Document:

EX-10.4

 Exhibit 10.4 

August 9, 2021 
 High Trail Investments ON LLC 

221 River Street, 9th Floor 

Hoboken, NJ 07030 
 Attention: Eric Helenek 

 

	 	Re:	 Agreement re Failure to Comply with EBITDA Covenant 

Ladies and Gentlemen: 
 Reference is made to that
certain Senior Secured Note due 2024 (Certificate No. A-5) issued on April 8, 2021 by Aterian, Inc. (formerly known as Mohawk Group Holdings, Inc.) (the “Company”) to High Trail
Investments ON LLC (“High Trail ON”) (the “Note”). Capitalized terms used but not defined herein shall have the meaning given to them by the Note. 

The Company hereby acknowledges and agrees that the Company and its consolidated Subsidiaries did not have Adjusted EBITDA at least equal to
the Target Adjusted EBITDA for the twelve (12)-month period ended June 30, 2021 as required by Section 9(K) of the Note and that the Company and its consolidated Subsidiaries had Adjusted EBITDA for the quarters ended on June 30,
2021, March 31, 2021 and December 31, 2020, as set forth on Exhibit A. The Company further acknowledges and agrees that the failure to comply with Section 9(K) of the Note for the twelve (12)-month period ended June 30,
2021 constitutes an Event of Default under the terms of the Note and that High Trail ON has declared an Event of Default under the Note (the “Current Event of Default”) and declared $2,681,382.79 of the Principal Amount thereof to
be due and payable immediately for cash in an amount equal to the Event of Default Acceleration Amount of $3,124,108.88 (the “Current Event of Default Acceleration Amount”). 

For valuable consideration, the sufficiency of which is hereby acknowledged, the Company hereby agrees as follows: 

 

	 	1.	 The Company shall pay the Current Event of Default Acceleration Amount in cash on August 9, 2021;
provided, however, that if the Company does not pay the entire Current Event of Default Acceleration Amount in cash on August 9, 2021, this letter agreement shall be deemed to be an Event of Default Stock Payment Notice whereby High Trail ON
elects to receive all unpaid portion of the Current Event of Default Acceleration Amount in shares of Common Stock, and in accordance with Section 5(C) of the Notes (except as set forth herein), the Company shall issue and deliver to High Trail
ON such number of shares of Common Stock equal to the quotient (rounded up to the nearest whole number) obtained by dividing the unpaid Current Event of Default Acceleration Amount by the Event of Default Stock Payment Price, with the date of
delivery of the Event of Default Stock Payment Notice being August 9, 2021, and the Event of Default Stock Payment Delivery Date being on or before August 11, 2021. 

 

	 	2.	 On August 9, 2021, the Company shall publicly announce its earnings for the period ended June 30,
2021, by no later than 8:00 a.m., New York City time. 

  

	 	3.	 The Company shall execute and deliver to High Trail ON on the date of this letter agreement, the Omnibus
Amendment to Senior Secured Notes Due 2024 and Warrants to Purchase Common Stock attached hereto as Exhibit B (the “Omnibus Amendment”). 

	 	4.	 Effective upon compliance with all obligations in this letter agreement and all obligations under the Omnibus
Amendment, provided that the Company satisfies in full its obligations under Section 1 hereof solely by payment in cash, High Trail ON waives (i) the Current Event of Default under the terms of the Note with respect to the remainder of the
outstanding Principal Amount under the Note and (ii) all Default Interest that would otherwise be applicable to the Current Event of Default. 

  

	 	5.	 The Company shall, within two Business Days of the date of this letter agreement, pay all reasonable and
documented out-of-pocket expenses and costs of High Trail ON (including, without limitation, the reasonable and documented attorney fees and expenses of counsel for High
Trail ON) in connection with the preparation, negotiation, execution and approval of this letter agreement and Exhibit B hereto. 

The agreement set forth in this letter agreement is limited to the extent specifically set forth above and shall in no way serve to amend or
waive compliance with any terms, covenants or provisions of the Note, other than as expressly set forth above and the Note shall otherwise continue in effect in accordance with their terms. 

Any breach of the terms and conditions of this letter agreement will constitute an Event of Default under each of the Note. 

[Remainder of Page Left Blank; Signature Page Follows] 

 This letter agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. 

 

			
	Very truly yours,
	
	ATERIAN, INC.
		
