicant” means a Person who applies for and requests (i) a Loan from Bank and/or (ii) a Deposit Account from Bank.
“Application” means any request from an Applicant for a Loan and/or Deposit Account in the form required by Bank.
“Bank” shall have the meaning set forth in the introductory paragraph.
“Bank Hold Amount” shall have the meaning set forth in Schedule 14.
“Bank Hold Rate” shall have the meaning set forth in Schedule 14.
“Borrower” means an Applicant or other Person for whom Bank has established a Loan.
“BSA Program” means Company’s Bank Secrecy Act, anti-money laundering and OFAC compliance program governing all aspects of the Program, developed by Company and approved by Bank.
“B2P Transaction” means a “bank-to-peer” transaction through the Program.
“Business Continuity Program” means Company’s disaster recovery and business continuity program governing all aspects of the Program, developed by Company and approved by Bank.
“Business Day” means any day, other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in the State of Utah are authorized or obligated by law or executive order to be closed.
“Card” means a general-purpose credit or debit card, in virtual form branded with the Network marks and which may contain the Company’s marks, and noted as issued by Bank, that may be used to access Loans to purchase goods or services from merchants anywhere in the world that participate in the Network.
“Cash Equivalents” means (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the government of the United States or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the government of the United States, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P and P-1 or the equivalent thereof by Moody’s and in either case maturing within 90 days after the day of acquisition, (e) bonds and similar debt instruments that constitute “securities” under the Securities Act of 1933 (as amended), are freely tradable on any nationally recognized securities exchange and can be liquidated within five (5) Business Days, (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition or (g) investments in money market or common trust funds having a rating from each of Moody’s and S&P in the highest investment category for short-term unsecured debt obligations or certificates of deposit granted thereby.
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“Change of Control” means (i) an Acquisition of Control of Company by any person or entity, or (ii) the sale by Company of all or substantially all of its assets to any person or entity.
“Charge Off Policy” the policy for the charge off of Loans included in Company’s servicing portfolio, a complete and correct copy of which shall be agreed by the Parties, and which may be modified or amended only at the direction of or with the consent of Bank.
“Charged Off Loan” shall have the meaning set forth in Section 14(b).
“Charge Off Date” shall have the meaning set forth in Section 14(b).
“Claim Notice” shall have the meaning set forth in Section 17(e).
“Closed Deposit Account” shall have the meaning set forth in Section 14(f).
“Closure Date” shall have the meaning set forth in Section 14(f).
“COC Notice” shall have the meaning set forth in Section 42(f).
“Collections Account” shall have the meaning set forth in Section 14(g).
“Company” shall have the meaning set forth in the introductory paragraph.
“Company Credit Facility” shall have the meaning set forth in Section 18(c)(8).
“Comparable Guaranty” means with respect to any Person, any agreement of such Person for the benefit of any third party in connection with any indebtedness for borrowed money.
“Complaint” means any expression of dissatisfaction, whether verbal or written, whether justified or not, that might be indicative of a failure to follow established procedures or which suggests a process deficiency that might lead to a regulatory violation.
“Complaint Management Program” means Company’s Complaint management program governing all aspects of the Program, in a written form developed by Company and approved by Bank.
“Compliance Management System” or “CMS” means Company’s compliance management system governing all aspects of the Program, developed by Company and approved by Bank.
“Confidential Information” means the terms and conditions of this Agreement, and any proprietary information or non-public information of a Party, including a Party’s proprietary marketing plans and objectives, that is furnished to the other Party in connection with this Agreement.
“Control” means, with respect to Company, the possession either directly or indirectly of the power to direct or cause the direction of Company’s management or policies whether through the ownership of voting securities, by contract or otherwise. Such control shall be presumed in the event that a third party acquires twenty-five percent (25%) or more of a class of voting securities of Company.
“Control Person” means, with respect to Company, (i) any executive officer or director; (ii) any shareholder owning twenty-five percent (25%) or more of a class of voting securities of Company, (iii)
3
any Person participating in the Control of Company’s business, and (iv) any Person having the power to direct the management or policies of Company.
“Credit Performance Fee” shall have the meaning set forth in Schedule 14.
“Credit Policy” means the minimum requirements and/or other such considerations that Bank uses (whether in one or more documents) to approve or deny an Application to establish a Loan, to make a Loan, or to modify the terms of a Loan, and the requirements for the pricing of Loans.
“Critical Vendor” shall have the meaning set forth in Section 8(a).
“DACA” shall have the meaning set forth in Section 14(g).
“Deposit Account” means each consumer-purpose sub-account of the FBO Deposit Account which represents a deposit account balance for each Accountholder established by Bank.
“Deposit Account Document Package” means, with respect to any Deposit Account, all of the Account Agreements, Applications, periodic statements, and other documents executed and/or delivered in connection with the opening and administration of such Deposit Account.
“Deposit Funds” means funds held in the FBO Deposit Account for the benefit of Accountholders. Such funds may include Loan Proceeds from Loans to the extent that the applicable Accountholder is also a Borrower with respect to a Loan.
“Deposit Policy” means the minimum requirements and/or other such considerations that Bank uses (whether in one or more documents) to approve or deny an Application to establish a Deposit Account.
“Disclosing Party” shall have the meaning set forth in Section 19(a).
“Effective Date” shall have the meaning set forth in the introductory paragraph.
“Elevated Complaint” means any Complaint that is directed or referred to any state attorney general, Regulatory Authority, governmental figure (including a state or federal legislator), or the Better Business Bureau or similar organization, or that alleges a potential UDAP, Fair Lending, or Community Reinvestment Act violation relating to any aspect of the Program.
“Eligible Loan” shall have the meaning set forth in Schedule 14.
“Existing Program Agreement” shall have the meaning set forth in the preamble.
“Exposure Collateral” shall have the meaning set forth in Section 43(d).
“FBO” means “for the benefit of”.
“FBO Deposit Account” shall have the meaning set forth in Section 3(b).
“FBO Deposit Account File” means, with respect to the FBO Deposit Account, the items, documents, files and records pertaining to the administration of the FBO Deposit Account, including the beneficial ownership of each Accountholder’s funds held in each Deposit Account, the principal amount, accrued interest (if any), and interest rate (if any) on each Deposit Account, and, to the extent applicable, the computer files, data tapes, books, records, note, copies of the Account Documents, Loan Documents and
4
all additional documents generated as a result of or utilized in opening and/or administering such FBO Deposit Account, which are delivered to or generated by Company.
“Federal Funds Rate” means an annual interest rate, adjusted on the first Business Day of each month, and equal to the Effective Federal Funds Rate, as published by the St. Louis Federal Reserve Bank’s FRED (Federal Reserve Economic Database) online database (available at:
https://fred.stlouisfed.org/series/EFFR) on such date.
https://fred.stlouisfed.org/series/EFFR) on such date.
“Finance Materials” shall have the meaning set forth in Section 4.
“First Premier Account” means the segregated collections account maintained at First Premier Bank for collections with respect to the Sezzle Cash Loans and Sezzle Send Loans.
“Depository Bank” means, initially, First Premier Bank, and subsequently the financial institution at which the Collections Account is maintained.
“Exposure Threshold” means [***]
“FBO Deposit Account” shall have the meaning set forth in Section 3(b).
“Force Majeure Event” shall have the meaning set forth in Section 35.
“Funded Facility Amount” means, on any day, the aggregate principal amount of advances made on or prior to such day, from the Company’s secured lender under a Company Credit Facility, reduced from time to time by payments and distributions in respect of principal of such advances.
“Funding Date” means the Business Day on which any pending Loans are funded. For Funding Statements received by Bank by 12:00 PM Mountain Time, the Funding Date shall be the date of the Funding Statement date (i.e., same day); provided, however, that the Funding Date with respect to a Sezzle Send Loan shall be the date on which Company provides the applicable Funding Statement to Bank.
“Funding Statement” means the statement prepared by Company on a Business Day that contains (i) the computation of the total funding amount for all Loans; (ii) a computation of all fees to be paid to the Network and of all Interchange earned from virtual card transactions; and (iv) such other information as shall be reasonably requested by Bank and mutually agreed to by the Parties.
“Funding Time” means the time identified by the Network for the payment of amounts due to the Network on any day.
“GAAP” means United States generally accepted accounting principles.
“ICA” means an Interbank Card Association number issued by the Network.
“ID Theft Red Flags Program” means Company’s identity theft red flags program governing all aspects of the Program, in a written form developed by Company and approved by Bank.
“Indemnifiable Claim” shall have the meaning set forth in Section 17(d).
“Indemnified Parties” shall have the meaning set forth in Section 17(c).
5
“Indemnifying Party” shall have the meaning set forth in Section 17(c).
“Information Security Incident” means any actual, threatened, or suspected loss of NPI, compromise in the security of NPI, unauthorized access to or use of NPI, or other information security incident.
“Information Security Program” means Company’s information security program governing all aspects of the Program, in a written form developed by Company and approved by Bank.
“Insolvent” means the failure to pay debts in the ordinary course of business, the inability to pay its debts as they come due or the condition whereby the sum of an entity’s debts is greater than the sum of its assets.
“Intended Recipient” shall have the meaning set forth in Schedule 5(l).
“Interchange” means the revenue paid to Bank by acquiring financial institutions for transactions with Merchants initiated with a Card, as established by a Network, net of amounts due to such acquiring financial institutions, for example, for return credits, chargebacks and the discount rate, if any.
“Leverage Ratio” means, as of the end of each fiscal quarter, the ratio of (a) total consolidated indebtedness for borrowed money for the Company and its subsidiaries on a consolidated basis as of such day to (b) the Tangible Net Worth for the Company and its subsidiaries on a consolidated basis as of such day.
“Licensee” shall have the meaning set forth in Section 20.
“Licensing Party” shall have the meaning set forth in Section 20.
“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien or security interest (statutory or other), or preference, priority or other security agreement, charge or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing authorized by the Company and/or any of its subsidiaries of any financing statement under the UCC or comparable law of any jurisdiction).
“Liquidated Loan” means a Loan which has been liquidated, whether by way of a payment in full, a disposition, a refinance, a compromise, a sale to a purchaser or any other means of liquidation of such Loan.
“Liquidity Sources” shall have the meaning set forth in Schedule 2.
“Litigation Expenses” means any court filing fee, court cost, arbitration fee or cost, witness fee, fees for transcriptions and recordings, and each and every other fee and cost of investigating and defending or asserting any claim for indemnification pursuant to this Agreement, including, in each case, attorneys’ fees, other professionals’ fees, and disbursements.
“Loan” means a consumer loan originated by Bank pursuant to the Program, including all rights to payment from or on behalf of the Borrower in respect of the Loan under the Loan Agreement with the related Borrower and otherwise, and each Loan includes any existing, as well as the right to payment of any future, interest charges and fees associated with such Loan. Unless context provides otherwise,
6
“Loan” shall include any Retention Loan.
“Loan Agreement” means the document containing the terms and conditions of a Loan including all disclosures required by Applicable Laws.
“Loan Disbursement” means a disbursement of Loan Proceeds by Bank to a Borrower or a merchant on behalf of the Borrower.
