Page 10 of 25 – SEC Filing
Covenants
Pursuant to the terms of the Preferred Stock as provided in the Certificate of Designation, so long as any shares of Preferred Stock are outstanding, the Issuer may not, among other things, without the prior written consent or vote of the holders of at least a majority of the then outstanding shares of Preferred Stock: (a) amend, alter, repeal or waive any provision of the Certificate of Designation, (b) amend, alter or repeal any provision of the Issuers charter documents in a manner that would adversely affect the powers, privileges, preferences or rights of the Preferred Stock, (c) create additional classes or series of capital stock having rights, preferences or privileges senior to or pari passu with the Preferred Stock or (d) increase or decrease the authorized number of shares of Preferred Stock.
In addition, so long as Sagard or its affiliates own at least 35% of the shares of Preferred Stock that were originally issued, the Certificate of Designation provides that the Issuer may not, among other things, without the prior written consent or vote of the holders of at least a majority of the then outstanding shares of Preferred Stock: (a) authorize or issue any capital stock of any subsidiary which is not wholly-owned by the Issuer, (b) declare or pay dividends on the Issuers equity securities or redeem any of the Issuers equity securities, (c) incur, guarantee or assume any indebtedness, subject to certain limited exceptions, (d) grant or incur any lien, subject to certain limited exceptions, (e) enter into any transaction for the acquisition of all or substantially of the equity interests or assets of another person, subject to certain limited exceptions (f) make any investments, subject to certain limited exceptions or (g) enter into any transactions with the Issuers affiliates, subject to certain limited exceptions.
Registration Rights Agreement
In connection with the Private Placement, the Issuer entered into a Registration Rights Agreement with Sagard (the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, Sagard and any transferee or assignee to whom Sagard or such transferee or assignee assigns its rights under the Registration Rights Agreement (collectively, the Investors) is entitled to certain shelf and piggyback registration rights with respect to the Conversion Shares, subject to the limitations set forth in the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Issuer will file a registration statement on Form S-3 with the SEC no later than the earlier of (i) ninety (90) days prior to the first anniversary of the closing of the Private Placement and (ii) thirty (30) days after the occurrence of an event described in Section 4.2(c) of the Preferred Stock Purchase Agreement (such event, an Early Filing Trigger), to register for resale the Conversion Shares, and any additional shares of Common Stock as may become issuable with respect to such securities as a result of stock splits, stock dividends or similar transactions (the Registrable Securities). The Issuer agreed to use its reasonable best efforts to have such registration statement declared effective by the SEC no later than the earlier of (1) the first anniversary of the of the closing of the Private Placement and (2) sixty (60) days after an Early Filing Trigger. The Registration Rights Agreement contains other provisions, including administrative procedures, indemnification provisions, penalties for the Issuers failure to perform, and other customary provisions.
Services Agreement
On March 23, 2018, the Issuer entered into a management services agreement with Manager, pursuant to which Manager will provide certain consulting and management advisory services to the Issuer over a three-year period (the Initial Term) for an annual fee of $450,000, which fees will be paid in equal installments over the Initial Term beginning in the second year of the Initial Term (the Services Agreement). The Services Agreement may be terminated earlier than the initial three-year term (i) upon mutual consent of the parties, (ii) by either party following a breach of the Services Agreement by the other party that remains uncured following 30 days written notice thereof, (iii) in Managers sole discretion with 10 days prior written notice, or (iv) upon the consummation of a Deemed Liquidation (so long as all accrued and unpaid fees payable thereunder as of such termination have been paid in full) or a Fundamental Change in which all of the Issuers shares of Preferred Stock are repurchased by the Issuer.
9
