As filed with
the Securities and Exchange Commission on September 14, 2023
Registration No. 333-
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES
ACT OF 1933
SWK HOLDINGS
CORPORATION
(Exact name of registrant
as specified in its charter)
Delaware |
|
6159 |
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77-0435679 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Primary
Standard Industrial
Classification
Code Number) |
|
(I.R.S.
Employer
Identification
Number) |
5956 Sherry Lane,
Suite 650
Dallas, TX 75225
(972) 687-7250
(Address, including
zip code, and telephone number, including area code, of registrant’s principal executive offices)
Jody Staggs
President and Chief
Executive Officer
5956 Sherry
Lane, Suite 650, Dallas, TX 75225
(972) 687-7250
(Names, address,
including zip code, and telephone number, including area code, of agent for service)
Copies to:
Rachael
M. Bushey, Esq.
Justin Platt,
Esq.
Goodwin Procter
LLP
2929 Arch Street
Suite 1700
Philadelphia,
PA 19104
(445) 207-7806 |
|
Dean
M. Colucci
Michelle Geller
Kelly R. Carr
Duane Morris
LLP
1540 Broadway
New York, NY
10036
(973) 424-2020 |
Approximate date of commencement
of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box. o
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. o
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. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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o |
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Accelerated filer |
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o |
Non-accelerated filer |
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x |
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Smaller reporting company |
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x |
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Emerging growth company |
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o |
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for comply with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o
The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to such Section 8(a), may determine.
The information in this
prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED SEPTEMBER 14, 2023
PRELIMINARY PROSPECTUS
$35,000,000
SWK HOLDINGS
CORPORATION
% Senior Notes
due 2028
We are offering
$35,000,000 in aggregate principal amount of our % Senior Notes due 2028
(the “Notes”). Interest on the Notes will accrue from ,
2023, and will be paid quarterly in arrears on , ,
and of each year, commencing
on and at maturity. The Notes will mature on ,
2028. We may redeem the Notes for cash, in whole or in part, at any time or from time to time at our option (i) on or after
, 2025 (the “First Call Date”) and prior to , 2026,
at a price equal to the sum of 102% of their principal amount, (ii) on or after
, 2026 and prior to , 2027, at a price equal
to the sum of 101% of their principal amount and (iii) on or after
, 2027, at a price equal to the sum of 100% of their principal amount, as described elsewhere in this prospectus, plus (in each
case noted above) accrued and unpaid interest to, but excluding, the date of redemption. In addition, at any time prior to the First
Call Date, we may, at our option, redeem the Notes for cash, in whole at any time or in part from time to time at a redemption price
equal to (i) 100% of the principal amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined herein), plus (iii) accrued and
unpaid interest, if any, to, but excluding, the date of redemption. See “Description of Notes—Optional Redemption.”
Additionally, upon the occurrence of a Triggering Event (defined below), holders of the Notes may require us to make an offer to purchase
the Notes for cash at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if
any, to, but excluding, the date of purchase. The Notes will be issued in denominations of $25 and in integral multiples thereof.
The Notes will be our senior unsecured obligations, will rank pari passu (or equally) in right of payment with all of our existing
and future senior unsecured indebtedness and will be senior to any other indebtedness expressly made subordinate to the Notes. The Notes
will be effectively subordinated to all of our existing and future secured indebtedness (to the extent of the value of the assets securing
such indebtedness) and structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries, including
trade payables.
Investing
in the Notes involves a high degree of risk. See “Risk Factors” beginning on page 11 and in the documents incorporated
by reference in this prospectus to read about factors you should consider before you make an investment decision.
Neither the U.S. Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
We intend to apply to list the Notes
on the Nasdaq Global Market (the “Nasdaq”) under the symbol “SWKHL.” If approved for listing, trading on such
exchange is expected to begin within 30 business days of , 2023, the original issue date. If such listing is obtained, we have no obligation
to maintain such listing, and we may delist the Notes at any time.
| |
Per
Note | | |
Total(2)(3) | |
Public offering price | |
$ | | | |
$ | | |
Underwriting discount(1) | |
$ | | | |
$ | | |
Proceeds, before expenses, payable to us(2) | |
$ | | | |
$ | | |
(1) |
See “Underwriting” for a description
of all underwriting compensation payable in connection with this offering. |
(2) |
B. Riley Securities, Inc. (“B. Riley”),
as representative of the underwriters, may exercise an option to purchase up to an additional $ in
aggregate principal amount of Notes offered hereby, within 30 days of the date of this prospectus. If this option is exercised in
full, the total offering price will be $ ,
the total underwriting discount paid by us will be $ ,
and total proceeds to us, before expenses, will be approximately $ .
|
(3) |
Total expenses of the offering payable by us,
excluding underwriting discounts and commissions and the Structuring Fee (as defined in “Underwriting”), are estimated
to be $ . |
The underwriters expect to deliver
the Notes to purchasers in book-entry form through the facilities of The Depository Trust Company (“DTC”) for the accounts
of its direct and indirect participants, including Euroclear Bank SA/NV, as operator of the Euroclear System, and Clearstream Banking,
S.A., on or about , 2023.
Book-Running
Manager
B. Riley Securities
The date of
this prospectus is , 2023
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
You should rely only on the information
contained in or incorporated by reference herein and in any free writing prospectus that we have authorized in connection with this offering.
Neither we nor the underwriters have authorized anyone to provide you with any information or to make any representations other than
those contained in this prospectus or incorporated by reference herein or any applicable
prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor
the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information that others may
give you. Neither we nor the underwriters will make an offer to sell these securities in any jurisdiction where such offer or sale are
not permitted. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in
this prospectus or incorporated by reference herein, any applicable prospectus supplement
or any related free writing prospectus. You should assume that the information appearing in this prospectus or
incorporated by reference herein or any prospectus supplement is accurate as of the date on the front of those documents only,
regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business,
financial condition, results of operations and prospects may have changed since those dates.
We may also provide a prospectus
supplement or post-effective amendment to the registration statement to add information to, or update or change information contained
in, this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in such prospectus supplement or post-effective amendment modifies or supersedes such statement.
Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded
will be deemed not to constitute a part of this prospectus. You should read both this prospectus together
with the other information contained or incorporated by reference in this prospectus and any applicable prospectus supplement
or post-effective amendment to the registration statement together with the additional information to which we refer you in the section
of this prospectus titled “Where You Can Find More Information” and “Incorporation
of Certain Information by Reference.”
This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information”
and “Incorporation of Certain Information by Reference.”
When we refer
to “SWK,” “we,” “our,” “us” and the “Company” in this prospectus,
we mean SWK Holdings Corporation and its consolidated subsidiaries, unless otherwise specified.
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus,
including the documents incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in
releases made by the Securities and Exchange Commission (“SEC”). Such statements include, without limitation, statements
regarding our expectations, hopes or intentions regarding the future. Statements that are not historical fact are forward-looking statements.
These forward-looking statements can often be identified by their use of words such as “expect,” “believe,” “anticipate,”
“outlook,” “could,” “target,” “project,” “intend,” “plan,” “seek,”
“estimate,” “should,” “will,” “may” and “assume,” as well as variations of
such words and similar expressions referring to the future. These cautionary statements are being made pursuant to the Securities Act,
the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws.
The forward-looking statements contained
in or incorporated by reference herein are largely based on our expectations, which reflect estimates and assumptions made by our management.
These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe
such estimates and assumptions to be reasonable, they are inherently uncertain and involve certain risks and uncertainties, many of which
are beyond our control. If any of those risks and uncertainties materialize, actual results could differ materially from those discussed
in any such forward-looking statement. Among the factors that could cause actual results to differ materially from those discussed in
forward-looking statements are those discussed under the heading “Risk Factors” below and those discussed under the
heading “Risk Factors” in other sections of our Annual Report on Form 10-K for the year ended December 31, 2022, as well
as in our other reports filed from time to time with the SEC that are incorporated by reference herein. See “Prospectus Summary—Additional
Information” and “Incorporation of Certain Information by Reference” for information about how to obtain
copies of those documents. All readers are cautioned that the forward-looking statements contained in this prospectus and in the documents
incorporated by reference herein are not guarantees of future performance, and we cannot assure any reader that such statements will
be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated
or implied in the forward-looking statements. All forward-looking statements in this prospectus and the documents incorporated by reference
herein are made only as of the date of the document in which they are contained, based on information available to us as of the date
of that document, and we caution you not to place undue reliance on forward-looking statements in light of the risks and uncertainties
associated with them. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
PROSPECTUS SUMMARY
This summary highlights selected
information contained elsewhere in this prospectus and in the documents incorporated by reference
herein. This summary is not complete and does not contain all of the information that you should consider before deciding whether
to invest in our Notes. You should carefully read the entire prospectus, including the risks associated with an investment in our Notes
discussed in the “Risk Factors” section of this prospectus and incorporated by reference
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as in our other reports filed from
time to time with the SEC that are incorporated by reference herein, before making an investment decision. Some of the statements in
this prospectus are forward-looking statements. See the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
Overview
SWK Holdings Corporation was incorporated
in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, we commenced a strategy of building a specialty
finance and asset management business. In August 2019, we commenced a complementary strategy of building a pharmaceutical development,
manufacturing and intellectual property licensing business. Our operations comprise two reportable segments: “Finance Receivables”
and “Pharmaceutical Development.” We evaluate and invest in a broad range of healthcare related companies and products with
innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and
pharmaceutical industries (collectively, “life science”). We allocate capital to each segment in order to generate income
through the sales of life science products by third parties. We are headquartered in Dallas, Texas.
Finance Receivables Segment
Our Finance Receivables
segment strategy is to be a leading healthcare capital provider by offering sophisticated, customized financing solutions to a broad
range of life science companies, institutions and inventors. This segment is primarily focused on monetizing cash flow streams derived
from commercial-stage products and related intellectual property through royalty purchases and financings, as well as through the creation
of synthetic revenue interests in commercialized products. Our business partners are primarily engaged in selling products that directly
or indirectly cure diseases and/or improve the wellness of people or animals, or they receive royalties paid on the sales of such products.