“Loan Documents” means, with respect to any Loan, each of the Loan documents included in the Loan Document Package.
“Loan Document Package” means, with respect to any Loan, all of the Loan Agreements, Applications, periodic statements, and other documents executed and/or delivered in connection with the origination, funding, servicing, and ownership of such Loan.
“Loan Payment” means any payment due on a Loan, including any payment of principal, interest, fees, or other amounts due under the related Loan Agreement.
“Loan Proceeds” means funds disbursed by Bank to a Borrower or a merchant on behalf of a Borrower pursuant to a Loan.
“Loan and Receivables Sale Agreement” means the Second Amended and Restated Loan and Receivables Sale Agreement, dated as of even date herewith, between Bank and Company, as amended,
supplemented or modified from time to time.
supplemented or modified from time to time.
“Losses” means any and all causes of action, claims, actions, liabilities, losses, judgments, interest, awards, damages (including punitive damages), settlement payments, diminution in value, fines, fees, penalties, costs and expenses, including Litigation Expenses.
“Marketing Materials” means all promotional and marketing materials, including marketing scripts, press releases, Merchant created content and other marketing materials used in connection with the Program regardless of whether such materials were created by Company or Merchant(s).
“Maximum Loan Amount” shall have the meaning set forth in Section 3(a).
“Measurement Period” shall have the meaning set forth in Schedule 14.
“Merchant” means retail sellers of products and services in the Company’s merchant network.
“Merchant Interest Program” means a program in which certain approved Merchants may have the opportunity to receive interest earnings on their funds that are held by Company.
“Minimum Monthly Bank Fee” shall have the meaning set forth in Schedule 14.
“Moody’s” means Moody’s Investors Service, Inc., together with its successors.
“Modification” means, with respect to any Loan or Deposit Account, any waiver, modification or variance of any term or any consent to the postponement of strict compliance with any term or any other grant of
an indulgence or forbearance to the related Borrower or related Accountholder.
an indulgence or forbearance to the related Borrower or related Accountholder.
7
“Multiple Disbursement Loan” shall have the meaning set forth in Section 3(a).
“Net Interchange Revenue” means the Interchange less any fees and costs imposed by the Network.
“Network” means Mastercard, Visa or an Account Network.
“NPI” means (a) any information that a Borrower, Accountholder or Applicant provides to Company or Bank relating to the Program, any information about a Borrower, Accountholder or Applicant resulting from the Program, and any information that Company or Bank otherwise obtains about a Borrower, Accountholder or Applicant in connection with providing the Program to that Borrower, Accountholder or Application, and (b) any list, description, or other grouping of Borrowers, Accountholders or Applicants that is derived using any of the foregoing information. NPI does not include information that has been aggregated or de-identified in a manner that complies with Applicable Laws.
“Outstanding Settlement Exposure” means, as of any date of determination, the aggregate outstanding settlement exposure attributable to card-funded top-up transactions processed through Third-Party Deposit Service Providers that have been credited to Accountholder sub-ledgers but for which Bank has not yet received the corresponding settlement funds.
“Overdue Amount” means the amount of settlement funds that a Third-Party Deposit Service Provider has failed to deliver to Bank within the applicable settlement window.
“Party” means either Company or Bank and “Parties” means Company and Bank.
“Payment Date” shall have the meaning set forth in Schedule 14.
“Person” means an individual or a corporation (including a business trust), partnership, trust, incorporated or unincorporated association, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind.
“Pledge” shall have the meaning set forth in Schedule 5(l).
“Portfolio Revenue” shall have the meaning set forth in Schedule 14.
“Program” means (i) the loan program pursuant to which Bank will establish Loans and make Loans on behalf of Borrowers pursuant to the terms of this Agreement and (ii) the deposit program pursuant to which Bank will establish Deposit Accounts on behalf of Accountholders pursuant to the terms of this Agreement.
“Program BIN” means one or more bank identification numbers registered with the Network for purposes of issuing a Card.
“Program Documents” means this Agreement, and the Loan and Receivables Sale Agreement, including any exhibits, addenda, and side letters with respect to each of them.
“Program Governance Committee” means Company’s formal governance committee, established or designated by Company and approved by Bank, responsible for ensuring the effectiveness and adequacy of the Required Controls.
“Program Launch Date” means September 27, 2024.
8
“Program Threshold Amount” means an amount initially determined by mutual agreement of the Parties and subsequently adjusted by Bank from time to time, with reasonable prior notice provided to Company, based on a monthly evaluation in order to meet the volume requirements of the Program.
“Program Year” means (i) the period from the Program Launch Date through the end of the month that includes the first anniversary of the Program Launch Date, and (ii) each subsequent period of twelve (12) months.
“Proprietary Material” shall have the meaning set forth in Section 20.
“PTA Commitment Fee” shall have the meaning set forth in Schedule 14.
“PTA Minimum Fee” shall have the meaning set forth in Schedule 14.
“PTA Minimum Rate” shall have the meaning set forth in Schedule 14.
“Receivable” means, with respect to any Borrower, any right to payment from or on behalf of any Borrower in respect of any Loan, and includes any existing, as well as the right to payment of any future, finance charges, late fees, returned check fees, and any and all other fees and charges and other obligations of such Borrower with respect to such Loan Account. Each Receivable includes all rights of Bank to payment under the Loan Agreement with such Borrower.
“Regulatory Authority” means any federal, state or local regulatory agency or other governmental agency or authority having jurisdiction over a Party and, in the case of Bank, shall include, but not be limited to, the Utah Department of Financial Institutions, the Federal Deposit Insurance Corporation, and the Financial Crimes Enforcement Network.
“Regulatory Inquiry” means any inquiry, investigation, proceeding or question (whether verbal or written, formal or informal) by any state attorney general, Regulatory Authority, governmental figure (including a state or federal legislator), or the Better Business Bureau or similar organization that is not an Elevated Complaint.
“Reportable Event” shall have the meaning provided in Section 6(e).
“Retention Loan” shall have the meaning set forth in the Loan and Receivables Sale Agreement.
“Retention Loan RTA” shall have the meaning set forth in the Loan and Receivables Sale Agreement.
“Required Controls” means the controls programs and controls policies, developed by Company and approved by Bank, to govern all aspects of the Program, including the programs and policies listed in Exhibit A.
“Restricted Party” shall have the meaning set forth in Section 19(a).
“S&P” means S&P Global Ratings.
“Sender” shall have the meaning set forth in Schedule 5(l).
“Servicer Physical Address” means Company’s address where it maintains its books and records for the Servicing Files and, with respect to Company in its capacity as servicer, is: 700 Nicollet
9
Mall, Suite 640, Minneapolis, MN 55402.
“Servicing File” means, with respect to each Loan, the FBO Deposit Account and each Deposit Account, the items, documents, files and records pertaining to the servicing of such Loan, FBO Deposit Account or such Deposit Account, including to the extent applicable the computer files, data tapes, books, records, notes, copies of the Loan Documents, copies of the Account Documents, copies of the Deposit Files and all additional documents generated as a result of or utilized in originating and/or servicing such Loans, Deposit Accounts and the FBO Deposit Account which are delivered to or generated by Company.
“Servicing Fee” shall have the meaning set forth in Schedule 14.
“Servicing Materials” shall have the meaning set forth in Section 13(h).
“Servicing Rate” shall have the meaning set forth in Schedule 14.
“Servicing Standard” shall have the meaning set forth in Section 13(a).
“Settlement” and “Settle” means the day the Bank settles with the Network for the then previous day(s) transactions.
“Sezzle Balance Deposit Account” means a Deposit Account for the Sezzle Balance product.
“Sezzle Cash Loan” means a cash advance Loan.
“Sezzle Send Loan” means a Pay-in-5 Loan for which the Loan Proceeds are distributed to a Sezzle Balance Deposit Account.
“Single Disbursement Loan” shall have the meaning set forth in Section 3(a).
“Supporting Company Credit Facility” shall have the meaning set forth in Section 42(d).
“Tangible Net Worth” means, with respect to the Company and its subsidiaries on a consolidated basis, the excess of total assets of over total liabilities and reserves, as determined in accordance with GAAP based on the most recent balance sheet of Company delivered pursuant to Section 42 of this Agreement less the consolidated net book value of all assets of Company and its subsidiaries on a consolidated basis (to the extent reflected as an asset in the consolidated balance sheet of Company at such date), which will be treated as intangibles under GAAP.
“Territory” means the fifty states of the United States, the District of Columbia, and the territories of the United States.
“Third-Party Deposit Service Provider” means a third-party service provider engaged by Company to process card-funded top-up transactions.
“Transaction” means an Account Network Transaction or a B2P Transaction.
“True-Up” shall have the meaning set forth in Schedule 14.
“UCC” means the Uniform Commercial Code, as from time to time in effect in the State of Utah; provided that if, by reason of any mandatory provisions of law, the perfection, the effect of perfection or
10
non-perfection or priority of the security interests granted in this Agreement are governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States of America other than the State of Utah, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of such perfection, effect of perfection or non-perfection or priority.
“Unclaimed Property Program” means Company’s unclaimed property program governing all aspects of the Program, in a written form developed by Company and approved by Bank.
“Unrestricted Cash” means, with respect to Company and its consolidated subsidiaries, as of any date of determination, the cash and Cash Equivalents of Company and its consolidated subsidiaries that, in accordance with GAAP, is reflected on the consolidated balance sheet of Company, but only to the extent that such cash and Cash Equivalents (or any deposit account or securities account in which such cash and Cash Equivalents are held) are not controlled by or subject to any Lien or other preferential arrangement in favor of any creditor.
“Vendor Management Program” means Company’s third-party service provider risk management program governing all aspects of the management of Company’s subcontractors and vendors of the Program, in a written form developed by Company and approved by Bank.
II. Construction
As used in this Agreement:
(a) All references to the masculine gender shall include the feminine gender (and vice versa);
(b) All references to “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation”;
(c) the word “or” means both “and” and “or,” except where the context clearly indicates that the Parties intend “or” to designate alternatives only, including when the word “either” or similar words or phrases are used;
(d) References to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation;
(e) References to “dollars” or “$” shall be to United States dollars unless otherwise specified herein;
(f) Unless otherwise specified, all references to days, weeks, months or years shall be deemed to be preceded by the word “calendar”;
(g) Unless otherwise specified, all references to “quarter” shall be deemed to mean calendar quarter; and
(h) The fact that Bank or Company has provided approval or consent shall not mean or otherwise be construed to mean that: (i) either Party has performed any due diligence with respect to the requested or required approval or consent, as applicable; (ii) either Party agrees that the item or information for which the other Party seeks approval or consent complies with any Applicable Laws; (iii) either Party has assumed the other Party’s obligations to comply with all Applicable Laws arising from or related to any requested or required approval or consent; or (iv) except as otherwise expressly set forth
11
in such approval or consent, either Party’s approval or consent impairs in any way the other Party’s rights or remedies under the Agreement, including indemnification rights for Company’s failure to comply with all Applicable Laws.
