Document:

ater-ex419_93.htm

Exhibit 4.19

SECOND OMNIBUS AMENDMENT TO SENIOR SECURED NOTES DUE 2024 AND WARRANTS TO PURCHASE COMMON STOCK

This SECOND OMNIBUS AMENDMENT TO SENIOR SECURED NOTES DUE 2024 AND WARRANTS TO PURCHASE COMMON STOCK (this “Amendment”) is made and entered into as of September 22, 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-3 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 (as the same may be amended from time to time, 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, that certain Warrant to Purchase Common Stock No. HTCS-2 (as the same may be amended from time to time, 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”) and those certain Warrants to Purchase Common Stock Nos. HTCS-5, HTCS-6, HTCS-7 and HTCS-8 (as the same may be amended from time to time, 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 previously amended certain provisions of the Notes and Warrants pursuant to that certain Omnibus Amendment to Senior Secured Notes Due 2024 and Warrants to Purchase Common Stock, dated August 9, 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.Title of the Notes. The second line of the title of each of the Notes is hereby amended and restated in its entirety to read as follows:

Senior Secured Note due 2023

1.2.Definition of “Maturity Date” set forth in the Notes. The definition of “Maturity Date” set forth in Section 1 of each of the Notes is hereby amended and restated in its entirety to read as follows:

““Maturity Date” means April 1, 2023.” 

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) acquisitions by Truweo or any of its Wholly Owned Subsidiaries of all, or substantially all, of the assets of another Person or a majority of the equity interests in another Person, provided that no such acquisition will be a “Permitted Investment” if, after giving effect to such acquisition, any Default or Event of Default would exist hereunder; (J) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (K) Investments consisting of deposit accounts in which the Collateral Agent has received a deposit account control agreement in accordance with the Security Agreement and (L) 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.”

1.4.Definition of “Target Adjusted EBITDA” set forth in the Notes. The definition of “Target Adjusted EBITDA” set forth in Section 1 of each of the Notes is hereby amended and restated in its entirety to read as follows:

““Target Adjusted EBITDA” means, (i) with respect to the fiscal quarter ending September 30, 2021, negative three million five hundred thousand dollars (-$3,500,000), (ii) with respect to the fiscal quarter ending December 31, 2021, negative three million five hundred thousand dollars (-$3,500,000), (iii) with respect to the fiscal quarter ending March 31, 2022, negative three million five hundred thousand dollars (-$3,500,000), (iv) with respect to the fiscal quarter ending June 30, 2022, negative one million dollars (-$1,000,000), (v) with respect to the fiscal quarter ending September 30, 2022, negative one million dollars (-$1,000,000), (vi) with respect to the fiscal quarter ending December 31, 2022, zero dollars ($0), 

 

 

and (vii) with respect to the fiscal quarter ending March 31, 2023, zero dollars ($0).”

1.5.Section 9(J) of the Notes. Section 9(J)(iv) and (v) of each of the Notes is hereby deleted.

1.6.Section 9(K) of the Notes. Section 9(K) of each of the Notes is hereby amended and restated in its entirety as follows:

“(K) Adjusted EBITDA. As of the last day of each applicable fiscal quarter, the Company and its consolidated Subsidiaries shall have Adjusted EBITDA of not less than Target Adjusted EBITDA for the three (3)-month period ending on such day.”

ARTICLE II

AMENDMENT OF WARRANTS

	
2.1
	
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 $0.01 per share, subject to adjustment as provided herein.”

ARTICLE III

MISCELLANEOUS

3.1.Rule 144 Holding Period.The Company and the Holder acknowledge and agree that the Notes and 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-3 - April 8, 2021

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

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

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

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

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

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

 

 

		

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

3.2.Disclosure of Amendment.No later than 9:15 a.m., New York time, on September 23, 2021, the Company shall file a Current Report on Form 8-K (the “Form 8-K”) disclosing all the material terms of the transactions contemplated by this Amendment and those certain letter agreements Re: Agreement re Events of Default, dated as of September 22, 2021, entered into between the Company and each of HTI SA and HTI ON (the “Letter Agreements”). From and after the issuance of the Form 8-K, the Company shall have disclosed all material, nonpublic information (if any) provided to HTI SA and HTI ON 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 Notes or Warrants, as applicable.

3.4. 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.

	
3.5.
	
Effectiveness of Amendments. The amendments to the Notes and Warrants set forth in Articles I and II hereof shall become effective upon execution by the Company and HTI SA and HTI ON of this Amendment and the Letter Agreements; provided, however, that in the event of any breach of the terms and conditions by the Company of the Letter Agreements or failure to deliver the shares of Common Stock pursuant to Event of Default Stock Payment Notices (as such term is used in the Letter Agreements) as contemplated by the Letter Agreements, each of HTI SA and HTI ON shall have the right to void this Amendment in whole or in part.