For example, our biotechnology and pharmaceutical business partners manufacture medication that directly treat disease states, whereas
our life science tools partners sell a wide variety of research instrumentation to help other companies conduct research into disease
states. We have been deploying our assets to earn interest, fees, and other income pursuant to this strategy, and we continue to identify
and review financing and similar opportunities on an ongoing basis with financial solutions that are tailored to the individual needs
of our business partners. In addition, through our wholly-owned subsidiary, SWK Advisors LLC, we can provide non-discretionary investment
advisory services to institutional clients in separately managed accounts to similarly invest in life science finance. We intend to fund
transactions through our own working capital, our revolving credit facility (together with any additional credit facility, or amendment
or refinancing thereof, the “Credit Facilities”) and the net proceeds of this offering, as well as by building our asset
management business by raising additional third-party capital to be invested alongside our capital.
We fill a niche that
we believe is underserved in the sub-$50 million transaction size market. Since many of our competitors that provide longer term, non-traditional
debt and/or royalty-related financing options typically have much greater financial resources than us, they tend not to focus on transaction
sizes below $50 million, as it is generally inefficient for them to do so. In addition, we do not believe that a sufficient number of
other companies offer similar types of long-term financing options to fill the demand of the sub-$50 million market. As such, we believe
we face less competition from such investors in transactions that are less than $50 million.
As of August
5, 2023, and since inception of the strategy, we and our partners have executed transactions with 50 different parties under our specialty
finance strategy, funding an aggregate of approximately $725.7 million in various financial products across the life science sector.
Our portfolio consist primarily of senior debt backed by royalties and synthetic royalties paid by companies in the life science sector,
and purchased royalties generated by sales of life science products and related intellectual property.
The objective
of our Finance Receivables segment is to maximize our portfolio total return in the context of a prudent level of risk, and thus, increase
our net income and book value by generating income from three sources:
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1. |
primarily owning or financing through debt
investments, royalties or revenue interests generated by the sales of life science products and related intellectual property; |
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2. |
receiving interest and other income by advancing
capital in the form of secured debt to companies in the life science sector; and |
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3. |
to a lesser extent, realizing capital appreciation
from equity-related investments in the life science sector. |
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In our portfolio
we seek to achieve attractive risk-adjusted returns as well as opportunities with the potential for equity-like returns combined with
downside protection that credit provides.
The majority
of our finance receivables transactions are structured similarly to factoring transactions whereby we provide capital in exchange for
an interest in an existing revenue stream. We primarily provide capital to companies following the commercialization of a product, although
in rare situations we consider pre-approval financings as well. The existing revenue stream can take several forms, but is most commonly
either a royalty derived from the sales of a life science product (1) from the marketing efforts of a third party, such as a royalty
paid to an inventor on the sales of a medicine, or (2) from the marketing efforts of a partner company, such as a medical device company
that directly sells its own products. Our structured debt investments may include warrants or other features, giving us the potential
to realize enhanced returns on a portion of our portfolio. Capital that we provide directly to our partners is generally used for growth
and general working capital purposes, as well as for acquisitions or recapitalizations in select cases. We generally fund the full amount
of transactions up to $25 million through our working capital.
In circumstances
where a transaction is greater than $25 million, we typically seek to syndicate amounts in excess of $25 million to both other investors
and our investment advisory clients. We do not expect to earn investment advisory income in transactions where we partner with investors
other than our investment advisory clients.
We source our investment
opportunities through a combination of our senior management’s proprietary relationships within the industry, outbound business
development efforts and inbound inquiries from companies, institutions and inventors interested in learning about our capital financing
alternatives. Our investment advisory clients generally do not originate investment opportunities for us.
Pharmaceutical Development
Segment
During 2019,
we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). Enteris
is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug delivery
technologies, the Peptelligence® platform.
Our Pharmaceutical
Development segment seeks to generate income by providing customers pharmaceutical development, formulation and manufacturing services.
We also intend
to continue to out-license our Peptelligence® technology to pharmaceutical companies to create novel and important oral therapeutic
treatments for a wide variety of indications. These licenses generate milestones and royalties for Enteris.
We seek to out-license
to pharmaceutical companies our existing internal product pipeline of off-patent, previously approved drug compounds with which we have
created novel formulations using our proprietary technology to develop treatments that have meaningful therapeutic benefits for patients
and caregivers. We do not expect to fund additional clinical research and development.
Tax Attributes
We view our ability
to carry forward our net operating losses, or NOLs, as an important and substantial asset. However, at this time, under current law,
we do not anticipate that our current business strategies will generate sufficient income to permit us to utilize our NOLs that are not
carried forward indefinitely prior to their respective expiration dates. As such, it is possible that we might pursue additional strategies
that we believe might result in our ability to utilize more of our NOLs.
Corporate Information
We file annual,
quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the
“Exchange Act’’), with the SEC. Our SEC filings are available to the public from the SEC’s internet site at http://www.sec.gov.
Our internet site is http://www.swkhold.com.
We will make available free of charge through our website in the “Investor Relations - SEC Filings” section our annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors
and executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. Also, posted on our website in the “Investor Relations
- Corporate Governance” section are charters for our Audit Committee, Compensation Committee and Governance and Nominating Committee
as well as our Code of Ethics and Insider Trading Policy governing our directors, officers and employees. Information on or accessible
through our website is not a part of, and is not incorporated into, this prospectus.
Our principal executive offices
are located at 5956 Sherry Lane, Suite 650, Dallas, Texas 75225, and our telephone number is (972) 687-7250. We maintain a website at
www.swkhold.com. Information on our website is not incorporated by reference into or otherwise part of this prospectus.
Summary Risk Factors
An investment in the Notes involves
a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk
Factors” section of this prospectus and in the documents incorporated by reference herein.
These risks include, but are not limited to, the following:
Risks Related to Finance Receivables
Segment
| · | We
may suffer losses on our principal invested in credit and royalty transactions. |
| | |
| · | We
operate in a highly competitive market for investment opportunities. |
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| · | We
generally do not control our partner companies. |
| | |
| · | Economic
recessions or downturns could impair the ability of our partner companies to repay loans,
which, in turn, could increase our non-performing assets, decrease the value of our assets,
reduce our volume of new loans and have a material adverse effect on our results of operations. |
| | |
| · | If
we make investments in unsecured debt backed by royalties or revenue interests, those investments
might not generate sufficient cash flow to service our debt obligations. |
| | |
| · | Our
quarterly and annual operating results are subject to fluctuation as a result of the nature
of our business, and if we fail to achieve our investment objective, the market price of
our common stock may decline. |
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| · | Our
investments in royalty-related transactions depend on third parties to market royalty-generating
products. |
| | |
| · | Our
Finance Receivables segment has a limited number of assets, which subjects our aggregate
returns, and the value of our common stock, to a greater risk of significant loss if any
of our debt securities declines in value or if any of our royalty investments substantially
underperforms our expectations. |
| · | Our
allowance for credit losses may prove inadequate. |
| | |
| · | Fluctuations
in the price of our publicly traded equity holdings and the price at which we sell such holdings
may affect the price of our common stock. |
| | |
| · | Our
financial condition and results of operations will depend on our ability to manage future
growth of our Finance Receivables segment effectively. |
Risks Related
to Our Business and Structure
| · | Our
ability to use NOL carryforwards to offset future taxable income for U.S. federal income
tax purposes may be limited, and our future cash tax liability may increase. |
| | |
| · | If
we are unable to obtain additional debt or equity financing on commercially reasonable terms
our business could be materially adversely affected. |
| | |
| · | Our
use of leverage may limit our operational flexibility and increase our overall risk, which
may adversely affect our business and results of operations. |
| | |
| · | Funds
affiliated with Carlson Capital, L.P. can control or exert significant influence over
our management and policies through their ownership of a large amount of our common stock. |
| | |
| · | If
there are substantial sales of shares of our common stock, the price of our common stock
could decline. |
| | |
| · | We
have adopted provisions in our certificate of incorporation and bylaws, and have entered
into the Rights Agreement, which could delay or prevent an acquisition of the Company. |
| | |
| · | If
we were deemed an investment company under the Investment Company Act of 1940 (the “1940
Act”), applicable restrictions could make it impractical for us to continue our business
as contemplated and could have a material adverse effect on our business. |
Risks Associated
with Investments in the Health Care and Life Science Industries
| · | Public
health epidemics, pandemics or outbreaks, including COVID-19, could adversely affect our
and our partner companies’ businesses. |
| | |
| · | Healthcare
and life science industries are subject to extensive government regulation, litigation risk,
reimbursement risk and certain other risks particular to those industries. |
| | |
| · | Some
of our partner companies may be unable to protect their proprietary rights and may infringe
on the proprietary rights of others. |
| | |
| · | The
pharmaceutical industry is subject to numerous risks, including competition, extensive government
regulation, product liability, patent exclusivity and commercial difficulties. |
| | |
| · | The
development of products by life science companies requires significant research and development,
clinical trials and regulatory approvals. |
| | |
| · | The
potential inability of our partner companies’ and counterparties to charge desired
prices with respect to prescription drugs could impact their revenues and in turn their ability
to repay us or the magnitude of their payments to us. |
Risks Related
to Pharmaceutical Development Segment
| · | Enteris’
licensees may not be successful in efforts to develop products for many years, if ever. |
| | |
| · | Enteris’
licensees may not be successful in their efforts to gain regulatory approval for any of their
product candidates and, if approved, the approval may not be on a timely basis. |
| | |
| · | Current
and future legislation may increase the difficulty and cost for Enteris or its partners to
obtain marketing approval of and the commercialization of their product candidates. This
could affect the timing as well as the amount of royalty income Enteris may earn as a result. |
| | |
| · | Enteris’
success depends upon its ability to protect its intellectual property rights. |
| | |
| · | If
Enteris encounters issues with its suppliers or if its licensees encounter issues with their
contract manufacturers, Enteris may need to qualify alternative manufacturers or suppliers,
which could impair Enteris’ and its licensees’ ability to sufficiently and timely
manufacture and supply pharmaceutical products. |
| | |
| · | Enteris’
production facilities have been impacted by COVID-19 and global supply chain constraints,
and any future impacts might adversely affect its operations and financial condition. |
Risks Related to this Offering
and the Notes
| · | We
may be able to incur substantially more debt, which could have important consequences to
you. |
| | |
| · | The
Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness
that we currently have or that we may incur in the future. |
| | |
| · | The
Notes will be structurally subordinated to the indebtedness and other liabilities of our
subsidiaries. |
| | |
| · | The
indenture governing the Notes will contain limited protection for holders of the Notes. |
| | |
| · | We
may not be able to generate sufficient cash to service all of our debt, and may be forced
to take other actions to satisfy our obligations under such indebtedness, which may not be
successful. |
| | |
| · | An
increase in market interest rates could result in a decrease in the value of the Notes. |
| | |
| · | An
active trading market for the Notes may not develop, which could limit the market price of
the Notes in the secondary market and your ability to sell them. |
| | |
| · | The
ratings for the Notes could at any time be revised downward or withdrawn entirely at the
discretion of the issuing rating agency. |
| | |
| · | We
have broad discretion in the use of the net proceeds of this offering and may not use them
effectively. |
THE OFFERING
The summary below describes
the principal terms of the Notes. Some of the terms and conditions described below are subject to important limitations and exceptions.