12
Schedule 2
Preapproved Marketing
[***]
1
Schedule 5(l)
FBO Deposit Account and Deposit Account Servicing Terms
[***]
1
[***]
2
[***]
3
Schedule 6(a)(1)
Program Governance Committee
The Program Governance Committee shall:
• Operate pursuant to a written charter that explicitly states that the committee is responsible for
ensuring the effectiveness and adequacy of the Required Controls
• Be limited in voting membership exclusively to members of Company’s senior management
• Approve all Required Controls, and any updates to the Required Controls, agreed by the Parties
• Review and approve the annual budget requirements and technology resource requirements for
the staffing and operation of the Required Controls
• Designate the officers or program administrators responsible for developing, implementing and
maintaining the Required Controls
• Receive periodic in-person updates and written reports from the designated officers or program
administrators for the following Required Controls:
• CMS
• BSA
• Privacy
• Information Security
• Information Technology/Technology Governance
• Vendor Management
• Business Continuity
The Program Governance Committee’s oversight of the Required Controls will include review of the
following:
1. Monthly issue management status reporting on all issues and findings identified through:
(a) Required Controls processes
(b) Bank oversight
(c) Independent audits and reviews
(d) Examination findings and recommendations
(e) Regulatory Inquiries, Complaints and litigation
2. Quarterly reporting on and review of Bank’s oversight of the Program, including:
(a) Bank control group reviews and reports, including all escalated compliance issues
(b) Issue Independent audits performed pursuant to Section 6(b)
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(c) Custom model reviews performed pursuant to Section 6(c)
3. Monthly Complaint reports, including root cause analysis and monitoring and testing of the Complaint Management Program
4. Quarterly reporting on CMS Program monitoring and testing
5. Monthly BSA Program metrics
6. Information Security Program metrics, including:
(a) Technology enhancements
(b) Penetration testing
(c) Information Security Incidents (immediate escalation where appropriate)
7. Quarterly employee training completion metrics
8. Review of the following Bank-required annual reports and reviews:
(a) Information Security
(b) Vendor Management
(c) ID Theft Red Flags
(d) Business Continuity
9. Review of Bank-required annual risk and controls assessments, including:
(a) Regulatory compliance
(b) BSA/AML/OFAC
(c) Information security/technology governance
3. Monthly Complaint reports, including root cause analysis and monitoring and testing of the Complaint Management Program
4. Quarterly reporting on CMS Program monitoring and testing
5. Monthly BSA Program metrics
6. Information Security Program metrics, including:
(a) Technology enhancements
(b) Penetration testing
(c) Information Security Incidents (immediate escalation where appropriate)
7. Quarterly employee training completion metrics
8. Review of the following Bank-required annual reports and reviews:
(a) Information Security
(b) Vendor Management
(c) ID Theft Red Flags
(d) Business Continuity
9. Review of Bank-required annual risk and controls assessments, including:
(a) Regulatory compliance
(b) BSA/AML/OFAC
(c) Information security/technology governance
2
Schedule 6(a)(2)
Compliance Management System
[***]
Compliance Management System
[***]
1
Schedule 6(a)(3)
BSA Program
[***]
1
[***]
2
Schedule 6(a)(4)
ID Theft Red Flags Program
[***]
1
Schedule 6(a)(5)
Privacy Program
[***]
1
Schedule 6(a)(6)
Complaint Management Program
[***]
1
Schedule 6(a)(7)
Information Security Program
[***]
1
[***]
2
Schedule 6(a)(8)
Business Continuity Program
[***]
1
Schedule 6(a)(9)
Vendor Management Program
[***]
1
Schedule 6(a)(x)
Unclaimed Property Program
[***]
1
Schedule 14
Payments
[***]
1
[***]
2
[***]
3
[***]
4
Schedule 22
Operational Program Expenses
Company shall reimburse Bank for any payment process fees covered under Section 22(b) of the Agreement as set forth in the table below:
Operational Program Expenses
Company shall reimburse Bank for any payment process fees covered under Section 22(b) of the Agreement as set forth in the table below:
[***]
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Exhibit A
Required Controls
Programs
• BSA
• Business Continuity
• Complaint Management
• Compliance Management System
• ID Theft Red Flags
• Information Security
• Privacy
• Vendor Management
• Unclaimed Property
Policies & Procedures (including related processes)
Marketing
• Marketing (including third party marketing channels/models, as applicable)
• Sales Incentive/Commission
Underwriting & Credit
• Credit Policy (including Implementation and Change Management)
• Model Governance
Servicing & Collections
• Account Servicing
• Re-Age
• Collections (including FDCPA)
• Charge-Off
• Allowance for Loan & Lease Losses (ALLL)
Regulatory Compliance
• Compliance Management System (CMS)
• Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
• Red Flags/Identity Theft
• Complaint Handling
• Electronic Funds Transfer Act (EFTA)
• Electronic Signatures and Electronic Disclosures (E-Sign)
• Fair Credit Reporting Act (FCRA)
• Fair Lending/Equal Credit Opportunity Act (ECOA)
• Record Retention and Data Destruction
• Service Members (SCRA/MLA)
• Privacy
• CAN-SPAM
• Telephone Consumer Protection Act (TCPA)
• Truth in Lending Act (TILA)
• UDAAP (Dodd-Frank) and UDAP (Section 5 FTC Act)
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• Policy Management
Information Security/Technology Governance
• Information Security
• Business Continuity Management
• Disaster Recovery
• Incident Response/Data Breach
Vendor Management
• Vendor Management
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Exhibit 10.5
Certain identified information in this document has been excluded because it is both (i) not material and (ii) is the type of information that the Company customarily and actually treats as private or confidential. This document has been marked with “[***]” to indicate where omissions have been made.
WEBBANK
and
SEZZLE INC.
SECOND AMENDED AND RESTATED LOAN AND RECEIVABLES SALE AGREEMENT
Dated as of August 12, 2026
SCHEDULES AND EXHIBITS
SCHEDULE 1 Definitions
SCHEDULE 2 Payments
EXHIBIT A Sezzle Cash Concentration Limits
EXHIBIT B Sezzle Cash Eligibility Criteria
EXHIBIT C Sezzle Send Concentration Limits
EXHIBIT D Sezzle Send Eligibility Criteria
This SECOND AMENDED AND RESTATED LOAN AND RECEIVABLES SALE
AGREEMENT (this “Agreement”), dated as of August 12, 2026 (“Effective Date”), is made by and between WEBBANK, an FDIC-insured, Utah state-chartered industrial bank having its principal location in Salt Lake City, Utah (“Bank”), and SEZZLE INC., a Delaware corporation, having its principal location in Minneapolis, Minnesota (“Company”).
AGREEMENT (this “Agreement”), dated as of August 12, 2026 (“Effective Date”), is made by and between WEBBANK, an FDIC-insured, Utah state-chartered industrial bank having its principal location in Salt Lake City, Utah (“Bank”), and SEZZLE INC., a Delaware corporation, having its principal location in Minneapolis, Minnesota (“Company”).
WHEREAS, Bank and Company are parties to the Second Amended and Restated Marketing and Servicing Agreement dated as of the Effective Date (as amended, modified or supplemented from time to time, the “Program Agreement”), pursuant to which Bank originates Loans, including Single
Disbursement Loans, Multiple Disbursement Loans and Retention Loans;
Disbursement Loans, Multiple Disbursement Loans and Retention Loans;
WHEREAS, Bank is and will be the owner of Loans pursuant to the Program Agreement;
WHEREAS, Company will service the Loans on behalf of Bank pursuant to the Program Agreement; and
WHEREAS, Bank may desire to sell to Company certain Single Disbursement Loans originated by Bank pursuant to the Program Agreement, and Company desires to purchase from Bank the Single Disbursement Loans that are offered;
WHEREAS, Bank may desire to sell to Company certain Loan Accounts and/or the Receivables arising from Loan Disbursements made on certain Multiple Disbursement Loans originated by Bank pursuant to the Program Agreement, and Company desires to purchase from Bank the Loan Accounts and/or the Receivables that are offered with respect to such Multiple Disbursement Loans;
WHEREAS, Bank may desire to sell to Company certain Retention Loans originated by Bank pursuant to the Program Agreement, and Company desires to purchase from Bank the Retention Loans that are offered;
WHEREAS, the Parties have entered into that certain Amended and Restated Loan and Receivables Sale Agreement, dated as of September 26, 2024, setting forth each Party’s rights and obligations related to the offering of a loan program (the “Existing Sale Agreement”); and
WHEREAS, the Parties now wish to amend and restate the Existing Sale Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions and mutual covenants and agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Company agree as follows:
1. | Definitions; Effectiveness. | ||||
(a) The capitalized terms used in this Agreement shall be defined as set forth in the Schedule 1 or, to the extent not set forth in Schedule 1, in the Program Agreement, and the rules of construction set forth in Schedule 1 shall apply to this Agreement.
(b) This Agreement shall be effective as of the Effective Date, and as of the Effective Date shall supersede and replace the Existing Sale Agreement. This Agreement shall not operate as to render invalid or improper any action heretofore taken under the Existing Sale Agreement.
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2. Purchase of Transferable Loans and Receivables; Payment to Bank; Reporting to Bank.
(a) Bank may sell, transfer, assign, set over, and otherwise convey to Company, without recourse on each Purchase Date, all or a portion of the Single Disbursement Transferable Loans. Single Disbursement Transferable Loans shall be sold by Bank to Company (or its designee approved by Bank), without recourse, with servicing released, on the second Business Day after the day on which such Single Disbursement Transferable Loans were originated and funded by Bank.
Company will be required to purchase all Single Disbursement Transferable Loans offered by Bank on each Purchase Date. Company shall pay to Bank the Purchase Price on each Purchase Date in accordance with this Section 2. Bank shall earn Interim Interest, calculated using the Interim Interest Rate, on each Single Disbursement Transferable Loan sold by Bank to Company (or its designee approved by Bank). Interim Interest shall accrue on a calendar day basis. For the avoidance of doubt, each Single Disbursement Transferable Loan sold by Bank shall be sold with servicing released on the applicable Purchase Date with respect to such Single Disbursement Transferable Loan.
(b) Bank may sell, transfer, assign, set over, and otherwise convey to Company, without recourse on each Purchase Date, all or a portion of the Receivables arising from Loan Disbursements on Multiple Disbursement Transferable Loans (“Multiple Disbursement Transferable Loan Receivables”). Multiple Disbursement Transferable Loan Receivables shall be sold by Bank to Company (or its designee approved by Bank), without recourse on the second Business Day after the day on which such Multiple Disbursement Transferable Loan Receivables were originated and funded by Bank. Company will be required to purchase all Multiple Disbursement
Transferable Loan Receivables offered by Bank on each Purchase Date. Company shall pay to Bank the Purchase Price on each Purchase Date in accordance with this Section 2. Bank shall earn Interim Interest, calculated using the Interim Interest Rate, on each Multiple Disbursement Transferable Loan Receivable sold by Bank to Company (or its designee approved by Bank). Interim Interest shall accrue on a calendar day basis.