	
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 Second Omnibus 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

 

The parties hereto have executed this 

[Signature Page to Second Omnibus Amendment to Senior Secured Notes Due 2024]

 

Second Omnibus 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 Second Omnibus Amendment to Senior Secured Notes Due 2024]ater-ex105_92.htm

Exhibit 10.5

 

 

September 22, 2021

 

High Trail Investments SA LLC

221 River Street, 9th Floor

Hoboken, NJ 07030

Attention: Eric Helenek

 

Re:Agreement re Events of Default

 

Ladies and Gentlemen:

Reference is made to: (i) that certain Senior Secured Note due 2024 (Certificate No. A-2) issued on April 8, 2021 by Aterian, Inc. (formerly known as Mohawk Group Holdings, Inc.) (the “Company”) to High Trail Investments SA LLC (“High Trail SA”), as amended (the “Exchange Note”), (ii) that certain Senior Secured Note due 2024 (Certificate No. A-3) issued on April 8, 2021 by the Company to High Trail SA, as amended (the “Purchase Note” and collectively with the Exchange Note, the “Notes”), (iii) that certain Warrant to Purchase Common Stock (No. HTCS-3), issued to High Trail SA pursuant to that certain letter agreement dated as of February 8, 2021, by and between the Company and High Trail SA, as amended (the “HTCS-3 Warrant”), (iv) that certain Warrant to Purchase Common Stock (No. HTCS-5), issued to High Trail SA by the Company on April 8, 2021, as amended (the “HTCS-5 Warrant”), and (v) that certain Warrant to Purchase Common Stock (No. HTCS-6), issued to High Trail SA by the Company on April 8, 2021, as amended (the “HTCS-6 Warrant” and collectively with the HTCS-3 Warrant and the HTCS-5 Warrant, the “High Trail SA Warrants”). Capitalized terms used but not defined herein shall have the meaning given to them by the Notes.

The Company hereby acknowledges the occurrence of certain defaults under the Notes and the other Transaction Documents disclosed to High Trail SA in writing on the date hereof, including Events of Default under Section 11(a)(viii) of the Notes. The Company further acknowledges that High Trail SA has declared an Event of Default under the Notes (the “Current Events of Default”) and declared all of the Principal Amount and accrued but unpaid interest under the Exchange Note to be due and payable immediately for cash in an amount equal to the Event of Default Acceleration Amount of $33,351,849.43 and declared $16,789,636.80 of the Principal Amount and accrued but unpaid interest under the Purchase Note to be due and payable immediately for cash in an amount equal to the Event of Default Acceleration Amount of $19,390,164.99 (collectively, the “Current Events of Default Acceleration Amount”).  The Company further acknowledges that the Current Events of Default Acceleration Amount is immediately payable in cash and that the Company is waiving its right to pay the Current Events of Default Acceleration Amount in cash.

For valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

	
 
	
1.
	
From and after the date hereof, High Trail SA shall have no right to exercise any remedy or otherwise enforce any rights against the Company or any of its subsidiaries under the Transaction Documents with respect to the Current Events of Defaults under the Exchange Note or any other Event of Default under the Exchange Note occurring prior to the satisfaction of the Current Events of Default Acceleration Amount (other than with respect to the right to receive payment by the Company of the Current Events of Default Acceleration Amount in shares of fully paid, validly issued Common Stock at the Event of Default Stock Payment Price or with respect to any breach of this letter agreement).  High Trail SA shall deliver Event of Default Stock Payment Notices with respect to the Current Events of Default Acceleration Amount as soon as it is practicable to do so 

 
 

	
 
		
without High Trail SA, together with the other Attribution Parties, collectively beneficially owning in the aggregate in excess of the Maximum Percentage (calculated in accordance with Section 7(A) of the Notes).  All shares of Common Stock issued by the Company to High Trail SA with respect to the Event of Default Acceleration Amount payable under the Exchange Note shall be Freely Tradable and the Company acknowledges that High Trail SA is under no obligation to accept any portion of the Current Events of Default Acceleration Amount with respect to the Purchase Note in shares of Common Stock until High Trail SA has received all of the Current Events of Default Acceleration Amount with respect to the Exchange Note in shares of Freely Tradable Common Stock.

	
 
	
2.
	
The Company acknowledges and agrees that the number of shares of Common Stock outstanding as of the date hereof is equal to 40,455,386 and that the Event of Default Stock Payment Price as of September 22, 2021 is equal to $8.1212.

	
 
	
3.
	
The Company agrees that it shall no longer have the right to cause a Forced Exercise (as defined in the High Trail SA Warrants) under Section 1(i) of the High Trail SA Warrants due to the fact that the Current Events of Default have occurred and regardless of the Company's performance of its obligations hereunder or whether any of the Notes remain outstanding.

	
 
	
4.
	
The Company shall execute and deliver to High Trail SA and High Trail Investments ON LLC (“High Trail ON”) on the date of this letter agreement, the Second Omnibus Amendment to Senior Secured Notes Due 2024 and Warrants to Purchase Common Stock in the form attached hereto as Exhibit A (the “Omnibus Amendment”).  

	
 
	
5.
	