	By:	 	 /s/ Arturo Rodriguez

	Name:	 	Arturo Rodriguez
	Title:	 	Chief Financial Officer

 AGREED AND ACCEPTED: 
  

			
	HIGH TRAIL INVESTMENTS ON LLC
		
	By:	 	 /s/ Eric Helenek

	Name:	 	Eric Helenek
	Title:	 	Authorized Signatory

 Exhibit A 
  

					
	 Quarter Ended Date
	  	Adjusted EBITDA (in 000’s)	 
	 December 31, 2020(1)
	  	+$	4,621	 
	 March 31, 2021
	  	-$	1,260	 
	 June 30, 2021
	  	-$	3,739	 

  

	(1) 	 Comprised of Aterian, Inc.’s fourth quarter 2020 Adjusted EBITDA of $453,000 plus the Smash pro forma
operating income (i.e., Adjusted EBITDA) of $4,168,000 as reported on the earnings release issued on March 8, 2021. 

 Exhibit B 

Form of Omnibus Amendment to Senior Secured Notes Due 2024 and Warrants to Purchase Common Stock 

(see attached)EX-10.5

 Exhibit 10.5 

OMNIBUS AMENDMENT TO SENIOR SECURED NOTES DUE 2024 AND 

WARRANTS TO PURCHASE COMMON STOCK 

This OMNIBUS AMENDMENT TO SENIOR SECURED NOTES DUE 2024 AND WARRANTS TO PURCHASE COMMON STOCK (this “Amendment”) is
made and entered into as of August 9, 2021, by and among Aterian, Inc. (formerly known as Mohawk Group Holdings, Inc.), a Delaware corporation (the “Company”), High Trail Investments ON LLC (“HTI
ON”) and High Trail Investments SA LLC (“HTI SA” together with HTI ON the “Holders”). 

RECITALS 

WHEREAS, the Company has issued those certain Senior Secured Notes due 2024, Certificate Nos. A-2, A-3, A-4 and A-5 (each a “Note” and together the
“Notes”) to the Holders pursuant to that certain Securities Purchase and Exchange Agreement, dated as of April 8, 2021, by and among the Company and the Holders (the “Securities Purchase and
Exchange Agreement”) (as the same may be amended from time to time); 
 WHEREAS, the
Company has issued that certain Warrant to Purchase Common Stock No. HTCS-3 (the “HTCS-3 Warrant”), to HTI SA pursuant to that certain letter
agreement dated as of February 8, 2021, by and between the Company and HTI SA (as the same may be amended from time to time), that certain Warrant to Purchase Common Stock No. HTCS-2 (the “HTCS-2 Warrant”), to HTI ON pursuant to that certain Securities Purchase Agreement dated as of February 2, 2021, by and between the Company and HTI ON (the “Securities
Purchase Agreement”) (as the same may be amended from time to time) and those certain Warrants to Purchase Common Stock Nos. HTCS-5, HTCS-6, HTCS-7 and HTCS-8 (the “HTCS-5-8 Warrants,” together with the HTCS-3 Warrant, the HTCS-2 Warrant and the HTCS-5-8 Warrants, the
“Warrants” ), to the Holders pursuant to the Securities Purchase and Exchange Agreement; 

WHEREAS, the Company and the Holders previously amended certain provisions of the HTCS-2 Warrant pursuant to that certain Amendment to Warrant to Purchase Common Stock, dated February 8, 2021; 

WHEREAS, the Company and the Holders previously amended certain provisions of the HTCS-3 Warrant and HTCS-2 Warrant pursuant to those certain Amendments to Warrants to Purchase Common Stock, dated April 8, 2021; 

WHEREAS, the Company and the Holders previously amended certain provisions of the Notes pursuant to that
certain Omnibus First Amendment to Senior Secured Notes Due 2024, dated May 19, 2021; 
 WHEREAS,
the Company and the Holders desire to further amend certain provisions of each of the Notes and to further amend certain provisions of each of the Warrants; 

WHEREAS, pursuant to Section 18 of the Notes, each of the Notes may be amended with the written
consent of the Company and the Required Holders (as defined in the Securities Purchase and Exchange Agreement) and pursuant to Section 9 of the Warrants, each of the Warrants may be amended with the written consent of the Holder (as defined in
the applicable Warrants); and 

 WHEREAS, as of the date hereof, the Holders constitute
the Required Holders (as defined in the Securities Purchase and Exchange Agreement) of the Notes and a Holder (as defined in the Warrants) of the Warrants. 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 

ARTICLE I 
 AMENDMENT OF
NOTES 
 1.1. Section 9(J)(iv) of the Notes. A new Section 9(J)(iv) of each of the Notes is hereby added as follows: 

“(iv) The Company and its Subsidiaries shall have, on August 9, 2021 and on each succeeding day through
October 31, 2021, liquidity calculated as unrestricted, unencumbered Cash and Cash Equivalents in one or more deposit accounts located in the United States and, subject to a Control Agreement (as defined in the Security Agreement) entered into
in favor of the Collateral Agent or a Control Agreement entered into otherwise in accordance with the Security Agreement in a minimum amount equal to thirty million dollars ($30,000,000).” 