Transferable Loan Receivables offered by Bank on each Purchase Date. Company shall pay to Bank the Purchase Price on each Purchase Date in accordance with this Section 2. Bank shall earn Interim Interest, calculated using the Interim Interest Rate, on each Multiple Disbursement Transferable Loan Receivable sold by Bank to Company (or its designee approved by Bank). Interim Interest shall accrue on a calendar day basis.
(c) Bank may sell, transfer, assign, set over, and otherwise convey to Company, without recourse on each Purchase Date, all or a portion of the Retention Transferable Loans. Retention Transferable Loans shall be sold by Bank to Company (or its designee approved by Bank), without recourse, with servicing released, on the second Business Day after the day on which such Retention Loans became a Retention Transferable Loan. Company will be required to purchase all Retention Transferable Loans offered by Bank on each Purchase Date. Company shall pay to Bank the Purchase Price on each Purchase Date in accordance with this Section 2. Bank shall earn Interim Interest, calculated using the Interim Interest Rate, and the Designated Amount on each Retention Loan for the first two (2) Business Days after origination thereof. Interim Interest shall accrue on a calendar day basis. For the avoidance of doubt, each Retention Transferable Loan sold by Bank shall be sold with servicing released on the applicable Purchase Date with respect to such Retention Transferable Loan.
(d) With respect to each Single Disbursement Transferable Loan, Multiple Disbursement
Transferable Loan Receivable and Retention Transferable Loan that Bank sells hereunder, Bank sells, transfers, assigns, sets over, and otherwise conveys to Company the applicable Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan and Retention Transferable Loan and all rights related thereto, and all proceeds of the foregoing, without recourse in accordance with this Section 2 on the related Purchase Date.
Transferable Loan Receivable and Retention Transferable Loan that Bank sells hereunder, Bank sells, transfers, assigns, sets over, and otherwise conveys to Company the applicable Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan and Retention Transferable Loan and all rights related thereto, and all proceeds of the foregoing, without recourse in accordance with this Section 2 on the related Purchase Date.
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(e) Bank shall deliver to Company a sale statement in a form to be agreed to by the Parties relating to all Transferable Loans and all Multiple Disbursement Transferable Loan Receivables that Bank is offering to sell to Company on the Purchase Date, to be delivered by secure e-mail or as otherwise mutually agreed no later than 8:00 AM Mountain Time on such Purchase Date. By no later than 12:00 PM Mountain Time on the applicable Purchase Date, Company shall pay Bank the Purchase Price by wire transfer of immediately available funds to the account designated by Bank. Upon the sale to Company of the Receivables arising from the final Loan Disbursement on a Multiple Disbursement Loan, Bank will simultaneously sell to Company, and Company shall purchase, the related Loan account (“Loan Account”), with servicing released, providing Company has purchased all of the previous Receivables arising from the relevant Multiple Disbursement Loan. The date on which the Loan Account is sold shall be the “Loan Account Purchase Date.”
(f) To the extent that such materials are in Bank’s possession, upon Company’s request, Bank agrees to cause to be delivered to Company, at Company’s cost, account files on all Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and Retention Transferable Loans purchased by Company pursuant to this Agreement. Such account files will include the application for the Loan, the Loan Agreement, confirmation of delivery of the Loan Agreement to the Borrower, and such other materials as Company may reasonably require (all of which may be in electronic form); provided that Bank may retain copies of such information as the owner of the Loan or as necessary to comply with Applicable Laws.
(g) In connection with the expiration or termination of the Program Agreement (i) all Loans and all Receivables for Multiple Disbursement Loans then owned by Bank shall be deemed
“Transferable Loans” hereunder on the last Business Day of the Term, and (ii) Company shall promptly purchase, or cause its designee to purchase, the Loans and Receivables then owned by Bank.
“Transferable Loans” hereunder on the last Business Day of the Term, and (ii) Company shall promptly purchase, or cause its designee to purchase, the Loans and Receivables then owned by Bank.
(h) If a Transferable Loan related to a Loan (or any portion thereof) is cancelled (whether by chargeback, return, refund or otherwise) after the sale of the Transferable Loan from Bank to Company, on the next available sale statement delivered by Bank, Bank shall refund the principal amount of such Transferable Loan or portion thereof following settlement of such chargeback, return, refund or other cancellation.
(i) If either Party transfers any amounts to the other Party in error (including if the Purchase Price for one or more Transferrable Loan and/or Multiple Disbursement Transferable Receivable is miscalculated), the Party benefitting from such error will pay to the other Party the amount in error within three (3) Business Days after receiving notice of an error from the other Party; provided, however, that any erroneous amounts paid by Company to Bank shall be subject to Bank’s rights in Section 13(g).
(j) Bank shall have the exclusive right, at any time upon notice to Company, to increase the Retention Loan RTA in Bank’s sole discretion, based upon projected volumes, asset performance and risk assessments, up to (but not more than) One Hundred Fifty Million Dollars
($150,000,000). Bank shall work with Company in good faith to increase the Retention Loan RTA from time to time.
($150,000,000). Bank shall work with Company in good faith to increase the Retention Loan RTA from time to time.
(k) On any Purchase Date, if any Retention Loans that were funded two (2) Business Days before such Purchase Date are to be newly designated as Retention Transferable Loans, the Parties shall use a random allocation to select those Retention Loans that will be designated as Retention Transferable Loans.
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3. Ownership of Loans, Transferable Loans and Receivables.
(a) Bank shall not retain any ownership of the applicable Loans after each related Purchase Date. Each Party agrees to make entries on its books and records to clearly indicate Company’s ownership of the Loans as of each applicable Purchase Date.
(b) On and after each Purchase Date and each Loan Account Purchase Date, as applicable,
automatically upon Company’s payment of the Purchase Price on each such date, Company shall be the sole owner for all purposes (e.g., tax, accounting, and legal) of the Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and Retention Transferable Loans purchased from Bank on such date and Company shall be entitled to all of the rights, privileges, and remedies applicable to said ownership interest, including the right to pledge, transfer, sell, assign, or exchange the Transferable Loans, Receivables, and Loan Accounts (including the right to receive any refund or the proceeds of a return or reversal). For all Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and Retention Transferable Loans sold hereunder, Bank shall not retain any ownership interest in such underlying Loan, Receivable and/or Loan Account and Company shall become the sole owner of any such underlying Loan, Receivable and/or Loan Account sold or transferred in accordance with the terms of this Agreement. Bank agrees to make entries on its books and records to clearly indicate the sale of applicable Transferable Loans and/or
Receivables to Company as of each Purchase Date. Company agrees to make entries on its books and records to clearly indicate the purchase of applicable Transferable Loans, Receivables, and/or Loan Accounts as of each Purchase Date and that ownership of the Transferable Loan,
Receivable and/or Loan Account is not retained by Bank. Bank and Company each intend the transfer of Transferable Loans and/or Receivables under this Agreement to be a true sale by Bank to Company of each Loan and/or Receivable and any payments and proceeds relating thereto and that is absolute and irrevocable. At any time and from time to time, Bank will promptly and duly execute and deliver or will promptly cause to be executed and delivered such further instruments and documents and take such further actions as are reasonably requested by Company to confirm the sale of the Transferable Loans and/or Receivables, and/or for the purpose of obtaining or preserving the full benefits of this Agreement, including, the filing of any financing or
continuation statements under the UCC or other applicable law in effect in any jurisdiction with respect to the transfer of ownership of the Transferable Loans and/or Receivables. At any time and from time to time, each of Company and Bank will promptly and duly execute or deliver or will promptly cause to be executed or delivered such further instruments and documents and take such further actions as are reasonably requested by the other for the purpose of obtaining or preserving the full benefits of this Agreement. However, in the event that, notwithstanding the intent of the Parties, a court of competent jurisdiction holds that the conveyance of any
Transferable Loan and/or Receivable is not a true sale of such Transferable Loan and/or Receivable from Bank to Company, then (i) this Agreement will also be deemed to be a security agreement within the meaning of Article 9 of the UCC, and (ii) the sale of any Transferable Loan and/or Receivable will be deemed to be a grant by Bank to Company of a security interest in, and in any event Bank hereby grants to Company a security interest in, all of Bank’s right, title and interest, whether now owned or hereafter acquired, in and to such Transferable Loan and/or Receivable, and all proceeds thereof, to secure the obligations of Bank pursuant to this
Agreement. Upon review and approval by Bank, Company may file a UCC-1 financing statement reflecting Bank as debtor/seller to reflect Company’s purchase of the Transferable Loans and/or Receivables pursuant to this Agreement.
automatically upon Company’s payment of the Purchase Price on each such date, Company shall be the sole owner for all purposes (e.g., tax, accounting, and legal) of the Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and Retention Transferable Loans purchased from Bank on such date and Company shall be entitled to all of the rights, privileges, and remedies applicable to said ownership interest, including the right to pledge, transfer, sell, assign, or exchange the Transferable Loans, Receivables, and Loan Accounts (including the right to receive any refund or the proceeds of a return or reversal). For all Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and Retention Transferable Loans sold hereunder, Bank shall not retain any ownership interest in such underlying Loan, Receivable and/or Loan Account and Company shall become the sole owner of any such underlying Loan, Receivable and/or Loan Account sold or transferred in accordance with the terms of this Agreement. Bank agrees to make entries on its books and records to clearly indicate the sale of applicable Transferable Loans and/or
Receivables to Company as of each Purchase Date. Company agrees to make entries on its books and records to clearly indicate the purchase of applicable Transferable Loans, Receivables, and/or Loan Accounts as of each Purchase Date and that ownership of the Transferable Loan,
Receivable and/or Loan Account is not retained by Bank. Bank and Company each intend the transfer of Transferable Loans and/or Receivables under this Agreement to be a true sale by Bank to Company of each Loan and/or Receivable and any payments and proceeds relating thereto and that is absolute and irrevocable. At any time and from time to time, Bank will promptly and duly execute and deliver or will promptly cause to be executed and delivered such further instruments and documents and take such further actions as are reasonably requested by Company to confirm the sale of the Transferable Loans and/or Receivables, and/or for the purpose of obtaining or preserving the full benefits of this Agreement, including, the filing of any financing or
continuation statements under the UCC or other applicable law in effect in any jurisdiction with respect to the transfer of ownership of the Transferable Loans and/or Receivables. At any time and from time to time, each of Company and Bank will promptly and duly execute or deliver or will promptly cause to be executed or delivered such further instruments and documents and take such further actions as are reasonably requested by the other for the purpose of obtaining or preserving the full benefits of this Agreement. However, in the event that, notwithstanding the intent of the Parties, a court of competent jurisdiction holds that the conveyance of any
Transferable Loan and/or Receivable is not a true sale of such Transferable Loan and/or Receivable from Bank to Company, then (i) this Agreement will also be deemed to be a security agreement within the meaning of Article 9 of the UCC, and (ii) the sale of any Transferable Loan and/or Receivable will be deemed to be a grant by Bank to Company of a security interest in, and in any event Bank hereby grants to Company a security interest in, all of Bank’s right, title and interest, whether now owned or hereafter acquired, in and to such Transferable Loan and/or Receivable, and all proceeds thereof, to secure the obligations of Bank pursuant to this
Agreement. Upon review and approval by Bank, Company may file a UCC-1 financing statement reflecting Bank as debtor/seller to reflect Company’s purchase of the Transferable Loans and/or Receivables pursuant to this Agreement.