See “Description of Notes” for a more detailed description of the terms and conditions of the Notes. All capitalized terms
not defined herein have the meanings specified in “Description of Notes.” Unless otherwise indicated, the information in
this prospectus assumes that the underwriters do not exercise their option to purchase additional Notes.
Issuer: |
SWK Holdings Corporation |
Notes Offered:
|
$35,000,000 in aggregate principal amount of %
Senior Notes due 2028 (or $ in aggregate principal
amount of % Senior Notes due 2028 if the underwriters’ option
is exercised in full). |
Offering Price:
|
100% of the principal amount. |
Maturity Date:
|
The Notes will mature on ,
2028, unless redeemed prior to maturity. |
Interest Rate
and Payment Dates: |
%
interest per annum on the aggregate principal amount of the Notes, payable quarterly in arrears on , , and of
each year, commencing on , and at maturity. |
Ranking: |
The Notes will be our senior unsecured obligations
and will rank: |
|
· |
senior to the outstanding
shares of our common stock; |
|
· |
senior to any of our future
subordinated debt; |
|
· |
pari passu (or equally)
with all of our existing and future senior unsecured indebtedness; |
|
· |
effectively subordinated
to any existing or future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant
security), to the extent of the value of the assets securing such indebtedness; and |
|
· |
structurally subordinated
to all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables. |
|
As of June 30, 2023, we had no outstanding indebtedness. |
Guarantors:
|
The Notes will not be guaranteed by any of our
subsidiaries or affiliates. |
Optional Redemption:
|
We may redeem the Notes for
cash, in whole or in part, at any time or from time to time at our option (i) on or after ,
2025 (the “First Call Date”) and prior to , 2026, at a price equal
to the sum of 102% of their principal amount, (ii) on or after ,
2026 and prior to , 2027, at a price equal to the sum of 101% of their
principal amount and (iii) on or after , 2027 at a price
equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and unpaid interest to, but excluding,
the date of redemption. At any time prior to the First Call Date, we may, at our option, redeem the Notes for cash, in whole at
any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii)
a Make-Whole Amount (as defined herein), plus (iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption.
See “Description of Notes—Optional Redemption” for additional details.
|
Purchase
of the Notes Upon Triggering Event: |
Upon the occurrence of a
Triggering Event, as defined below, we must offer to purchase the Notes at 100% of their principal amount, plus accrued and unpaid
interest, if any, to but excluding the date of the purchase. For more details, see “Description of Notes—Purchase
of Notes upon a Triggering Event.” |
Sinking Fund:
|
The Notes will not be subject to any sinking funding
(i.e., no amounts will be set aside by us to ensure repayment of the Notes at maturity). |
Use of Proceeds:
|
We anticipate using the net proceeds of this offering
for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making capital expenditures
and funding working capital. For additional information, see “Use of Proceeds.” |
Events of
Default: |
Events of default generally will include failure
to pay principal, failure to pay interest, failure to observe or perform any other covenant or warranty in the Notes or in the indenture
that governs the Notes, and certain events of bankruptcy, insolvency or reorganization. See “Description of Notes—Events
of Default.” |
Other Covenants: |
In addition to any covenants described
elsewhere in this prospectus, so long as the Notes are outstanding the following covenants will apply to the Notes: |
|
|
|
|
|
· |
We agree that for the period
of time during which the Notes are outstanding, we will not (i) make additional borrowings, including through the issuance of additional
debt or the sale of additional debt securities, unless our “asset coverage” (as defined in the 1940 Act), except to the
extent modified by this covenant, equals at least 150% after such borrowings, and (ii) declare any cash dividend or distribution
upon any class of our capital stock, or purchase any such capital stock if our asset coverage were below 150% at the time of the
declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase.
For the purposes of determining “asset coverage” as used above, any and all indebtedness of the Company, including any
outstanding borrowings under the Credit Facilities and any successor or additional credit facility, shall be deemed a senior security
of us. For the avoidance of doubt, the definition of asset coverage as defined in the 1940 Act shall apply regardless as to whether
we are otherwise subject to regulation under the 1940 Act. |
|
· |
If, at any time, we are
not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC,
we agree to furnish to holders of the Notes and the trustee, for the period of time during which the Notes are outstanding, our audited
annual financial statements, within 90 days of our fiscal year end, and unaudited interim financial statements, within 45 days of
our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects,
in accordance with accounting principles generally accepted in the United States. |
|
· |
We will
use commercially reasonable efforts to maintain a credit rating on the Notes by a rating organization designated from time to time
as being a “nationally recognized statistical rating organizations” within the meaning of Section 3(a)(62) of the
Exchange Act, including but not limited to Egan-Jones Ratings Company and any successor to the credit rating business thereof (“Egan-Jones”
and each such organization, an “NRSRO”) provided that no minimum rating will be required. |
|
|
|
|
|
For additional information, see “Description of Notes” for certain other covenants applicable to the Notes. |
Additional Notes: |
We may create and issue additional
Notes ranking equally and ratably with the Notes offered hereby in all respects, so that such additional Notes will constitute and
form a single series with the previously outstanding Notes and will have the same terms and conditions (except the price to public,
the issue date, and, if applicable, the initial interest payment date) as the previously outstanding Notes; provided that
if any such additional Notes are not fungible with the Notes initially offered hereby for U.S. federal income tax purposes, such
additional Notes will have a different CUSIP number. |
Defeasance:
|
The Notes are subject to legal and covenant defeasance
by us. See “Description of Notes—Defeasance” for more information. |
|
|
Listing: |
We intend to apply to list the Notes on the Nasdaq
under the symbol “SWKHL.” If the Notes are approved for listing, we expect trading in the Notes to begin within 30 business
days of the original issue date. |
Form and Denomination:
|
The Notes will be issued in book-entry form in
denominations of $25 and integral multiples of $25 in excess thereof. The Notes will be represented by a permanent global certificate
deposited with the trustee as custodian for DTC and registered in the name of a nominee of DTC. Beneficial interests in any of the
Notes will be shown on, and transfers will be effected only through, records maintained by DTC and its direct and indirect participants
and any such interest may not be exchanged for certificated securities, except in limited circumstances. |
Settlement:
|
Delivery of the Notes will be made against payment
therefor on or about , 2023. |
Trustee: |
Wilmington Trust, National Association. |
Governing
Law: |
The indenture and the Notes will be governed by
and construed in accordance with the laws of the State of New York. |
Risk factors:
|
Investing in the Notes involves a high degree
of risk and purchasers may lose their entire investment. See “Summary of Risk Factors” above, “Risk Factors—Risks
Related to this Offering and to the Notes” below and “Risk Factors”
sections in our most recent Annual Report on Form 10-K for the year ended December 31, 2022, incorporated by reference herein in
their entirety, for a discussion of factors you should carefully consider before deciding to invest in the Notes. |
RISK FACTORS
Investing
in the Notes involves a high degree of risk. Before investing in the Notes, you should consider carefully the risks and other information
described in, or incorporated by reference into, this prospectus, including the risks and uncertainties discussed in the “Risk
Factors” sections in this prospectus, our most recent Annual Report on Form 10-K for the year ended December 31, 2022 and any subsequent
Quarterly Reports on Form 10-Q, which are incorporated by reference herein in their entirety. Additional risks and uncertainties not
presently known to us, or that we currently see as immaterial, may also harm our business. If any of the risks incorporated by reference
herein occur, our business, financial condition and operating results could be harmed, the trading price of the Notes could decline and
you could lose part or all of your investment.
Risks Related to this Offering
and to the Notes
We may
be able to incur substantially more debt, which could have important consequences to you.
We may be able
to incur substantial additional indebtedness in the future. The terms of the indenture governing the Notes, other than the asset coverage
covenant (as more fully described in the “Description of Notes”), do not prohibit us from doing so. If we incur
any additional indebtedness that ranks equally with the Notes, the holders of that debt will be entitled to share ratably with you in
any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution. This may have the effect of reducing
the amount of proceeds paid to you. Incurrence of additional debt would also further reduce the cash available to invest in operations,
as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face
could intensify.
Our level of indebtedness could have
important consequences to you, because:
| · | it
could affect our ability to satisfy our financial obligations, including those relating to
the Notes; |
| | |
| · | a
substantial portion of our cash flows from operations would have to be dedicated to interest
and principal payments and may not be available for operations, capital expenditures, expansion,
acquisitions or general corporate or other purposes; |
| | |
| · | it
may impair our ability to obtain additional debt or equity financing in the future;
|
| | |
| · | it
may limit our ability to refinance all or a portion of our indebtedness on or before maturity;
|
| | |
| · | it
may limit our flexibility in planning for, or reacting to, changes in our business and industry;
and |
| | |
| · | it
may make us more vulnerable to downturns in our business, our industry or the economy in
general. |
Our operations
may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on the Notes, we could be in default
on the Notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding. Conversely, a default
under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle
the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder. In addition, such default
or acceleration may result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof
to bring suit for the enforcement thereof or exercise other remedies provided thereunder. If a judgment is obtained by any such holders,
such holders could seek to collect on such judgment from the assets of the Company. If that should occur, we may not be able to pay all
such debt or to borrow sufficient funds to refinance it. Even if new financing were then available, it may not be on terms that are acceptable
to us.
However, no event
of default under the Notes would result from a default or acceleration of, or suit, other exercise of remedies or collection proceeding
by holders of, our other outstanding debt, if any. As a result, all or substantially all of our assets may be used to satisfy claims
of holders of our other outstanding debt, if any, without the holders of the Notes having any rights to such assets.