1.2. Section 9(J)(v) of the Notes. A new Section 9(J)(v) of each of the Notes is hereby added as follows: 

“(v) The Company and its Subsidiaries shall have, on August 9, 2021 and on each succeeding day through
October 31, 2021, liquidity, calculated as (i) inventory, net, plus (ii) accounts receivable, net (each determined in accordance with GAAP) in an aggregate minimum amount equal to sixty five million dollars ($65,000,000), less
(iii) any amount of Cash and Cash Equivalents in excess of thirty million dollars ($30,000,000), in one or more deposit accounts located in the United States and, subject to a Control Agreement (as defined in the Security Agreement) entered
into in favor of the Collateral Agent or a Control Agreement entered into otherwise in accordance with the Security Agreement.” 
 1.3.
Definition of “Permitted Investment” set forth in the Notes. The definition of “Permitted Investment” set forth in Section 1 of each of the Notes is hereby amended and restated in its
entirety to read as follows: 
 ““Permitted Investment” means: (A) Investments deemed to be
disclosed pursuant to the Securities Purchase Agreement, as in effect as of the Issue Date; (B) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing
within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date 

 
of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard &
Poor’s Corporation or Moody’s Investors Service, (iii) certificates of deposit issued by any bank headquartered in the United States with assets of at least $5,000,000,000 maturing no more than one year from the date of investment
therein, and (iv) money market accounts; (C) Investments accepted in connection with Permitted Transfers; (D) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of the Company’s business; (E) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers in the ordinary course of business and consistent with past practice, provided that this clause (E) shall not apply to Investments of the Company in any Subsidiary; (F) Investments
consisting of (i) loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of the Company pursuant to employee stock purchase
plans or other similar agreements approved by the Company’s Board of Directors and (ii) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, provided that the aggregate of
all such loans outstanding may not exceed $250,000 at any time; (G) Investments in Wholly Owned Subsidiaries; (H) Permitted Intellectual Property Licenses; (I) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; (J) Investments consisting of deposit accounts in which the Collateral Agent has received a deposit account control agreement in accordance with the Security
Agreement and (K) additional Investments that do not exceed one hundred thousand dollars ($100,000) in the aggregate in any twelve (12) month period. Notwithstanding anything to the contrary herein, except as expressly permitted pursuant
to this Note, the transfer, sale, lease, license, loan or conveyance of assets of Truweo to any entity not wholly owned, directly or indirectly by Truweo, shall not be a “Permitted Investment” hereunder.” 

ARTICLE II 
 AMENDMENT
OF WARRANTS 
 2.1 Preamble of the Warrants. The reference to “at any time or times on or after the Issuance Date” in
the preamble paragraph of each of the Warrants is hereby amended and restated in its entirety to read as follows: 
 “at any time or
times after the expiration of the Lock-Up Period (as defined in that certain Securities Purchase Agreement, dated June 10, 2021, by and between the Company and the purchasers identified on the signature
pages thereto) (the “Lock-Up Period”)”. 

 2.2 Section 1(b) of the Warrants. Section 1(b) of each of the Warrants is hereby
amended and restated in its entirety to read as follows: 
 “(b) Exercise Price. For purposes of this Warrant,
“Exercise Price” means the lower of the Closing Sale Price of the Common Stock on August 9, 2021 or the Daily VWAP on August 9, 2021.” 

2.3 Section 1(c) of the Warrants. The last sentence of Section 1(c) of each of the Warrants is hereby amended and restated in its
entirety to read as follows: 
 “In addition to the foregoing, if (1) the Company fails for any reason to deliver
to the Holder the Warrant Shares subject to an Exercise Notice by the second Trading Day following the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the Weighted Average Price of the Common Stock on the date of the applicable Exercise Notice), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after the Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise, or (2) on or after January 7, 2022, the Holder delivers an Exercise Notice, but this Warrant is not then
exercisable because the Lock-Up Period has not expired, the Company shall, by no later than two Business Days after delivery of the Exercise Notice, pay to the Holder, in cash, as liquidated damages and not as
a penalty, an amount equal to the product of (x) the difference between (I) the Weighted Average Price of the Common Stock on such date minus (II) the Exercise Price then in effect; multiplied by (y) the total number of Warrant
Shares then subject to this Warrant; provided that, for the avoidance of doubt, if the amount in (x) above is a negative number, then the Company shall not be required to pay any amount to the Holder pursuant to clause (2).” 