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(c) Bank does not assume and shall not have any liability to Company for the repayment or servicing of any Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loans and/or Retention Transferable Loans after the related Purchase Date.
(d) The Program Agreement shall govern the servicing of the Loans for Bank, and of any interest held by Bank in the Loans and/or Receivables. The Program Agreement shall provide the exclusive mechanism for the payment of the amounts collected on Loans and/or Receivables, with the servicer thereunder designated by Bank to distribute amounts collected by the Company on Loans to the holder of any Transferable Loan and/or Receivables sold by Bank under this Agreement. Any subsequent owner of the Transferable Loans and/or Receivables shall separately compensate Company for servicing the Transferable Loans and/or Receivables, but all such servicing shall be subject to the terms of the Program Agreement.
(e) Company or any subsequent owner of the Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and/or Retention Transferable Loans may (i) securitize the Transferable Loans, or any amounts owing thereunder, or (ii) issue an “asset-backed security” (as defined under 17 C.F.R. § 229.1101(c) or Section 3(a)(77) of the Securities Exchange Act of 1934) backed by the Single Disbursement Transferable Loans, Multiple Disbursement Transferable Loan Receivables, Loan Accounts and/or Retention Transferable Loans or any amounts owing thereunder, in each case, without the prior written consent of Bank; provided that all of the following conditions are met:
(1) Bank is not required to maintain any ongoing ownership interest in the Transferable Loans after the sale thereof to Company, Bank is not required to make any informational reports or filings with respect to the securitization or other financing transaction and Bank is not required to incur any costs or expenses in connection with such securitization or other financing transaction; provided Bank agrees to cooperate with Company following any reasonable request from Company or any subsequent owner of the Transferable Loans with respect to the activities under Section 3(d) if the Company (or some other creditworthy entity reasonably acceptable to Bank) has agreed in writing to promptly and fully reimburse Bank for any out-of-pocket costs and expenses incurred by Bank.
(2) Bank is not deemed to be the “sponsor” or “depositor” under any rule, regulation or order of the Securities and Exchange Commission with respect to such transaction.
(3) Bank is not required to waive or agree to impair any of its rights or remedies under the Program Documents.
(4) Any identification of Bank by name and any description of the Program have been approved by Bank.
Company shall include a provision in any agreement by which Company sells or transfers Transferable Loans and/or Receivables requiring such transferee to comply with the terms of this Section 3(e) to the same extent as Company, and requiring such transferee to include such a provision in subsequent transfers of the Transferable Loans. Company shall ensure that final copies of all offering documents and investor presentations (or similar financing documents, as applicable) in connection with any such transaction are promptly provided to Bank.
(f) Notwithstanding anything to the contrary in this Agreement, but without diminishing any rights of Company to Transferable Loans once they are sold to Company, Bank may sell, participate,
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pledge, or otherwise transfer any Loans (or interest in Loans) owned by Bank. Bank will not sell or transfer any Loans and/or Receivables except in accordance with this Agreement.
(g) Bank hereby consents to Company’s sharing information regarding Transferable Loans and/or Receivables acquired hereunder by Company (other than any personally identifiable information of Borrowers), and the Loans relating to such Transferable Loans and/or Receivables, with potential financing partners, provided that such potential financing partner has entered into a standard form of nondisclosure agreement, which form shall be approved by Bank.
4. Representations, Warranties and Covenants.
(a) Bank hereby represents, warrants and covenants, as of the Effective Date, each Purchase Date, and each Loan Account Purchase Date, or covenants, as applicable, to Company that:
(1) Bank is an FDIC-insured, Utah state-chartered industrial bank, duly organized and validly existing and in good standing under the laws of its formation and has full corporate power and authority to execute, deliver, and perform its obligations under this Agreement; the execution, delivery and performance of this Agreement have been duly authorized, and are not in conflict with and do not violate the terms of the charter or bylaws of Bank and will not result in a material breach of or constitute a default under, or require any consent under, any indenture, loan or agreement to which Bank is a party;
(2) All approvals, authorizations, consents, and other actions by, notices to, and filings with, any Person required to be obtained for the execution, delivery, and performance of this Agreement by Bank, have been obtained;
(3) This Agreement constitutes a legal, valid, and binding obligation of Bank, enforceable against Bank in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws now or hereafter in effect, including the rights and obligations of receivers and conservators under 12 U.S.C. §§ 1821(d) and (e), which may affect the enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
(4) There are no proceedings or investigations pending or, to the best knowledge of Bank, threatened against Bank (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by Bank pursuant to this Agreement, or (iii) that would have a materially adverse financial effect on Bank or its operations if resolved adversely to it;
(5) Bank is not Insolvent;
(6) Immediately prior to each transfer and assignment of Transferable Loans and/or Receivables herein contemplated, to its actual knowledge, assuming performance by Company of its obligations under the Program Agreement, Bank (i) has good and marketable legal title to each Transferable Loan and/or Receivables and (ii) is the sole owner thereof, free and clear of all liens, claims, encumbrances, security interests, and rights of others, and has the right to assign, sell and transfer such Transferable Loan and/or Receivables, free and clear of any liens, claims, encumbrances, security interests, and rights of others; and
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(7) With respect to each Transferable Loan and/or Receivables sold on any Purchase Date by Bank to Company, (i) Bank has not taken any action (directly or indirectly, voluntarily or involuntarily): (a) to alter the terms or conditions of such Transferable Loan and/or Receivable or (b) that could be reasonably expected to impair the enforceability of such Transferable Loans and/or Receivables (except that such representation does not extend to any action by Company or its agents); (ii) upon Bank’s receipt of the related Purchase Price, Bank shall have conveyed to Company all of Bank’s right, title and interest in each Transferable Loan and/or Receivable sold hereunder subject to no prior security interest in favor of any other creditor of Bank; and (iii) Bank has not pledged, assigned, sold, granted a security interest in or otherwise conveyed such Transferable Loan and/or Receivable nor authorized the filing of, and is not aware of, any financing statements against Bank that include a description of collateral that includes such Transferable Loan and/or Receivable.
(b) Company hereby represents and warrants to Bank, as of the Effective Date, each Purchase Date, and each Loan Account Purchase Date that:
(1) Company is a corporation, duly organized and validly existing in good standing under the laws of its formation, and has full power and authority to execute, deliver, and perform its obligations under this Agreement; the execution, delivery, and performance of this Agreement have been duly authorized, and are not in conflict with and do not violate the terms of the articles or bylaws of Company and will not result in a material breach of or constitute a default under or require any consent under any indenture, loan, or agreement to which Company is a party;
(2) All approvals, authorizations, consents, and other actions by, notices to, and filings with any Person required to be obtained for the execution, delivery, and performance of this Agreement by Company, have been obtained;
(3) This Agreement constitutes a legal, valid, and binding obligation of Company,
enforceable against Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect, which may affect the enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
enforceable against Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect, which may affect the enforcement of creditors’ rights in general, and (ii) as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);
(4) There are no proceedings or investigations pending or, to the best knowledge of Company, threatened against Company (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by Company pursuant to this Agreement, or (iii) that would have a materially adverse financial effect on Company or its operations if resolved adversely to it;
(5) Company is not Insolvent; and
(6) The execution, delivery and performance of this Agreement by Company comply with Applicable Laws.
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(c) The representations and warranties set forth in this Section 4 shall survive the sale, transfer and assignment of the Transferable Loans and/or Receivables to Company pursuant to this Agreement and, with the exception of those representations and warranties contained in subsections 4(a)(4) and 4(b)(4), shall be made continuously throughout the term of this Agreement, including on each Purchase Date and each Loan Account Purchase Date. In the event that any investigation or proceeding of the nature described in subsection 4(a)(4) or 4(b)(4) is instituted or threatened against Bank or Company (as applicable), Bank or Company (as applicable) shall promptly notify the other of such pending or threatened investigation or proceeding (unless prohibited from doing so by Applicable Laws or the direction of a Regulatory Authority).
5. Conditions Precedent. The obligations of Bank in this Agreement to sell any Transferable Loan and/or Receivables are subject to the satisfaction of the following conditions precedent on or prior to each Purchase Date and Loan Account Purchase Date:
(a) As of each Purchase Date and Loan Account Purchase Date, unless waived by Bank, no action or proceeding shall have been instituted or, to Bank’s knowledge, threatened against Company or Bank to prevent or restrain the consummation of the purchase or other transactions contemplated hereby, and, on each Purchase Date and Loan Account Purchase Date, there shall be no injunction, decree, or similar restraint preventing or restraining such consummation;
(b) The representations and warranties of Company set forth in the Program Documents shall be true and correct in all material respects, unless waived by Bank, on each Purchase Date and Loan Account Purchase Date as though made on and as of such date; and
(c) The obligations of Company set forth in the Program Documents to be performed on or before each Purchase Date and Loan Account Purchase Date shall have been performed in all material respects, unless waived by Bank.
For the avoidance of doubt, nothing contained in this Section 5 shall be construed to limit, restrict or modify Bank’s continuing obligations with respect to Transferable Loans and/or Loan Accounts previously sold by Bank.
6. Term and Termination.
(a) This Agreement shall have an initial term beginning on the Program Launch Date and ending on the fifth (5th) anniversary of the Program Launch Date (the “Initial Term”) and shall renew automatically for successive terms of one (1) year (each a “Renewal Term,” and together with the Initial Term, the “Term”), unless either Party provides notice of non-renewal to the other Party at least one hundred eighty (180) days prior to the end of the Initial Term or any then-current Renewal Term or this Agreement is earlier terminated in
accordance with the provisions hereof.
accordance with the provisions hereof.
(b) Bank shall have the right to terminate this Agreement immediately upon written notice to Company in any of the following circumstances:
(1) any representation or warranty made by Company in this Agreement shall be incorrect in any material respect and shall not have been corrected within thirty (30) Business Days after written notice thereof has been given to Company;
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(2) Company shall default in the performance of any obligation or undertaking under this Agreement and such default shall continue for thirty (30) Business Days after written notice thereof has been given to Company;
(3) Company shall have a receiver, conservator, or similar official appointed for it, shall commence a voluntary case or other proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency,
receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;
receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;
(4) an involuntary case or other proceeding, whether pursuant to banking regulations or otherwise, shall be commenced against Bank seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, and such case or proceeding has not been stayed or dismissed within sixty (60) days after filing; or an order for relief shall be entered against Bank under the federal bankruptcy laws as now or hereafter in effect;
(5) either Bank or Company has terminated the Program Agreement and any applicable notice period provided in the Program Agreement has expired; or
(6) in the event that the Transferable Loans and/or Receivables transferred hereunder are held to be property of Bank, or if for any reason this Agreement is held or deemed to create indebtedness or a security interest in any of the Transferable Loans and/or Receivables, rather than a true sale of the Transferable Loans and/or Receivables.