The Notes
will be unsecured and therefore will be effectively subordinated to any secured indebtedness that we currently have or that we may incur
in the future.
The Notes
will not be secured by any of our assets. As a result, the Notes will be effectively subordinated to any secured indebtedness that we
have currently outstanding or may incur in the future to the extent of the value of the assets securing such indebtedness. The indenture
governing the Notes, other than the asset coverage covenant (as more fully described in the “Description of Notes”),
will not prohibit us from incurring additional secured (or unsecured) indebtedness in the future. In any liquidation, dissolution, bankruptcy
or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged
to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including
the holders of the Notes.
The
Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The Notes
will be obligations exclusively of the Company and not of any of our subsidiaries nor will the Notes be secured by any of the assets
of our subsidiaries. The Notes will be effectively subordinated to any secured indebtedness of our subsidiaries currently outstanding
or that they may incur in the future to the extent of the value of the assets securing such indebtedness. None of our subsidiaries will
be a guarantor of the Notes, and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
Therefore, in any bankruptcy, liquidation or similar proceeding, all claims of creditors (including trade creditors) of our subsidiaries
will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the
Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our
claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness
or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes will be structurally subordinated to all indebtedness
and other liabilities (including trade payables) of any of our subsidiaries and any subsidiaries that we may in the future acquire or
establish as financing vehicles or otherwise. Except as set forth in “Description of Notes – Covenants” below,
the indenture does not otherwise prohibit us or our subsidiaries from incurring additional indebtedness in the future or granting liens
on our assets or the assets of our subsidiaries to secure any such additional indebtedness. In addition, future debt and security agreements
entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the
transfer by our subsidiaries of assets pledged as collateral.
The indenture governing
the Notes will contain limited protection for holders of the Notes.
The indenture
under which the Notes will be issued will offer limited protection to holders of the Notes. The terms of the indenture and the Notes
will not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions,
circumstances or events that could have an adverse impact on your investment in the Notes. In particular, the terms of the indenture
and the Notes will not place any restrictions on our or our subsidiaries’ ability to:
| · | issue
securities or otherwise incur additional indebtedness or other obligations, including (1)
any indebtedness or other obligations that would be equal in right of payment to the Notes,
(2) any indebtedness or other obligations that would be secured and therefore rank effectively
senior in right of payment to the Notes to the extent of the values of the assets securing
such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries
and which therefore is structurally senior to the Notes and (4) securities, indebtedness,
or obligations issued or incurred by our subsidiaries that would be senior to our equity
interests in our subsidiaries and therefore rank structurally senior to the Notes with respect
to the assets of our subsidiaries, in each case, other than an incurrence of indebtedness
or other obligation that would violate the covenants set forth below under “Description
of Notes – Covenants.” |
| · | pay
dividends on, or purchase or redeem or make any payments in respect of, capital stock or
other securities subordinated in right of payment to the Notes; |
| · | sell
assets (other than certain limited restrictions on our ability to consolidate, merge or sell
all or substantially all of our assets); |
| · | enter
into transactions with affiliates; |
| · | create
liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback
transactions; |
| · | create
restrictions on the payment of dividends or other amounts to us from our subsidiaries. |
In addition,
the indenture will not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going
private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions,
except to the limited extent described in this prospectus supplement under “Description of Notes—Purchase of Notes
Upon a Triggering Event.” Furthermore, the terms of the indenture and the Notes will not protect holders of the Notes in the
event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit
ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth,
revenues, income, cash flow, or liquidity. Also, an event of default or acceleration under our other indebtedness would not necessarily
result in an “Event of Default” under the Notes.
Our ability
to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the indenture and the
Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations
with respect to the Notes or negatively affecting the trading value of the Notes.
Other
debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional
covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for
and trading levels and prices of the Notes.
We may not be able to generate
sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness,
which may not be successful.
Our ability to make scheduled payments
on, or to refinance our obligations under, our debt will depend on our financial and operating performance and that of our subsidiaries,
which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which
may be beyond our control.
We may not maintain a level of cash
flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our
cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures,
sell assets, seek to obtain additional equity capital or restructure our debt. In the future, our cash flow and capital resources may
not be sufficient for payments of interest on, and principal of, our debt, and such alternative measures may not be successful and may
not permit us to meet our scheduled debt service obligations. We may not be able to refinance any of our indebtedness or obtain additional
financing. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required
to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those sales,
or if we do, at an opportune time, the proceeds that we realize may not be adequate to meet debt service obligations when due. Repayment
of our indebtedness, to a certain degree, is also dependent on the generation of cash flows by our subsidiaries (none of which will be
guarantors) and their ability to make such cash available to us, by dividend, loan, debt repayment, or otherwise. Our subsidiaries may
not be able to, or be permitted to, make distributions or other payments to enable us to make payments in respect of our indebtedness.
Each of our subsidiaries is a distinct legal entity and, under certain circumstances, applicable U.S. and foreign legal and contractual
restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions or other payments
from our subsidiaries, we may be unable to make required payments on our indebtedness.
An increase in market
interest rates could result in a decrease in the value of the Notes.
In general, as market interest rates
rise, notes bearing interest at a fixed rate decline in value. Consequently, if you purchase the Notes, and the market interest rates
subsequently increase, the market value of your Notes may decline. We cannot predict the future level of market interest rates.
An active trading market for
the Notes may not develop, which could limit the market price of the Notes in the secondary market and your ability to sell them.
The Notes are
a new issue of debt securities for which there currently is no trading market. We intend to apply to list the Notes on the Nasdaq within
30 business days of the original issue date under the symbol “SWKHL.” There is no assurance that Nasdaq will approve the
listing of the Notes. Even if the listing of the Notes is approved by Nasdaq, an active trading market may not develop for the Notes
and you may have difficulty selling the Notes or may not be able to sell your Notes. If the Notes are traded after their initial issuance,
they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities,
our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. The underwriters
have advised us that they intend to make a market in the Notes pending any listing of the Notes on the Nasdaq, but they are not
obligated to do so. The underwriters may discontinue any market-making in the Notes at any time at their sole discretion. Accordingly,
a liquid trading market may not develop for the Notes, you may not be able to sell your Notes at a particular time and the price you
receive when you sell may not be favorable. To the extent an active trading market does not develop, the liquidity and trading price
for the Notes may be harmed. Therefore, you may be required to bear the financial risk of an investment in the Notes until maturity of
the Notes.
In addition, there may be a limited
number of buyers when you decide to sell your Notes. This may affect the price, if any, offered for your Notes or your ability to sell
your Notes when desired or at all.
We may redeem the Notes
before maturity, and you may be unable to reinvest the proceeds and obtain an equal effective interest rate.
We
may redeem the Notes in whole or in part, at our option (i) on or after
, 2025 (the “First Call Date”) and prior to
, 2026, at a price equal to the sum of 102% of their principal amount, (ii) on or after
, 2026 and prior to , 2027, at a price
equal to the sum of 101% of their principal amount and (iii) on or after
, 2027 at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and unpaid interest to,
but excluding, the date of redemption. In addition, at any time prior to the First Call Date, we may, at our option, redeem the Notes
for cash, in whole at any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount of Notes
redeemed, plus (ii) a Make-Whole Amount (as defined herein), plus (iii) accrued and unpaid interest, if any, to, but excluding, the date
of redemption. See “Description of Notes—Optional Redemption.” Additionally, upon the occurrence of a Triggering
Event (defined below), holders of the Notes may require us to make an offer to purchase the Notes for cash at a purchase price equal
to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the purchase date. If a
redemption does occur, you may be unable to reinvest the money you receive in the redemption in a comparable security at an equal or
higher effective interest rate.
We may
issue additional Notes.
Under the terms of the indenture governing
the Notes, we may from time to time without notice to, or the consent of, the holders of the Notes, create and issue additional Notes
which may rank equally with the Notes. If any such additional Notes are not fungible with the Notes initially offered hereby for U.S.
federal income tax purposes, such additional Notes will have a different CUSIP number.
The rating for the Notes could
at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
Ratings only reflect the views of
the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion
of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold the Notes. Ratings do not reflect market prices
or suitability of a security for a particular investor and the rating of the Notes may not reflect all risks related to us and our business,
or the structure or market value of the Notes. We may elect to issue other securities for which we may seek to obtain a rating in the
future. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered
or withdrawn, could adversely affect the market for or the market value of the Notes.
We
may not be able to repurchase the Notes upon a Triggering Event because we may not have sufficient funds.
Upon a Triggering
Event, holders of the Notes may require us to make an offer to purchase the Notes for cash at a purchase price equal to 100% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the purchase date. Our failure to purchase
such tendered Notes upon the occurrence of such Triggering Event would result in an Event of Default under the indenture governing the
Notes and may result in a cross-default under the agreements governing certain of our other indebtedness which may result in the acceleration
of such indebtedness requiring us to repay that indebtedness immediately. If such a Triggering Event were to occur, we may not have sufficient
funds to repay any such accelerated indebtedness. In addition, you may not be able to require us to repurchase the Notes under the change
of control provisions in the indenture in the event of certain important corporate events, such as a leveraged recapitalization (which
would increase the level of our indebtedness, potentially resulting in a downgrade of our credit ratings, thereby negatively affecting
the value of the Notes), reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a “Triggering
Event” under the indenture. Such a transaction may not involve a change in voting power or beneficial ownership or, even if it
does, may not involve a change that constitutes a “Triggering Event” that would trigger our obligation to purchase the Notes.
Therefore, if an event occurs that does not constitute a “Triggering Event,” we will not be required to make an offer to
purchase the Notes despite the event. See “Description of Notes—Purchase of Notes upon a Triggering Event.”
We have broad discretion in
the use of the net proceeds of this offering and may not use them effectively.
We intend to use the net proceeds
from this offering for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making
capital expenditures and funding working capital. However, our management will have broad discretion in the application of the net proceeds
from this offering and could spend the proceeds in ways that do not improve our results of operations. The failure by management to apply
these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price
of the Notes to decline.
USE OF PROCEEDS
We estimate that the net proceeds
from this offering will be approximately $ million after discounts, commissions, the Structuring Fee and estimated expenses related to
this offering (or approximately $ million if the underwriters’ option is exercised in full). We intend to use the net proceeds
from this offering for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making
capital expenditures and funding working capital.