Effective upon satisfaction of (i) all obligations in this letter agreement, including without limitation, the payment by the Company of the Current Events of Default Acceleration Amount in shares of fully paid, validly issued Common Stock at the Event of Default Stock Payment Price, (ii) all obligations under that certain letter agreement Re: Agreement re Events of Default, dated as of September 22, 2021, entered into between the Company and High Trail ON, including without limitation, the payment by the Company of the Current Events of Default Acceleration Amount in shares of fully paid, validly issued Common Stock at the Event of Default Stock Payment Price (as such terms are defined in such letter agreement) and (iii) all obligations under the Omnibus Amendment, High Trail SA waives (i) the Current Events of Default under the terms of the Purchase Note with respect to the remainder of the outstanding Principal Amount under the Purchase Note and (ii) all Default Interest that would otherwise be applicable to the Current Events of Default.

	
 
	
6.
	
The Company agrees that for the period commencing on the date hereof and ending on November 1, 2021 (the “Restricted Period”), neither the Company nor any of its subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of, or file a registration statement with respect to) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any preferred stock or any purchase rights).  Notwithstanding the foregoing, the restrictions in this Section 6 shall not apply during the Restricted Period: (1) in respect of the issuance of (A) Options or Convertible Securities issued under any Approved Stock Plan; (B) the issuance of securities as consideration in any merger, acquisition, business combination or strategic investment (including any joint venture, marketing, distribution, collaboration, license, strategic alliance or partnership), provided, that such securities are not issued primarily for the purpose of raising capital; (C) shares of the Company’s capital stock issuable pursuant to shareholder rights plans; (D) shares of Common Stock issued 

	
 
		
pursuant to securities held by High Trail SA, High Trail ON or any of their affiliates; (E) the issuance of Common Stock upon the exercise of Options or warrants, the settlement or vesting of restricted stock units, stock appreciation rights or restricted stock awards (including shares of Common Stock withheld by the Company for the purpose of paying on behalf of the holder thereof the exercise price of stock options or for paying taxes due as a result of such exercise or lapse of forfeiture restrictions), or the conversion of outstanding preferred stock or other outstanding Convertible Securities which are outstanding on date hereof or granted pursuant to an Approved Stock Plan after the date hereof, provided, that such issuance of Common Stock upon exercise of such Options or Convertible Securities is made pursuant to the terms of either: (I) such Approved Stock Plan or (II) such Options or Convertible Securities in effect on the date hereof and, in the case of (II), such Options or Convertible Securities are not amended, modified or changed on or after the date hereof to increase the number of such securities, to decrease the exercise price, exchange price or conversion price of such securities or to extend the term of such securities; or (2) to the granting of registration rights with respect to any issuance of securities under clause (B) of this sentence; provided that no such registration statement is filed with respect to such securities during the Restricted Period. As used herein, (i) “Convertible Securities” means any capital stock or other security of the Company or any of its subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock and Options) or any of its subsidiaries; (ii) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities; and (iii) “Approved Stock Plan” means any stock option plan or employee benefit plan or any stock or option plan or other agreement which has been approved by the Board of Directors of the Company (the “Board of Directors”) prior to the date hereof, or any stock option plan or employee benefit plan or any stock or option plan or other agreement which is approved by: (A) the Board of Directors or the compensation committee thereof and the stockholders of the Company after the date hereof, or (B) the Board of Directors or the compensation committee thereof as inducement grants in accordance with Nasdaq Listing Rule 5635(c)(4) after the date hereof, pursuant to which shares of Common Stock, options to purchase Common Stock and other incentive equity awards may be issued to any employee, officer, consultant or director for services provided to the Company in their capacity as such.

	
 
	
7.
	
By no later than 9:15 a.m., New York City time on September 23, 2021, the Company shall file a Current Report on Form 8-K disclosing all the material terms of the transactions contemplated by this letter agreement and the Omnibus Amendment (the “Form 8-K”). From and after the issuance of the Form 8-K, the Company shall have disclosed all material, nonpublic information (if any) provided to High Trail SA or High Trail ON by the Company or any of its subsidiaries or any of their respective officers, directors, employees or agents and neither High Trail SA nor High Trail ON shall be in possession of any material, non-public information regarding the Company or any of its Subsidiaries.

	
 
	
8.
	
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 SA and High Trail ON (including, without limitation, the reasonable and documented attorney fees and expenses of counsel for High Trail SA and High Trail ON) in connection with the preparation, negotiation, execution and approval of this letter agreement.

Any breach of the terms and conditions by the Company of this letter agreement or failure to deliver the shares of Common Stock pursuant to Event of Default Stock Payment Notices delivered hereunder will constitute an Event of Default under each of the Notes and void this letter agreement in its entirety.

 

 

[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 SA LLC

	
 
	
 

	
By:
	
/s/ Eric Helenek

	
Name:
	
Eric Helenek

	
Title:
	
Authorized Signatory

 

Exhibit A

 

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

(see attached)

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