(c) A Party shall have the right to terminate this Agreement immediately upon written notice to the other Party in any of the following circumstances:
(1) any representation or warranty made by the other Party in this Agreement shall be incorrect in any material respect and shall not have been corrected within thirty (30) Business Days after written notice thereof has been given to such other Party;
(2) the other Party shall default in the performance of any obligation or undertaking under this Agreement and such default shall continue for thirty (30) Business Days after written notice thereof has been given to such other Party;
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(3) the other Party shall have a receiver, conservator, or similar official appointed for it, shall commence a voluntary case or other proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency,
receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;
receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official or to any involuntary case or other similar proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;
(4) an involuntary case or other proceeding, whether pursuant to banking regulations or otherwise, shall be commenced against Bank seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, receivership, conservatorship or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, conservator, custodian, or other similar official of it or any substantial part of its property, and such case or proceeding has not been stayed or dismissed within sixty (60) days after filing; or an order for relief shall be entered against Bank under the federal bankruptcy laws as now or hereafter in effect; or
(5) either Bank or Company has terminated the Program Agreement and any applicable notice period provided in the Program Agreement has expired.
(d) Bank shall have the right to terminate this Agreement or suspend performance of its obligations under the Program immediately upon written notice to Company in any of the following circumstances:
(1) there is a material adverse change in the financial condition of Company. A material adverse change in financial condition includes (i) any breach of or event of default under, or any failure to comply with the terms, conditions, or covenants (in each case, regardless of whether such breach, event of default, or failure to comply is asserted or waived by any other Person) of any Company Credit Facility, or (ii) Company fails to provide reasonable evidence of its ability to renew, extend, or replace a Company Credit Facility at least thirty (30) days prior to a maturity thereof;
(2) a court or a Regulatory Authority having jurisdiction orders or issues an injunction that prohibits Bank from continuing to participate in the Program; or
(3) Bank has been advised by legal counsel that a change in Applicable Laws or any judicial decision of a court having jurisdiction over Bank, the Company, or the Program, or any interpretation or position (formal or informal) of a Regulatory Authority creates a material risk that Bank’s continued performance under this Agreement would violate Applicable Laws.
If Bank suspends its obligations pursuant to this Section 6(d), then the obligations of Company shall be excused during the time period of such suspension. Bank shall not terminate this Agreement pursuant to this Section 6(d) unless Bank first seeks to discuss with Company modifications to the Program to avoid the need for such termination and the Parties are unable to agree to such modifications.
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(e) Bank may terminate this Agreement immediately upon written notice to Company if Bank incurs any Loss and is not able to obtain indemnification for such Loss under Section 8 due to the application of Applicable Laws that limit or restrict Bank’s ability to seek such
indemnification, or if Bank is precluded by a Regulatory Authority from seeking such indemnification.
indemnification, or if Bank is precluded by a Regulatory Authority from seeking such indemnification.
(f) In addition to the foregoing termination rights, Bank may terminate this Agreement immediately upon written notice to Company (i) if Company defaults on its obligation to make a payment to Bank as provided in Section 2 of this Agreement and fails to cure such default within one (1) Business Day of receiving notice of such default from Bank; (ii) if Company defaults on its obligation to make a payment to Bank as provided in Section 2 of this Agreement more than once in any three (3) month period; or (iii) if Company fails to maintain the Required Balance in the Collateral Account as required by Section 26
(g) Bank may terminate this Agreement immediately upon written notice to Company if Bank is deemed to be a “sponsor” or “depositor” under any rule, regulation or order the Securities and Exchange Commission with respect to any security issued by Company or any Affiliate
(h) The termination of this Agreement either in part or in whole shall not discharge any Party from any obligation incurred prior to such termination, including any obligation with respect to Transferable Loans and/or Receivables sold prior to such termination
(i) The following terms of this Agreement shall survive the expiration or earlier termination of this Agreement: Sections 6, 7, 8, 16, 23 and 26.
7. Confidentiality.
(a) Each Party agrees that Confidential Information of the other Party (“Disclosing Party”) shall be used by such Party solely in the performance of its obligations and exercise of its rights pursuant to the Program Documents. Except as required by Applicable Laws or legal process, neither party, (each a “Restricted Party”) shall disclose Confidential Information of the Disclosing Party to third parties; provided, however, that the Restricted Party may disclose Confidential Information of the other Party (i) to the Restricted Party’s Affiliates, agents, representatives or subcontractors for the sole purpose of fulfilling the Restricted Party’s obligations under this Agreement (as long as the Restricted Party exercises reasonable efforts to prohibit any further disclosure by its Affiliates, agents, representatives or subcontractors), provided that in all events, the Restricted Party shall be responsible for any breach of the confidentiality obligations hereunder by any of its Affiliates, agents (other than Company as agent for Bank), representatives or subcontractors, (ii) to the Restricted Party’s auditors, accountants and other professional advisors, or to a Regulatory Authority, (iii) to any other third party as mutually agreed in writing by the Parties or (iv) with consent of the Disclosing Party. In addition, each Party agrees that the other Party may share Confidential Information with potential acquirers including the other party to a sale of assets (including Loans, or economic interests in the Loans and/or the Receivables), or to any lender or potential lender (including in connection with the issuance of debt securities) to such Party solely to the extent required to facilitate such transactions and due diligence associated with such transactions, provided that the potential party to such transaction is subject to written nondisclosure obligations and limitations on use only for the actual or prospective transaction.
(b) A Party’s Confidential Information shall not include information that:
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(1) is generally available to the public;
(2) has become publicly known, without fault on the part of the Restricted Party who now seeks to disclose such information, subsequent to the Restricted Party acquiring the information;
(3) was otherwise known by, or available to, the Restricted Party prior to entering into this Agreement; or
(4) becomes available to the Restricted Party on a non-confidential basis from a Person, other than a Party to this Agreement, who is not known by the Restricted Party after reasonable inquiry to be bound by a confidentiality agreement with the Disclosing Party or otherwise prohibited from transmitting the information to the Restricted Party.
(c) Upon written request or upon the termination of this Agreement, each Party shall, within thirty (30) days, return to the other Party all Confidential Information of the other Party in its possession that is in written form, including by way of example, but not limited to, reports, plans, and manuals; provided, however, that either Party may maintain in its possession all such Confidential Information of the other Party required to be maintained under Applicable Laws relating to the retention of records for the period of time required thereunder.
(d) In the event that a Restricted Party is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information of the Disclosing Party, the Restricted Party will provide the Disclosing Party with prompt notice of such request(s) so that the Disclosing Party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Party’s compliance with the provisions of this Agreement. In the event that the Disclosing Party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the Disclosing Party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information of the Disclosing Party which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information of the Disclosing Party so furnished as the Restricted Party would exercise in assuring the confidentiality of any of its own Confidential Information.
8. Indemnification. The indemnification obligations and procedures set forth in the Program Agreement are expressly incorporated into this Agreement by reference.
9. Assignment.
(a) Section 28 (Assignment) of the Program Agreement is expressly incorporated into this Agreement by reference.
(b) Company, or any subsequent purchaser, assignee or transferee of Transferable Loans, may sell, assign or transfer any Transferable Loan to any Affiliate or third-party purchaser. Company shall cause the Registrar to maintain at all times a record of the Registered Holder of each Transferable Loan transferred by Company, and Company shall require each purchaser, assignee or transferee to comply with the terms of Section 3(c) of this Agreement. Company shall ensure that any purchaser, assignee or transferee will engage Company as the servicer of such Transferable Loan, and that any such servicing will be subject to the servicing of the Loan under the Program Agreement.
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10. Third Party Beneficiaries. This Agreement is not intended to and does not confer any rights or
remedies upon any Person other than the Parties. Nothing contained herein shall be construed as
creating a third-party beneficiary relationship between either Party and any other Person.
11. Notices. All notices and other communications that are required or may be given in connection
with this Agreement shall be in writing and shall be deemed received (a) on the day delivered, if
delivered by hand; (b) on the day transmitted, if transmitted by e-mail with receipt confirmed; or
(c) three (3) Business Days after the date of mailing to the other Party, if mailed first-class mail
postage prepaid, at the following address, or such other address as either Party shall specify in a
notice to the other:
To Bank: WebBank
Attn: [***]
P.O. Box 757
Portsmouth NH 03802
Tel. [***]
Email: [***]
With copies to: WebBank
Attn: [***]
P.O. Box 757
Portsmouth NH 03802
Email: [***]
To Company: Sezzle Inc.
Attn: [***]
700 Nicollet Mall, Suite 640, Minneapolis, MN 55402
Tel. [***]
Email: [***]
With copy to: Sezzle Inc.
Attn: [***]
700 Nicollet Mall, Suite 640, Minneapolis, MN 55402
Tel. [***]
Email: [***]
12. Relationship of Parties. The Parties agree that in performing their responsibilities pursuant to this
Agreement, they are in the position of independent contractors. This Agreement is not intended to
create, nor does it create and shall not be construed to create, a relationship of partner or joint
venturer or any association for profit between and among the Parties.
13. Expenses. Each Party shall bear the costs and expenses of performing its obligations under this
Agreement, unless expressly provided otherwise in the Program Documents.
(a) Each Party shall be responsible for payment of any federal, state, or local taxes or
assessments associated with the performance of its obligations under this Agreement.
(b) Company shall reimburse Bank for all reasonable third-party fees incurred by Bank in
connection with the performance of this Agreement.
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(c) Company shall pay for Bank’s reasonable legal and other professional fees and expenses as provided in Section 22 of the Program Agreement.
(d) Company shall reimburse Bank for all reasonable costs associated with Bank’s assignment to Company of Loans pursuant to Sections 2(f).
(e) All fees payable pursuant to this Section 13 may be paid by wire or ACH, as determined by the Company, but shall be paid pursuant to the terms of the Bank’s invoice. Bank may assess a service charge of [***] per month on any amounts due under this Agreement that are thirty (30) days past due.
(f) Bank may set-off, combine, consolidate or otherwise appropriate and apply (i) any assets of Company held by Bank or (ii) any indebtedness or other liabilities at any time owing by Bank to Company, as the case may be, against or on account of any obligations owed by Company to Bank under the Program Documents.
14. Examination. Company agrees to submit to any examination that may be required by a Regulatory Authority having jurisdiction over Bank, during regular business hours and upon reasonable prior notice (or otherwise, if required by the Regulatory Authority), and to otherwise provide reasonable cooperation to Bank in responding to such Regulatory Authority’s inquiries and requests related to the Program.
15. Site Visits. Company, upon reasonable prior notice from Bank, agrees to submit to an inspection of its books, records, accounts, and facilities relevant to the Program, from time to time, during regular business hours. All expenses of inspection shall be borne by Company, and Company shall reimburse Bank for out-of-pocket expenses incurred by Bank in the performance of periodic on-site reviews of Company’s financial condition, operations and internal controls. Company shall store all documentation and electronic data related to its performance under this Agreement and shall make such documentation and data available during any inspection by Bank. Company shall make available to Bank such information, documentation, and data as may be requested by Bank from time to time to conduct testing, reviews, or other evaluations of Company or the Program.