CAPITALIZATION
The following table sets forth our
capitalization as of June 30, 2023:
|
· |
on an actual basis; and |
|
· |
on an adjusted basis to give
effect to this offering as if it occurred on that date (assuming no exercise of the underwriters’ option to purchase additional
Notes), after deducting underwriting discounts and commissions, the Structuring Fee and estimated offering expenses payable by us.
|
You should read the data set forth
below in conjunction with “Use of Proceeds” appearing elsewhere in this prospectus, as well as our unaudited financial
statements and notes thereto incorporated by reference in this prospectus and our “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Form 10-Q for the quarter ended June 30, 2023, filed with the SEC
on August 10, 2023. See “Incorporation of Certain Information by Reference.”
| |
As
of June 30, 2023 | |
| |
Actual | | |
Adjusted(1) | |
(in
thousands) | |
| | |
| |
Cash
and cash equivalents | |
$ | 6,805 | | |
$ | | |
Current
Liabilities | |
$ | 2,996 | | |
$ | 2,996 | |
Long-term
liabilities: | |
| | | |
| | |
Contingent
consideration payable | |
| 11,200 | | |
| 11,200 | |
Other
non-current liabilities | |
| 2,362 | | |
| 2,362 | |
$ million
Senior Notes, interest at %, due , 2028(2) | |
| — | | |
| | |
Total
Liabilities | |
$ | 16,558 | | |
$ | | |
| |
| | | |
| | |
Total
stockholders’ equity | |
$ | 273,884 | | |
$ | 273,884 | |
| |
| | | |
| | |
Total
Capitalization | |
$ | 290,442 | | |
$ | | |
(1) Excludes up to an additional $ million
in aggregate principal amount of Notes issuable upon the exercise of the underwriters’ option to purchase additional Notes.
(2) Excludes unamortized debt issuance costs
of approximately $ million on the Notes.
DESCRIPTION OF OTHER
INDEBTEDNESS
Revolving Credit
Facility
On June 28, 2023, the Company entered into
a new Credit Agreement (the “Credit Agreement”) by and among SWK Funding LLC, the Company’s wholly-owned subsidiary
(together with the Company, the “Borrower”), the lenders party thereto (“Lenders”), and First Horizon Bank as
a Lender and Agent (the “Agent”). The Credit Agreement provides for a revolving credit facility with an initial maximum principal
amount of $45.0 million. The Credit Agreement provides that the Company may request one or more incremental increases in an aggregate
amount not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the termination of the
revolving credit period on June 28, 2026 (the “Commitment Termination Date”). The revolving credit period will be followed
by a one-year amortization period, with the final maturity date of the Credit Agreement occurring on June 28, 2027.
The outstanding
principal balance of the Credit Agreement will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the
Credit Agreement) plus (ii) 3.75 percent at all times prior to the Commitment Termination Date. The outstanding principal balance of
the Revolving Credit Facility will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement)
plus (ii) 4.25 percent at all times on and after the Commitment Termination Date. Under the terms of the Credit Agreement, all accrued
and unpaid interest shall be due and payable, in arrears, on the first business day of each calendar month.
The Credit Agreement
contains customary affirmative and negative covenants, in addition to financial covenants specifying that, as of the end of each calendar
month, (i) the consolidated leverage ratio of Borrower will not exceed 1.00 to 1.00, (ii) the consolidated interest coverage ratio of
Borrower will not be less than 4.00 to 1.00, (iii) the cash collection rate in relation to Borrower’s portfolio of loan assets
will not be less than 4.5%, for such calendar month, (iv) the net charge-off percentage in relation to Borrower’s portfolio of
loan assets will not exceed 3 percent for such calendar month, and (v) the weighted average risk rating in relation to Borrower portfolio
of loan assets will not be less than 3.00. In addition, the Credit Agreement provides that at no time shall the Company permit its consolidated
tangible net worth to be less than $145.0 million, or its Liquidity (as defined in the Credit Agreement) to be less than $5.0 million.
The Credit Agreement also contains events of default customary for such financings, the occurrence of which would permit the Agent and
Lenders to accelerate the aggregate principal amount due thereunder.
The
Credit Agreement refinances the Company’s Loan and Security Agreement dated as of June 29, 2018 (the “Prior Credit Agreement”),
as amended, between the Company and Cadence Bank, N.A. Cadence Bank, as the lender and administrative agent, which was due to expire
on September 30, 2025. The Prior Credit Agreement was terminated by the Company, effective as of June 28, 2023.
As
of June 30, 2023, no amounts were outstanding under either credit facility, and $45.0 million was available for borrowing under the Credit
Agreement.
DESCRIPTION OF NOTES
The Company
will issue $35,000,000 in aggregate principal amount of % Senior Notes due 2028 (or $
aggregate principal amount of % Senior Notes due 2028 if the
underwriters’ option is exercised in full) (the “Notes”) under an indenture to be dated as of
, 2023 (the “base indenture”) between the Company and Wilmington Trust,
National Association as trustee (the “trustee”), as supplemented by the first supplemental indenture thereto to be dated
as of , 2023 (together with the base indenture, the “indenture”). Unless
the context requires otherwise, all references to “we,” “us,” “our” and the
“Company” in this “Description of Notes” refer solely to SWK Holdings Corporation, the issuer of the Notes, and
not to any of its subsidiaries. All references to interest in this section include additional interest, if any, payable as the sole
remedy relating to the failure to comply with our reporting obligations pursuant to the provisions set forth below under “—Events
of Default—Remedies if an Event of Default Occurs.”
The following description is only
a summary of certain provisions of the indenture and the Notes. You should read these documents in their entirety because they, and not
this description, define your rights as holders of the Notes. The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the indenture and to the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), and to all of the provisions of the indenture and those terms made a part of the indenture by reference to the
Trust Indenture Act.
General
The Notes:
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will be
our general unsecured, senior obligations; |
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will be
initially limited to an aggregate principal amount of $35,000,000 (assuming no exercise of the underwriters’ option to purchase
additional Notes described herein); |
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will mature
on , 2028 unless earlier redeemed or repurchased, and 100% of the aggregate principal amount
will be paid at maturity; |
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will bear
cash interest from , 2023 at an annual rate of %, payable quarterly in
arrears on , , and of
each year, beginning on , and at maturity; |
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will be
redeemable at our option, in whole or in part, on or after , 2025,
at the prices and on the terms described under “—Optional Redemption” below; |
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will
be subject to repurchase by us, at the option of the holders of the Notes, following a Triggering Event, for cash at
a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, as further described
under “—Purchase of Notes Upon a Triggering Event” below; |
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will be
issued in denominations of $25 and integral multiples of $25 in excess thereof; |
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will not
have a sinking fund; |
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are expected
to be listed on the Nasdaq Global Market (“Nasdaq”) under the symbol “SWKHL”; and |
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will be
represented by one or more registered Notes in global form, but in certain limited circumstances may be represented by Notes in definitive
form. |
Except
as set forth under “—Covenants” below, the indenture will
not otherwise limit the amount of debt (including secured debt) that may be issued by us or our subsidiaries under the indenture or otherwise.
Other than restrictions described under “—Covenants—Merger, Consolidation or Sale of Assets” below, the
indenture will not contain any covenants or other provisions designed to afford holders of the Notes protection in the event of a highly
leveraged transaction involving us or in the event of a decline in our credit rating as the result of a takeover, recapitalization, highly
leveraged transaction or similar restructuring involving us that could adversely affect such holders.
We have granted the underwriters
an option to purchase additional Notes in an aggregate principal amount not to exceed $ . We may from time to time, without the consent
of the existing holders, issue additional Notes having the same terms and conditions (except the price to public, the issue date and,
if applicable, the initial interest payment date) that may constitute a single fungible series with the Notes offered by this prospectus;
provided that if any such additional Notes are not fungible with the Notes initially offered hereby for U.S. federal income tax purposes,
such additional Notes will have different CUSIP numbers. For the avoidance of doubt, such additional Notes will still constitute a single
series with all other Notes issued under the indenture for all purposes, including waivers, amendments, redemptions and offers to purchase.
Ranking
The Notes are senior unsecured obligations
of the Company, and, upon our liquidation, dissolution or winding up, will rank (i) senior to the outstanding shares of our common stock,
(ii) senior to any of our future subordinated debt, (iii) pari passu (or equally) with our existing and future unsecured indebtedness,
(iv) effectively subordinated to any existing or future secured indebtedness (including indebtedness that is initially unsecured to which
we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (v) structurally subordinated
to all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables. See “Risk Factors—The
Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness that we currently have or that we
may incur in the future.” The Notes will be obligations solely of the Company and will not be guaranteed by any of our subsidiaries.
As of June 30, 2023, we had no outstanding
indebtedness.
Interest
Interest on the Notes will accrue
at an annual rate equal to % from and including , 2023 to, but excluding, the maturity date or earlier payment date or redemption date
and will be payable quarterly in arrears on , , and of each year, beginning on , and at maturity, to the holders of record at the close
of business on the immediately preceding , , and (and immediately preceding the maturity date), as applicable (whether or not a business
day).
The initial interest period for the
Notes will be the period from and including , 2023, to, but excluding, , and subsequent interest periods will be the periods from and
including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.
The amount of interest payable for any interest period, including interest payable for any partial interest period, will be computed
on the basis of a 360-day year comprised of twelve 30-day months. If an interest payment date falls on a non-business day, the applicable
interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment.
“Business day” means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day in which banking institutions in New York are authorized or obligated
by law or executive order to close.
Optional Redemption
We may, at our
option, redeem the Notes for cash, in whole at any time or in part from time to time (i) on or after ,
2025 (the “First Call Date”), and prior to , 2026, at a redemption price equal
to the sum of 102% of their principal amount, (ii) on or after , 2026 and prior
to , 2027, at a redemption price equal to the sum of 101% of their principal amount
and (iii) on or after , 2027 at a redemption price equal to the sum of 100% of
their principal amount, and, in each case, plus (in each case noted above) accrued and unpaid interest to, but excluding, the date of
redemption.
At any time
prior to the First Call Date, we may, at our option, redeem the Notes for cash, in whole at any time or in part from time to time at
a redemption price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined below), plus
(iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In each case,
notice of redemption shall be given to the holders of the Notes to be redeemed no fewer than 10 days and not more than 60 days
prior to the date fixed for redemption.