ARTICLE III 

MISCELLANEOUS 
 3.1.
Rule 144 Holding Period. The Company and the Holder acknowledge and agree that the Notes and the Warrants will continue to have a holding period under Rule 144 (“Rule 144”) promulgated under the Securities Act of 1933, as
amended, that will be deemed to have commenced as of the dates set forth below. The Company further acknowledges and agrees that it will neither assert nor maintain a contrary position with respect to the date of commencement of the holding period
under Rule 144 with respect to the Notes or the Warrants. 
  

	 	(a)	 Note Certificate No. A-2 - December 1, 2020 

 

	 	(b)	 Note Certificate No. A-3 - April 8, 2021 

 

	 	(c)	 Note Certificate No. A-4 - February 2, 2021 

	 	(d)	 Note Certificate No. A-5 - April 8, 2021 

 

	 	(e)	 Warrant No. HTCS-2 - February 2, 2021 

 

	 	(f)	 Warrant No. HTCS-3 - February 9, 2021 

 

	 	(g)	 Warrant No. HTCS-5 - December 1, 2020 

 

	 	(h)	 Warrant No. HTCS-6 - April 8, 2021 

 

	 	(i)	 Warrant No. HTCS-7 - February 2, 2021 

 

	 	(j)	 Warrant No. HTCS-8 - April 8, 2021 

3.2. Disclosure of Amendment. No later than 8:00 a.m., New York time, on August 9, 2021, the Company shall publicly announce its
earnings for the period ended June 30, 2021 and all the material terms of the transactions contemplated by this Amendment and the letter agreements entered into as of the date hereof by and among the Company and the Holders (the
“Earnings Release”). From and after the issuance of the Earnings Release, the Company shall have disclosed all material, nonpublic information (if any) provided to the Holder by the Company or any of its subsidiaries or any
of their respective officers, directors, employees or agents and neither HTI SA nor HTI ON shall be in possession of any material, non-public information regarding the Company or any of its Subsidiaries. 

3.3. Captions. The headings contained in this Amendment are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Amendment. Except as otherwise indicated, all references in this Amendment to “Sections” are intended to refer to the Sections or Articles of the Note or Warrants, as applicable. 

3.5. Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Amendment shall be
determined in accordance with the provisions of the Securities Purchase and Exchange Agreement. 
 3.6. No Other Amendment. Except for
the matters expressly set forth in this Amendment, all other terms of the Notes and Warrants are hereby ratified and shall remain unchanged and in full force and effect. 

3.7. Counterparts. This Amendment may be executed in two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. 
 3.8.
Electronic and Facsimile Signatures. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. A party’s
electronic signature (complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. §§ 301-309), as amended from time to time, or other applicable law) of this Agreement shall
have the same validity and effect as a signature affixed by the party’s hand. 
 [Signature Pages Follow] 

 The parties hereto have executed this Amendment to Senior Secured Notes due 2024 and
Warrants to Purchase Common Stock as of the date first written above. 
  

			
	COMPANY:
	
	ATERIAN, INC.
		
	By:	 	 /s/ Arturo Rodriguez

		 	Name: Arturo Rodriguez
		 	Title: Chief Financial Officer

 [SIGNATURE PAGE TO AMENDMENT
TO SENIOR SECURED NOTES DUE 2024 AND WARRANTS TO PURCHASE COMMON STOCK] 

 The parties hereto have executed this Amendment to Senior Secured Notes due 2024 and
Warrants to Purchase Common Stock as of the date first written above. 
  

			
	HOLDERS:
	
	HIGH TRAIL INVESTMENTS SA LLC
		
	By:	 	 /s/ Eric Helenek

		 	Name: Eric Helenek
		 	Title: Authorized Signatory
	
	HIGH TRAIL INVESTMENTS ON LLC
		
	By:	 	 /s/ Eric Helenek

		 	Name: Eric Helenek
		 	Title: Authorized Signatory

 [SIGNATURE PAGE TO AMENDMENT
TO SENIOR SECURED NOTES DUE 2024 AND WARRANTS TO PURCHASE COMMON STOCK]

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