16. Governing Law; Waiver of Jury Trial. This Agreement, including all issues concerning the validity of the Agreement, the construction of its terms, and the interpretation, performance, and enforcement of the rights and duties of the Parties, shall be governed by, interpreted, and enforced in accordance with the laws of the State of Utah, without giving effect to the rules, policies, or principles thereof with respect to conflicts of laws that would require the application of any other law. Without limiting the generality of the foregoing, the Parties agree the laws of the State of Utah shall govern the entire relationship between and among the Parties, including without limitation, all issues or claims arising out of, relating to, in connection with, or incident to this Agreement, whether such claims are based in tort, contract, or arise under statute or in equity.
The Parties acknowledge and agree that this Agreement is made and performed in the State of Utah. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR CLAIM (WHETHER BASED UPON CONTRACT, TORT, EQUITY OR OTHERWISE) ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S
ENTERING INTO THIS AGREEMENT.
ENTERING INTO THIS AGREEMENT.
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17. Manner of Payments. Unless the manner of payment is expressly provided herein, all payments under this Agreement shall be made by wire or ACH transfer to the bank accounts designated by the respective Parties. Notwithstanding anything to the contrary contained herein, neither Party shall be excused from making any payment required of it under this Agreement as a result of a breach or alleged breach by the other Party of any of its obligations under this Agreement or any other agreement, provided that the making of any payment hereunder shall not constitute a waiver by the Party making the payment of any rights it may have under the Program Documents or by law.
18. Brokers. No Party has agreed to pay any fee or commission to any agent, broker, finder, or other person for or on account of services rendered as a broker or finder in connection with this Agreement or the transactions contemplated hereby that would give rise to any valid claim against any other Party for any brokerage commission or finder’s fee or like payment.
19. Entire Agreement. The Program Documents constitute the final agreement between the Parties. The Program Documents are the complete and exclusive expression of the Parties’ agreement on the matters contained therein. All prior and contemporaneous negotiations and agreements between the Parties on the matters contained in the Program Documents are expressly merged into and superseded by the Program Documents. The provisions of the Program Documents may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings. In entering into the Program Documents, neither Party has relied upon any statement, representation, warranty, or agreement of the other Party except for those expressly contained in the Program Documents. There are no conditions precedent to the effectiveness of this Agreement other than the execution hereof by the Parties and those conditions expressly stated in this Agreement.
20. Amendment and Waiver. This Agreement may not be amended orally, but only by a written instrument signed by all Parties that identifies itself as an amendment to this Agreement. No failure or delay in exercising any right or remedy or requiring the satisfaction of any condition under this Agreement, and no course of dealing between the Parties, operates as a waiver or estoppel of any right, remedy, or condition. All waivers must be in writing and signed by the Party against whom the waiver is to be enforced. A waiver made in writing on one occasion is effective only in that instance and only for the purpose that it is given and is not and is not to be construed as a waiver on any future occasion or against the other Party. To the extent any course of dealing, act, omission, failure, or delay in exercising any right or remedy under this Agreement constitutes the election of an inconsistent right or remedy, that election does not constitute a waiver of any right or remedy or limit or prevent the subsequent enforcement of any Agreement provision. No single or partial exercise of any right or remedy under this Agreement precludes the simultaneous or subsequent exercise of any other right or remedy. The rights and remedies of the Parties set forth in this Agreement are not exclusive of, but are cumulative to, any rights or remedies now or subsequently existing at law, in equity, or by statute.
21. Severability. Any provision of this Agreement that is deemed invalid, illegal, or unenforceable in any jurisdiction, shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining portions hereof in such jurisdiction or rendering such provision or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. All terms and conditions of this Agreement will be deemed enforceable to the fullest extent permissible under Applicable Laws, and, when necessary, the court is authorized to reform any and all terms or conditions to give them such effect.
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22. Interpretation. The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments thereto, and the same shall be construed neither for nor against any Party, but shall be given a reasonable interpretation in accordance with the plain meaning of its terms and the intent of the Parties.
Agreement or any amendments thereto, and the same shall be construed neither for nor against any Party, but shall be given a reasonable interpretation in accordance with the plain meaning of its terms and the intent of the Parties.
23. Jurisdiction; Venue. Each Party hereby submits to the exclusive jurisdiction of the federal and state courts in Salt Lake City, Utah (and appellate courts thereof) in connection with any dispute related to this Agreement or any matter contemplated hereby. Each Party irrevocably and unconditionally waives any objection to the laying of such venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
24. Headings. Captions and headings in this Agreement are for convenience of reference only, are not to be deemed part of this Agreement, and do not affect the construction or interpretation of this Agreement.
25. Counterparts; Electronic Signatures. This Agreement may be executed and delivered by the Parties in any number of counterparts, and by different parties on separate counterparts, each of which counterpart shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. This Agreement may be executed and delivered by facsimile, as an attachment to an electronic mail message in .pdf, .jpeg, .TIFF or similar electronic format, or by electronic signature (including DocuSign, AdobeSign, and
ContractWorks), which will be considered originals and legally binding for all purposes. Each Party agrees that any such electronically transmitted signature shall be valid and binding on such Party to the same extent as a manual signature.
ContractWorks), which will be considered originals and legally binding for all purposes. Each Party agrees that any such electronically transmitted signature shall be valid and binding on such Party to the same extent as a manual signature.
26. Security.
(a) Definitions.
(1) “Base Amount” means [***]
(2) “Cumulative Transaction Volume” means the sum of all loan amounts on Single Disbursement Loans and Maximum Loan Amounts on Multiple Disbursement Loans made by Bank under the Program.
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(3) “Delinquency Ratio” equals (a) with respect to Sezzle Cash Loans, (i) the outstanding principal balance of Sezzle Cash Loans that are thirty-one (31) or more days past due divided by (ii) the total principal balance of Sezzle Cash Loans and (b) with respect to Sezzle Send Loans, (i) the outstanding principal balance of Sezzle Send Loans that are thirty-one (31) or more days past due divided by (ii) the total principal balance of Sezzle Send Loans
(4) “Federal Funds Rate” means an annual interest rate, adjusted on the first Business Day of each month, and equal to the Effective Federal Funds Rate, as published by the St. Louis Federal Reserve Bank’s FRED (Federal Reserve Economic Database) online database (available at: https://fred.stlouisfed.org/series/EFFR) on such date.
(5) “HFS Loan Collateral Amount” means [***]
(6) “Ineligible Loan Collateral Amount” equals [***]
(7) “Level 1 Delinquency Ratio Trigger” occurs if [***]
(8) “Level 1 Vintage Trigger” occurs if [***]
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(9) “Level 2 Delinquency Ratio Trigger” occurs if [***]
(10) “Level 2 Vintage Trigger” occurs if [***]
(11) “Required Balance” means [***]
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(12) “Sezzle Cash Collateral Rate” equals [***]
(13) “Sezzle Cash Loan Collateral Amount” is equal to [***]
(14) “Sezzle Send Collateral Rate” equals [***]
(15) “Sezzle Send Loan Collateral Amount” is equal to [***]
(b) Establishment of Collateral Account. Company shall provide Bank with cash collateral to secure Company’s obligations under the Program Documents, including without limitation obligations related to funding, payments, legal fees, and indemnification, which Bank shall deposit in a deposit account (the “Collateral Account”) at Bank. The Collateral Account shall be a deposit account at Bank, segregated from any other deposit account of Company, that shall hold only the funds provided by Company to Bank as collateral. At all times, Company shall maintain funds in the Collateral Account equal to the Required Balance. In the event the actual balance in the Collateral Account is less than the Required Balance, Company shall, within two (2) Business Days, make a payment into the Collateral Account in an amount equal to the difference between the Required Balance and the actual balance in such account.
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(c) Security Interest. To secure all Company’s obligations under the Program Documents (including without limitation the payment by Company of any amounts due under the Program Documents, and the performance of any of Company’s obligations under the Program Documents), Company hereby grants Bank a first priority and continuing security interest in and to the Collateral Account and the funds therein and the proceeds thereof, and agrees to take such steps as Bank may reasonably require to perfect or protect such security interest. Company represents that, as of the date of the Agreement, the Collateral Account is not subject to any claim, lien, security interest or encumbrance (other than the interest of Bank). Company shall not allow any other Person to have any claim, lien, security interest, or encumbrance on the Collateral Account. Bank shall have all of the rights and remedies of a secured party under Applicable Laws with respect to the Collateral Account and the funds therein or proceeds thereof, and shall be entitled to exercise those rights and remedies in its discretion.
(d) Interest. The Collateral Account shall be a money market deposit account and shall bear interest in favor of Company at [***] computed based on the average daily balance of the Collateral Account during the prior month and credited to the Collateral Account, as property of Company, promptly following each month end.
(e) Withdrawals.
(1) Without limiting any other rights or remedies of Bank under this Agreement, Bank shall have the right to withdraw amounts from the Collateral Account to fulfill any obligations of Company under the Program Documents on which Company has defaulted, either during the Term or following termination of any of the Program Documents. To the extent that Bank has withdrawn amounts from the Collateral Account and such amounts are subsequently paid directly to Bank, Bank shall restore such amounts to the Collateral Account within two (2) Business Days after receipt of the amounts paid directly to Bank.
(2) Company shall not have any right to withdraw amounts from the Collateral Account. In the event the actual balance in the Collateral Account is more than the Required Balance, then at Company’s option, Company may provide to Bank a report setting forth the calculation for the Required Balance and the extent to which the actual amount held in the Collateral Account at such time exceeds the Required Balance. Within two (2) Business Days after receipt of such a report from Company, Bank shall transfer from the Collateral Account any amount held therein that exceeds the Required Balance as of the date of such report and pay such amount to an account designated by Company.
Notwithstanding the foregoing, following the expiration or termination of this
Agreement, Bank shall be entitled to retain in the Collateral Account the amount of any reasonably expected liability that Company may have to Bank under the Program Documents.
Agreement, Bank shall be entitled to retain in the Collateral Account the amount of any reasonably expected liability that Company may have to Bank under the Program Documents.
(f) Termination of Collateral Account. Bank shall release any funds remaining in the Collateral Account to Company on latest to occur of: (i) [***] after termination of this Agreement, (ii) the last date on which Company is obligated to purchase Transferable Loans, Multiple Disbursement Transferable Loan Receivables and/or Loan Accounts pursuant to Section 2, or (iii) the fulfillment by Company of all of its obligations to Bank under the Program Documents, including its outstanding indemnification obligations with respect to all Claim Notices provided to Company during the Term or within one hundred eighty (180) days after the expiration or termination of this Agreement.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized officers as of the date first written above.
WEBBANK
By: /s/ Jason Lloyd
Name: Title: | Jason Lloyd President & CEO | ||||
SEZZLE INC.
By: /s/ Charlie Youakim
Name: Title: | Charlie Youakim CEO | ||||
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Schedule 1
I. Definitions
“Agreement” shall have the meaning set forth in the introductory paragraph.
I. Definitions
“Agreement” shall have the meaning set forth in the introductory paragraph.
“Bank Purchase Premium” shall have the meaning set forth in Schedule 2.
“Base Amount” shall have the meaning set forth in Section 26(a).
“Collateral Account” shall have the meaning set forth in Section 26(b).