If less than
all of the Notes in certificated, non-global form are to be redeemed, the particular Notes to be redeemed will be selected not more than
25 days prior to the redemption date by the trustee from the outstanding certificated Notes not previously called for redemption,
by lot, or in the trustee’s discretion, on a pro-rata basis, provided that the unredeemed portion of the principal amount of any
Notes will be in an authorized denomination (which will not be less than the minimum authorized denomination) for such Notes. The trustee
will promptly notify us in writing of the certificated Notes selected for redemption and, in the case of any certificated Notes selected
for partial redemption, the principal amount thereof to be redeemed. Beneficial interests in any of the global Notes or portions thereof
called for redemption that are registered in the name of DTC or its nominee will be selected by DTC in accordance with DTC’s applicable
procedures.
The trustee shall have
no obligation to calculate any redemption price, or any component thereof, and the trustee shall be entitled to receive and conclusively
rely upon an officer’s certificate delivered by the Company that specifies any redemption price.
Unless we default on the payment of the
redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
We may at any time, and from time to time,
purchase notes at any price or prices in the open market or otherwise.
“Make-Whole
Amount” means, in connection with any optional redemption of any Note, the excess, if any, of (i) the sum of the present values,
as of the date of such redemption, of the remaining scheduled payments of principal (including the redemption price of such Note on the
First Call Date) of, and interest (exclusive of interest accrued to, but excluding, the date of redemption) on, such Note being redeemed,
assuming such Note matured on, and that accrued and unpaid interest on such Note was payable through, the First Call Date, determined
by discounting, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), such principal and interest at the
Reinvestment Rate (as defined below) (determined on the third business day preceding the date of redemption (or in the case of a discharge,
as of the date that redemption funds are deposited with the trustee)) over (ii) the aggregate principal amount of such Notes being redeemed.
“Reinvestment
Rate” means, 0.500%, or 50 basis points, plus the arithmetic mean (rounded to the nearest one-hundredth of one percent) of the
yields displayed for the five most recent Business Days published in the most recent Statistical Release under the caption “Treasury
constant maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity of the Notes
(assuming that the Notes matured on the First Call Date) as of the date of redemption. If no maturity exactly corresponds to such remaining
life to maturity, yields for the two published maturities most closely corresponding to such remaining life to maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding in each of such relevant periods to the nearest month. For the purpose of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of determination of the Reinvestment Rate shall be used.
Purchase of Notes
Upon a Triggering Event
If a Triggering
Event occurs with respect to the Notes, holders of such Notes will have the right to require us to purchase all or any part of their
Notes pursuant to the offer described below (the “Triggering Offer”) on the terms set forth in the indenture. In the Triggering
Offer, we will be required to offer payment in cash equal to 100% of the aggregate principal amount of the Notes purchased plus accrued
and unpaid interest, if any, to but excluding the date of purchase (the “Triggering Payment”). Within 30 days following any
Triggering Event, unless we have exercised our right to redeem all of the Notes as described under “- Optional Redemption,”
with respect to the Notes, we will be required to mail, or with respect to Notes issued in global form, transmit in accordance with DTC’s
standard procedures therefor, a notice to the holders of such Notes describing the transaction or transactions that constitute the Triggering
Event and offering to purchase such Notes on the date specified in the notice, which date will be no earlier than 15 days and no later
than 60 days from the date such notice is mailed or transmitted) (the “Triggering Payment Date”), pursuant to the procedures
required by the indenture and described in such notice. The notice will, if mailed or transmitted prior to the date of (i) the
consummation of the Change of Control or (ii) the occurrence of a Delisting Event, as applicable, state that the offer to purchase
is conditioned on the Triggering Event occurring on or prior to the Triggering Payment Date. We must comply with the requirements
of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the purchase of the Notes as a result of a Triggering Event. To the extent that the provisions of any securities
laws or regulations conflict with the Triggering Event provisions of the indenture, we will be required to comply with the applicable
securities laws and regulations and will not be deemed to have breached our obligations under the Triggering Event provisions
or the delisting provisions of the indenture by virtue of such conflicts. On the Triggering Payment Date, we will be required, to the
extent lawful, to:
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or portions of Notes properly tendered and not withdrawn pursuant to the Triggering Offer; |
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previously deposited for such purpose, with the paying agent an amount equal to the Triggering Payment in respect of all Notes or portions
of Notes tendered; and |
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to the Trustee the Notes properly accepted together with an officer’s certificate stating the aggregate principal amount of Notes
or portions of Notes being purchased by us. |
The paying agent
will promptly mail, or with respect to Notes issued in global form, transmit in accordance with DTC’s standard procedures therefor,
to each holder of Notes properly tendered the purchase price for the Notes, and the trustee will promptly authenticate and mail (or cause
to be transferred by book-entry) to each holder a new Note equal in principal amount to any unpurchased portion of any Notes surrendered.
We will not be
required to make an offer to purchase any Notes upon a Triggering Event if (1) a third party makes such an offer in the manner, at the
times and otherwise in compliance with the requirements for an offer made by us, and such third party purchases all Notes of the applicable
series properly tendered and not withdrawn under its offer; or (2) we have given
written notice of a full redemption of all of the Notes to the holders thereof as provided under “— Optional Redemption,”
if applicable, above, unless we fail to pay the redemption price on the redemption date.
For purposes of the
foregoing discussion of a purchase at the option of holders, the following definitions are applicable:
“Change
of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of
the properties and assets of the Company and its subsidiaries taken as a whole to any “person” or “group” (as
those terms are used in Section 13(d)(3) of the Exchange Act) other than us or one of our subsidiaries; (2) the approval by the holders
of our common stock of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance
with the provisions of the indenture); (3) the consummation of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange
Act), other than Carlson Capital, L.P. and/or any of its affiliates, becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the then outstanding number of shares of our
voting stock; or (4) the Company consolidates or merges with or into any entity, pursuant to a transaction in which any of the outstanding
voting stock of the Company or such other entity is converted into or exchanged for cash, securities or other property (except when voting
stock of the Company constitutes, or is converted into, or exchanged for, at least a majority of the voting stock of the surviving person).
“Delisting
Event” means, with respect to the Notes, (i) after being listed and commencing trading on an exchange, the Notes are no
longer listed on Nasdaq, the New York Stock Exchange (“NYSE”), the NYSE American LLC (“NYSE AMER”), or listed
or quoted on an exchange or quotation system that is a successor to Nasdaq, the NYSE or NYSE AMER, (ii) we are not subject to the reporting
requirements of the Exchange Act, but the Notes are still outstanding, or (iii) as of the 31st business day following the
settlement of the Notes, the Notes are not listed and trading on an exchange.
“Triggering
Event” means, with respect to the Notes, the occurrence of either a Change of Control or a Delisting Event.
The definition
of “Change of Control” includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance
or other disposition of “all or substantially all” of the properties and assets of us and our subsidiaries taken as a whole.
Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to purchase its Notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than all of the properties and assets of us and our subsidiaries
taken as a whole to another person or group may be uncertain.
Events of Default
Holders of our Notes will have rights
if an Event of Default occurs in respect of the Notes and is not cured, as described later in this subsection. The term “Event
of Default” in respect of the Notes means any of the following:
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we do not
pay interest on any Note when due, and such default is not cured within 30 days; |
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we do not
pay the principal of the Notes when due and payable; |
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we do not
make a Triggering Payment on the Triggering Payment Date; |
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we
breach any covenant or warranty in the indenture with respect to the Notes and such breach continues for 60 days after we receive
a written notice of such breach from the trustee or we and the trustee receive a written notice of such breach from the holders
of at least 25% of the principal amount of the outstanding Notes; |
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certain
specified events of bankruptcy, insolvency or reorganization occur and remain undischarged
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unstayed for a period of 90 days; and |
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if,
on the last business day of each of 24 consecutive calendar months, any class of senior securities representing any of our indebtedness
shall have an asset coverage (as such term is used in the 1940 Act and, for the avoidance of doubt, including our consolidated
assets and liabilities) of less than 100%. |
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We are required
to notify the trustee within 10 business days after we become aware of the occurrence of any default under the indenture known
to us. The trustee is then required within 90 calendar days of the trustee’s receipt of notice of any default to give to the registered
holders of the Notes notice of all uncured or unwaived defaults known to it. The trustee may withhold notice to the holders of the Notes
of any default, except in the payment of principal or interest, if the trustee in good faith determines the withholding of notice to
be in the interest of the holders of the Notes.
Each year, we will furnish to the
trustee an officer’s certificate of one of our officers certifying that, to their knowledge, we are in compliance with the indenture
and the Notes, or else specifying any default, its status and what actions we are taking or propose to take with respect thereto.
Remedies if an Event of Default
Occurs
If an Event of Default has occurred and
is continuing, the trustee or the holders of not less than 25% of the outstanding principal amount of the Notes may declare the entire
principal amount of the Notes, together with accrued and unpaid interest, if any, to be due and payable immediately by a notice in writing
to us and, if notice is given by the holders of the Notes, the trustee. This is called an “acceleration of maturity.” If
the Event of Default occurs in relation to our filing for bankruptcy or certain other events of bankruptcy, insolvency or reorganization
occur, the principal amount of the Notes, together with accrued and unpaid interest, if any, will automatically, and without any declaration
or other action on the part of the trustee or the holders, become immediately due and payable.
At any time after a declaration of
acceleration of the Notes has been made by the trustee or the holders of the Notes and before any judgment or decree for payment of money
due has been obtained by the trustee, the holders of a majority of the outstanding principal of the Notes, by written notice to us and
the trustee, may rescind and annul such declaration and its consequences if (i) such rescission would not conflict with any judgment
or decree of a court of competent jurisdiction, (ii) we have paid or deposited with the trustee all amounts due and owed with respect
to the Notes (other than principal that has become due solely by reason of such acceleration) and certain other amounts, and (iii) any
other Events of Default have been cured or waived.
At our election, the sole remedy
with respect to an Event of Default due to our failure to comply with certain reporting requirements under the Trust Indenture Act or
under “—Covenants—Reporting” below, for the first 180 calendar days after the occurrence of such Event
of Default, consists exclusively of the right to receive additional interest on the Notes at an annual rate equal to (1) 0.25% for the
first 90 calendar days after such default and (2) 0.50% for calendar days 91 through 180 after such default. On the 181st day after such
Event of Default, if such violation is not cured or waived, the trustee or the holders of not less than 25% of the outstanding principal
amount of the Notes may declare the principal, together with accrued and unpaid interest, if any, on the Notes to be due and payable
immediately. If we choose to pay such additional interest, we must notify the trustee and the holders of the Notes by an officer’s
certificate of our election at any time on or before the close of business on the first business day following the Event of Default and
we shall deliver to the trustee an officer’s certificate (upon which the trustee may rely conclusively) to that effect stating
(i) the amount of such additional interest that is payable and (ii) the date on which such additional interest is payable. Unless and
until a responsible officer of the trustee receives such a certificate stating that additional interest is due, the trustee may assume
without inquiry that no such additional interest is payable. The trustee shall not at any time be under any duty or responsibility to
verify or determine whether any additional interest is payable, or with respect to the nature, extent or calculation of any taxes or
the amount of any additional interest owed, or with respect to the method employed in such calculation of any additional interest.
Before a holder of the Notes is allowed
to bypass the trustee and bring a lawsuit or other formal legal action or take other steps to enforce such holder’s rights relating
to the Notes, the following must occur:
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must give the trustee written notice that the Event of Default has occurred and remains uncured; |
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the holders
of at least 25% of the outstanding principal of the Notes must have made a written request to the trustee to institute proceedings
in respect of such Event of Default in its own name as trustee; |
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such holder
or holders must have offered to the trustee indemnity or security satisfactory to the trustee against the costs, expenses and liabilities
to be incurred in compliance with such request; |
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the trustee
for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and |
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no direction
inconsistent with such written request has been given to the trustee during such 60-day period by holders of a majority of the outstanding
principal of the Notes. |
These limitations
do not apply to a suit instituted by a holder if we default in the payment of the Triggering Payment, principal, premium, if any,
or interest on, the Notes.
No delay or omission in exercising
any right or remedy will be treated as a waiver of that right, remedy or Event of Default.
If
an Event of Default occurs and continues, the trustee is under no obligation to exercise any of its rights or powers under the indenture
at the request or direction of any of the holders, unless such holders have offered the trustee security or indemnity satisfactory to
the trustee.
The holders of a majority in principal
amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the Notes, provided that:
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the direction so given by
the holder is not in conflict with any law or the indenture, nor does it subject the trustee to a risk of personal liability in respect
of which the trustee has not received indemnification satisfactory to it in its sole discretion against all losses, liabilities and
expenses caused by taking or not taking such action; and |
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the trustee may take any
other action deemed proper by the trustee which is not inconsistent with such direction. |
Book-entry and other indirect
holders of the Notes in global form should consult their banks or brokers for information on how to give notice or direction to or make
a request of the trustee and how to declare or cancel an acceleration of maturity.
Waiver of Defaults
The holders
of not less than a majority of the outstanding principal amount of the Notes may on behalf of the holders of all Notes waive any past
default with respect to the Notes other than (i) a default in the payment of the Triggering Payment, principal, premium, if any, or
interest on, the Notes, (ii) a default in the payment of principal, premium, if any, or interest on the Notes when such payments
are due and payable (other than by acceleration as described above), or (iii) in respect of a provision that cannot, per the terms
of the indenture, be modified or amended without the consent of each holder of Notes.
Covenants
In addition to standard covenants
relating to payment of principal and interest, maintaining an office where payments may be made or securities can be surrendered for
payment, payment of taxes by us and related matters, the following covenants will apply to the Notes.
Reporting
We have agreed
to provide to holders of the Notes and the trustee (if at any time when Notes are outstanding we are not subject to the reporting requirements
of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC), our audited annual consolidated financial statements,
within 90 days of our fiscal year end, and unaudited interim condensed consolidated financial statements, within 45 days of our fiscal
quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance
with applicable accounting principles generally accepted in the United States.
The posting or delivery of any such
information, documents and reports to the trustee is for informational purposes only and the trustee’s receipt of such shall not
constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of the covenants under the indenture (as to which the trustee is entitled
to rely exclusively on an officer’s certificate). The trustee shall have no duty to review or analyze reports, information and
documents delivered to it. Additionally, the trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise,
the Company’s compliance with the covenants or with respect to any reports or other documents filed with any protected online data
system or participate on any conference calls.
Asset Coverage
Compliance
We agree that
for the period of time during which the Notes are outstanding, we will not as determined on a consolidated basis (i) make additional
borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage (as
defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities), with respect to
our senior debt securities, for any class of senior securities representing any of our indebtedness, equals at least 150% after such
borrowings, and (ii) declare any cash dividend or distribution upon any class of our capital stock, or purchase any such capital stock
if our asset coverage (as defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities)
for any class of senior securities representing any of our indebtedness, were below 150% at the time of the declaration of the dividend
or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase. For the purposes of determining
“asset coverage” as used in the immediately preceding sentence, any and all indebtedness of the Company as determined
on a consolidated basis, including any outstanding borrowings under the Credit Facilities and any successor or additional credit
facility, shall be deemed a senior security of us.
Maintain
a Credit Rating
We will agree
in the indenture to use our commercially reasonable efforts at our own expense to maintain a rating of the Notes by at least
one NRSRO at all times while the Notes are outstanding provided; that no minimum rating will be required.
Merger, Consolidation or
Sale of Assets
The indenture will provide that we
will not merge or consolidate with or into any other person (other than a merger of a wholly owned subsidiary into us), or sell, transfer,
lease, convey or otherwise dispose of all or substantially all our property in any one transaction or series of related transactions
unless:
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we are the
surviving entity or the entity (if other than us) formed by such merger or consolidation or to which such sale, transfer, lease,
conveyance or disposition is made will be a corporation or limited liability
company organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; |
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the surviving
entity (if other than us) expressly assumes, by supplemental indenture in form reasonably satisfactory to the trustee, executed and
delivered to the trustee by such surviving entity, the due and punctual payment of the principal of, and premium, if any, and interest
on, all the Notes outstanding, and the due and punctual performance and observance of all the covenants and conditions of the indenture
to be performed by us; |
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immediately
after giving effect to such transaction or series of related transactions, no default or Event of Default has occurred and is continuing;
and |
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in the case
of a merger where the surviving entity is other than us, we or such surviving entity will deliver, or cause to be delivered, to the
trustee, an officer’s certificate and an opinion of counsel, each stating that such transaction and the supplemental indenture,
if any, in respect thereto, comply with this covenant and that all conditions precedent in the indenture relating to such transaction
have been complied with; provided that in giving an opinion of counsel, counsel may rely on an officer’s certificate as to
any matters of fact, including as to the satisfaction of the preceding bullet. |
The surviving entity (if other than
us) will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Notes and the indenture,
and the Company will automatically and unconditionally be released and discharged from its obligations under the Notes and the indenture.
Modification or Waiver
There are three types of changes we
can make to the indenture and the Notes:
Changes Not Requiring Approval
We can make certain changes to the
indenture and the Notes without the specific approval of the holders of the Notes. This type is limited to clarifications and certain
other changes that would not adversely affect holders of the Notes in any material respect and include changes:
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to
evidence the succession of another entity, and the assumption by the successor entity of our covenants, agreements
and obligations under the indenture and the Notes; |
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to add to
our covenants such new covenants, restrictions, conditions or provisions for the protection of the holders of the Notes, and to make
the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or
provisions an Event of Default; |
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to modify,
eliminate or add to any of the provisions of the indenture to such extent as necessary to effect the qualification of the indenture
under the Trust Indenture Act, and to add to the indenture such other provisions as may be expressly permitted by the Trust Indenture
Act, excluding however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act; |
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to cure
any ambiguity or to correct or supplement any provision contained in the indenture or in any supplemental indenture which may be
defective or inconsistent with other provisions; |
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to secure
the Notes or add guarantees of our obligations under the indenture and the Notes; |
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to evidence
and provide for the acceptance and appointment of a successor trustee and to add or change any provisions of the indenture as necessary
to provide for or facilitate the administration of the trust by more than one trustee; and |
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to make
provisions in regard to matters or questions arising under the indenture, so long as such other provisions do not materially affect
the interest of any holder of the Notes. |
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Changes Requiring Approval
of Each Holder
We cannot make certain changes to
the Notes without the specific approval of each holder of the Notes. The following is a list of those types of changes:
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changing
the stated maturity of the principal of, or any installment of interest on, any Note; |
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reducing
the principal amount or rate of interest of any Note; |
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amend
or change the calculation of the Triggering Payment or the right of a holder of the Notes to receive such Triggering Payment; |
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changing
the place of payment where, or the coin or currency in which, any Note or any interest is payable; |
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impairing
the right to institute suit for the enforcement of any payment on or after the date on which it is due and payable; |
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reducing
the percentage in principal amount of holders of the Notes whose consent is needed to modify or amend the indenture; and |
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reducing
the percentage in principal amount of holders of the Notes whose consent is needed to waive compliance with certain provisions of
the indenture or to waive certain defaults. |
Changes Requiring Majority
Approval
Any other change to the indenture
and the Notes would require the approval by holders of not less than a majority in aggregate principal amount of the outstanding Notes.
Consent from holders to any change
to the indenture or the Notes must be given in writing. The consent of the holders of the Notes is not necessary under the indenture
to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.
Further Details Concerning
Voting
The amount of Notes deemed to be outstanding
for the purpose of voting will include all Notes authenticated and delivered under the indenture as of the date of determination except:
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Notes cancelled
by the trustee or delivered to the trustee for cancellation; |
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Notes
for which we have deposited with the trustee or paying agent in trust money for their payment or redemption and, if money has been
set aside for the redemption of the Notes, notice of such redemption has been duly given to the holders of the Notes pursuant
to the indenture to the satisfaction of the trustee; |
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Notes held
by the Company, its subsidiaries or any other entity which is an obligor under the Notes, unless such Notes have been pledged in
good faith and the pledgee is not the Company, an affiliate of the Company or an obligor under the Notes; |
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Notes which
have undergone full defeasance, as described below; and |
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Notes which
have been paid or exchanged for other Notes due to such Notes loss, destruction or mutilation, with the exception of any such Notes
held by protected purchasers who have presented proof to the trustee that such Notes are valid obligations of the Company. |
We will generally be entitled to
set any day as a record date for the purpose of determining the holders of the Notes that are entitled to vote or take other action under
the indenture, and the trustee will generally be entitled to set any day as a record date for the purpose of determining the holders
of the Notes that are entitled to join in the giving or making of any notice of default, any declaration of acceleration of maturity
of the Notes, any request to institute proceedings or the reversal of such declaration. If we or the trustee set a record date for a
vote or other action to be taken by the holders of the Notes, that vote or action can only be taken by persons who are holders of the
Notes on the record date and, unless otherwise specified, such vote or action must take place on or prior to the 180th day after the
record date. We may change the record date at our option, and we will provide written notice to the trustee and to each holder of the
Notes of any such change of record date.