“Company Credit Facility” shall have the meaning set forth in the Program Agreement.
“Confidential Information” means the terms and conditions of this Agreement, and any proprietary information or non-public information of a Party, including a Party’s proprietary marketing plans and objectives, that is furnished to the other Party in connection with this Agreement.
“Cumulative Transaction Volume” shall have the meaning set forth in Section 26(a).
“Delinquency Ratio” shall have the meaning set forth in Section 26(a).
“Designated Amount” shall have the meaning set forth in Schedule 2.
“Disclosing Party” shall have the meaning set forth in Section 7(a).
“Effective Date” shall have the meaning set forth in the introductory paragraph.
“Existing Sale Agreement” shall have the meaning set forth in the preamble.
“Federal Funds Rate” shall have the meaning set forth in Section 26(a).
“HFS Loan Collateral Amount” shall have the meaning set forth in Section 26(a).
“Ineligible Loan Collateral Amount” shall have the meaning set forth in Section 26(a).
“Interim Interest” means, with respect to any Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable or Retention Loan purchased from Bank hereunder, the interest that accrued on such Single Disbursement Transferable Loan, Multiple Disbursement
Transferable Loan Receivable or Retention Loan between date Bank funds the Loan to the date the Company purchases each Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable or Retention Loan based on the Interim Interest Rate. For the avoidance of doubt, the calculation of the Interim Interest shall disregard any grace period, promotional interest rate, delinquency interest, penalty interest, or otherwise adjusted interest rate applicable to the Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable or Retention Loan.
Transferable Loan Receivable or Retention Loan between date Bank funds the Loan to the date the Company purchases each Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable or Retention Loan based on the Interim Interest Rate. For the avoidance of doubt, the calculation of the Interim Interest shall disregard any grace period, promotional interest rate, delinquency interest, penalty interest, or otherwise adjusted interest rate applicable to the Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable or Retention Loan.
“Interim Interest Rate” shall equal [***]
“Level 1 Delinquency Ratio Trigger” shall have the meaning set forth in Section 26(a).
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“Level 1 Vintage Trigger” shall have the meaning set forth in Section 26(a).
“Level 2 Delinquency Ratio Trigger” shall have the meaning set forth in Section 26(a).
“Level 2 Vintage Trigger” shall have the meaning set forth in Section 26(a).
“Loan Account” shall have the meaning set forth in Section 2(e).
“Loan Account Purchase Date” shall have the meaning set forth in Section 2(e).
“Maximum Loan Amount” means the total loan amount to be funded by Bank for a Multiple Disbursement Loan, which amount shall be disbursed in multiple Loan Disbursements.
“Multiple Disbursement Transferable Loan” means, with respect to any Purchase Date, any Multiple Disbursement Loan (including any related Multiple Disbursement Transferable Loan Receivable and excluding any Retention Loan) that was funded two (2) Business Days prior to such Purchase Date.
“Multiple Disbursement Transferable Loan Receivables” shall have the meaning set forth in Section 2(b).
“Network” means the bank card association network.
“Party” means Bank or Company, and “Parties” means Bank and Company.
“Prime Rate” means the Prime Interest Rate as published in the Federal Reserve Economic Data table.
“Program Agreement” shall have the meaning set forth in the introductory paragraph.
“Program Documents” means this Agreement, and the Program Agreement, including any exhibits, addenda, and side letters with respect to each of them.
“Purchase Date” means each date on which Company pays Bank the Purchase Price for a Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable, or Retention Transferable Loan and, pursuant to this Agreement, acquires such Single Disbursement Transferable Loan, Multiple Disbursement Transferable Loan Receivable and/or Retention Transferable Loan from Bank. Each Business Day may be a Purchase Date.
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“Purchase Price” means, with respect to a Single Disbursement Transferable Loan or the Multiple Disbursement Transferable Loan Receivables or a Retention Transferable Loan (excluding any Sezzle Cash Charged Off Loan and any Sezzle Send Charged Off Loan), the sum of [***] For the avoidance of doubt, if a Single Disbursement Loan, Retention Transferable Loan or the first disbursement for a Multiple Disbursement Loan was funded on a Friday, the Purchase Date shall be the following Tuesday, and the Purchase Price shall include the interest accrued on the Single Disbursement Loan, Multiple Disbursement Loan Receivables or Retention Transferable Loan from the date of funding through the following Monday (assuming that during that period there were no weekdays on which banking institutions in the State of Utah were authorized or obligated by law or executive order to be closed). “Purchase Price” means, with respect to a Retention Transferable Loan that is either a Sezzle Cash Charged Off Loan or a Sezzle Send Charged Off Loan, [***]
“Registered Holder” means the holder of a Transferable Loan, as determined exclusively by the Registrar.
“Registrar” means the Company or, subject to Bank’s approval (which shall not be unreasonably withheld or delayed), Company’s designee.
“Required Balance” shall have the meaning set forth in Section 26(a).
“Restricted Party” shall have the meaning set forth in Section 7(a).
“Retention Loan” means any Sezzle Cash Loan or any Sezzle Send Loan.
“Retention Loan RTA” means (i) initially, Thirty Million Dollars ($30,000,000) or (ii) such other amount as may be determined from time to time pursuant to Section 2.
“Retention Transferable Loan” means any Sezzle Cash Transferable Loan or any Sezzle Send Transferable Loan.
“Sezzle Cash Charged Off Loan” means, with respect to any Purchase Date, any Sezzle Cash Loan that has been charged off in accordance with the Charge Off Policy (including any Sezzle Cash Ineligible Loan that becomes a Sezzle Cash Charged Off Loan).
“Sezzle Cash Collateral Rate” shall have the meaning set forth in Section 26(a).
“Sezzle Cash Concentration Limits” means the concentration limits applicable to Sezzle Cash Loans set forth in Exhibit A attached hereto.
“Sezzle Cash Eligible Loan” means any Sezzle Cash Loan that meets both the Sezzle Cash Eligibility Criteria and the Sezzle Cash Concentration Limits.
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“Sezzle Cash Eligibility Criteria” means the eligibility criteria applicable to Sezzle Cash Loans set forth in Exhibit B attached hereto.
“Sezzle Cash Excess Concentration Loan” means any Sezzle Cash Loan the origination of which would result in the total Sezzle Cash Loans then held by Bank exceeding one or more of the Sezzle Cash Concentration Limits.
“Sezzle Cash Excess Loan” means, with respect to any Purchase Date, any Sezzle Cash Loan the origination of which would result in the total Retention Loans (but excluding any existing Sezzle Cash Excess Loans and Sezzle Send Excess Loans then owned by Bank) then held by Bank exceeding the Retention Loan RTA.
“Sezzle Cash Ineligible Loan” means any Sezzle Cash Loan that does not meet the Sezzle Cash Eligibility Criteria or the Sezzle Cash Concentration Limits.
“Sezzle Cash Loan Collateral Amount” shall have the meaning set forth in Section 26(a).
“Sezzle Cash Transferable Loan” means, with respect to any Purchase Date, any Sezzle Cash Excess Loan or any Sezzle Cash Charged Off Loan.
“Sezzle Send Charged Off Loan” means, with respect to any Purchase Date, any Sezzle Send Loan that has been charged off in accordance with the Charge Off Policy (including any Sezzle Send Ineligible Loan that becomes a Sezzle Send Charged Off Loan).
“Sezzle Send Collateral Rate” shall have the meaning set forth in Section 26(a).
“Sezzle Send Concentration Limits ” means the concentration limits applicable to Sezzle Send Loans set forth in Exhibit C attached hereto.
“Sezzle Send Eligible Loan” means any Sezzle Send Loan that meets both the Sezzle Send Eligibility Criteria and the Sezzle Send Concentration Limits.
“Sezzle Send Eligibility Criteria” means the eligibility criteria applicable to Sezzle Send Loans set forth in Exhibit D attached hereto.
“Sezzle Send Excess Concentration Loan” means any Sezzle Send Loan the origination of which would result in the total Sezzle Send Loans then held by Bank exceeding one or more of the Sezzle Send Concentration Limits.
“Sezzle Send Excess Loan” means, with respect to any Purchase Date, any Sezzle Send Loan origination of which would result in the total Retention Loans (but excluding any existing Sezzle Cash Excess Loans and Sezzle Send Excess Loans then owned by Bank) then held by Bank exceeding the Retention Loan RTA.
“Sezzle Send Ineligible Loan” means any Sezzle Send Loan that does not meet the Sezzle Send Eligibility Criteria or the Sezzle Send Concentration Limits.
“Sezzle Send Loan Collateral Amount” shall have the meaning set forth in Section 26(a).
“Sezzle Send Transferable Loan” means, with respect to any Purchase Date, any Sezzle Send Excess Loan or any Sezzle Send Charged Off Loan.
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“Single Disbursement Transferable Loan” means, with respect to any Purchase Date, any Single Disbursement Loan (excluding any Retention Loan) that was originated two (2) Business Days prior to such Purchase Date.
“Transferable Loan” means, with respect to any Purchase Date, any Single Disbursement Transferable Loan, any Multiple Disbursement Transferable Loan or any Retention Transferable Loan.
“Unfunded Loan Disbursement Amount” means, with respect to any particular Multiple Disbursement Loan as of a particular date of determination, the amount that equals the Maximum Loan Amount with respect to such Multiple Disbursement Loan minus the aggregate amount of all Loan Disbursements made at any time on or prior to such date with respect to such Multiple Disbursement Loan.
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II. Construction
As used in this Agreement:
(a) All references to the masculine gender shall include the feminine gender (and vice versa);
(b) All references to “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation”;
(c) The word “or” means both “and” and “or,” except where the context clearly indicates that the Parties intend “or” to designate alternatives only, including when the word “either” or similar words or phrases are used;
(d) References to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation;
(e) References to “dollars” or “$” shall be to United States dollars unless otherwise specified herein;
(f) Unless otherwise specified, all references to days, weeks, months or years shall be deemed to be preceded by the word “calendar”;
(g) Unless otherwise specified, all references to “quarter” shall be deemed to mean calendar quarter; and
(h) The fact that a Party has provided approval or consent shall not mean or otherwise be construed to mean that: (i) a Party has performed any due diligence with respect to the requested or required approval or consent, as applicable; (ii) a Party agrees that the item or information for which another Party seeks approval or consent complies with any Applicable Laws; (iii) a Party has assumed another Party’s obligations to comply with all Applicable Laws arising from or related to any requested or required approval or consent; or (iv) except as otherwise expressly set forth in such approval or consent, a Party’s approval or consent impairs in any way another Party’s rights or remedies under the Agreement, including indemnification rights for a Party’s failure to comply with all Applicable Laws.
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Schedule 2
Payments
[***]
31
[***]
32
Exhibit A
Sezzle Cash Concentration Limits
Sezzle Cash Concentration Limits
[***]
33
Exhibit B
Sezzle Cash Eligibility Criteria
Sezzle Cash Eligibility Criteria
[***]
34
Exhibit C
Sezzle Send Concentration Limits
Sezzle Send Concentration Limits
[***]
35
Exhibit D
Sezzle Send Eligibility Criteria
[***]
36