Discharge
The indenture will provide that we
can be discharged from our obligations with respect to the Notes, except for specified obligations, including:
| · | obligations to register the
transfer or exchange of the Notes; |
| · | obligations to replace stolen,
lost or mutilated Notes; |
| · | obligations to maintain paying
agencies; |
| · | obligations to hold monies
for payment in trust; and |
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rights, protections, immunities and indemnities of the trustee and the Company’s obligations
in respect thereof, |
if (i) (x)
all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment
money has been deposited in trust and thereafter repaid to the Company or discharged from such trust, have been delivered to the trustee
for cancellation, or (y) all Notes that have not theretofore been delivered to the trustee for cancellation (1) have become due and payable,
(2) will become due and payable at their stated maturity within one year, or (3) are subject to redemption within one year (and we have
entered into arrangements reasonably satisfactory to the trustee for the giving of notice of redemption to the holders), and we have
paid or deposited with the trustee money or U.S. government obligations, or a combination thereof,
sufficient (to the extent of any U.S. government obligations, in the opinion of a nationally recognized firm of independent public accountants,
investment bank or appraisal firm, to generate enough cash to make interest, principal and any other applicable payments on the Notes
on the applicable due date) to pay all the principal of, any premium and interest on, the Notes to the date of deposit (in the case
of Notes that have become due and payable) or to the stated maturity or redemption date, as the case may be, and delivered
irrevocable instructions to the trustee to apply the deposited cash and/or U.S. government obligations toward the payment of the
Notes at the maturity or on the redemption date, as the case may be; (ii) we have paid or caused to be paid all other sums
payable under the indenture; and (iii) we deliver an officer’s certificate and opinion of counsel to the trustee
stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied
with.
“U.S.
government obligations” means securities that are (1) direct obligations of the United States for the payment of which
its full faith and credit is pledged, or (2) obligations of a person controlled or supervised by and acting as an agency or instrumentality
of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States,
which in either case, are not callable or redeemable by the issuer thereof and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. government obligations or a specific
payment of principal of or interest on any such U.S. government obligations held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. government obligations
or the specific payment of principal of or interest on the U.S. government obligations evidenced by such depository receipt.
Defeasance
The following defeasance provisions
will be applicable to the Notes.
Covenant Defeasance
Under the
indenture, we have the option to take the actions described below and be released from some of the restrictive covenants under the
indenture under which the Notes were issued. This is called “covenant
defeasance.” The consequences to the holders of the Notes would be that, while they would no longer benefit from certain
covenants under the indenture, and while the Notes could not be accelerated for any reason, the holders of the Notes nonetheless
would be guaranteed to receive the principal and interest owed to them. In order to achieve covenant defeasance, the following must
occur:
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we must
irrevocably deposit or cause to be deposited with the trustee as trust funds for the benefit of all holders of the Notes cash, U.S.
government obligations or a combination of cash and U.S. government obligations sufficient, without reinvestment, in the opinion
of a nationally recognized firm of independent public accountants, investment bank or appraisal firm, to generate enough cash to
make interest, principal and any other applicable payments on the Notes on their various due dates; |
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we must
deliver to the trustee an opinion of counsel stating that under U.S. federal income tax law, we may make the above deposit and covenant
defeasance without causing beneficial owners of the Notes to be taxed on the Notes differently
than if those actions were not taken; |
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we must
deliver to the trustee an officer’s certificate stating that the Notes, if then listed on any securities exchange, will not
be delisted as a result of the deposit; |
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no default
or Event of Default with respect to the Notes has occurred and is continuing, and no defaults or Events of Defaults related to bankruptcy,
insolvency or organization occurs during the 90 days following the deposit; |
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the covenant
defeasance must not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act; |
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the covenant
defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any other material agreements
or instruments to which we are a party; |
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the covenant
defeasance must not result in the trust arising from the deposit constituting an investment company within the meaning of the 1940
Act, unless such trust will be registered under the Investment Company Act or exempt from registration thereunder; and |
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we must
deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent with
respect to the covenant defeasance have been complied with. |
Full Defeasance
Under the indenture,
we have the option to take the actions described below and be discharged from our obligations under the Notes (except for specified
surviving obligations). This is called “full defeasance.” If there is a change in U.S. federal income tax law, we can
legally release ourselves from all payment and other obligations on the Notes if we take the following actions below:
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we must
irrevocably deposit or cause to be deposited with the trustee as trust funds for the benefit of all holders of the Notes cash, U.S.
government obligations or a combination of cash and U.S. government obligations
sufficient, without reinvestment, in the opinion of a nationally recognized firm, of independent public accountants, investment bank
or appraisal firm, to generate enough cash to make interest, principal and any other applicable payments on the Notes on their various
due dates; |
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we
must deliver to the trustee an opinion of counsel confirming that there has been a change to the current U.S. federal income tax
law or the Internal Revenue Service (the “IRS”) has published a ruling or
we have received a ruling from the IRS, and based on that change or ruling, we are permitted to make the above
deposit without causing beneficial owners of the Notes to be taxed on the Notes any
differently than if we did not make the deposit; |
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we must
deliver to the trustee an officer’s certificate stating that the Notes, if then listed on any securities exchange, will not
be delisted as a result of the deposit; |
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no default
or Event of Default with respect to the Notes has occurred and is continuing and no defaults or Events of Defaults related to bankruptcy,
insolvency or organization occurs during the 90 days following the deposit; |
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the full
defeasance must not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act; |
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the full
defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any other material agreements
or instruments to which we are a party; |
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the full
defeasance must not result in the trust arising from the deposit constituting an investment company within the meaning of the Investment
Company Act unless such trust will be registered under the Investment Company Act or exempt from registration thereunder; and |
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we must
deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent with
respect to the full defeasance have been complied with. |
In the event that the trustee is
unable to apply the funds held in trust to the payment of obligations under the Notes by reason of a court order or governmental injunction
or prohibition, then those of our obligations discharged under the full defeasance or covenant defeasance will be revived and reinstated
as though no deposit of funds had occurred, until such time as the trustee is permitted to apply all funds held in trust under the procedure
described above to the payment of obligations under the Notes. However, if we make any payment of principal or interest on the Notes
to the holders, we will have the right to receive such payments from the trust in the place of the holders.
Counsel may rely on an officer’s
certificate as to any matters of fact in giving an opinion of counsel in connection with the full defeasance or covenant defeasance provisions.
Listing
We have applied to list the Notes
on the Nasdaq under the symbol “SWKHL.” If the application is approved, we expect trading in the Notes on the Nasdaq to begin
within 30 business days of the date of the original issue date. The Notes are expected to trade “flat,” meaning that purchasers
will not pay and sellers will not receive any accrued and unpaid interest on the Notes that is not included in the trading price thereof.
Governing Law
The indenture and the Notes will be
governed by and construed in accordance with the laws of the State of New York.
Global Notes; Book-Entry Issuance
The Notes will be issued in the form
of one or more global certificates, or “Global Notes,” registered in the name of The Depository Trust Company, or “DTC,”
or its nominee. DTC has informed us that its nominee will be Cede & Co. Accordingly, we expect Cede & Co. to be the initial registered
holder of the Notes. No person that acquires a beneficial interest in the Notes will be entitled to receive a certificate representing
that person’s interest in the Notes except as described herein. Unless and until definitive securities are issued under the limited
circumstances described below, all references to actions by holders of the Notes will refer to actions taken by DTC upon instructions
from its participants, and all references to payments and notices to holders will refer to payments and notices to DTC or Cede &
Co., as the registered holder of these securities.
DTC has informed us that it is a
limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York
Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues,
and money market instruments from over 100 countries that DTC’s participants, or “Direct Participants,” deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates
the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository
Trust & Clearing Corporation, or “DTCC.”
DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is
owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants” and, together with Direct Participants,
“Participants”). DTC has an S&P rating of AA+ and a Moody’s rating of Aaa. The DTC Rules applicable to its participants
are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of the Notes under the
DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC’s records. The ownership
interest of each actual purchaser of each Note, or the “Beneficial Owner,” is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,
however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests
in the Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except as described herein.
To facilitate subsequent transfers,
all Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or
such other name as may be requested by an authorized representative of DTC. The deposit of the Notes with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts the
Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications
by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Redemption notices will be sent to DTC.
If less than all of the Notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct
Participant in the Notes to be redeemed.
Neither DTC nor Cede & Co. (nor
any other DTC nominee) will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC’s
applicable procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited
on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds,
distributions and interest payments on the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from us or the applicable trustee or depositary on the payment date in accordance with their respective holdings shown
on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with the Notes held for the accounts of customers in bearer form or registered in “street name,” and will
be the responsibility of such Participant and not of DTC nor its nominee, the applicable trustee or depositary, or us, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and interest
payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of
us or the applicable trustee or depositary. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct Participants and Indirect Participants.
The information in this section concerning
DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for
the accuracy thereof.
None of the Company, the trustee,
any depositary, or any agent of any of them will have any responsibility or liability for any aspect of DTC’s or any participant’s
records relating to, or for payments made on account of, beneficial interests in a Global Note, or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
Termination of a Global Note
If a Global Note is terminated for
any reason, interest in it will be exchanged for certificates in non-book-entry form as certificated securities. After such exchange,
the choice of whether to hold the certificated Notes directly or in street name will be up to the investor. Investors must consult their
own banks or brokers to find out how to have their interests in a Global Note transferred on termination to their own names, so that
they will be holders of the Notes. See “—Form, Exchange and Transfer of Certificated Registered Securities.”
Payment and Paying Agents
We will pay interest to the person
listed in the register maintained by the registrar as the owner of the Notes at the close of business on the record date for the applicable
interest payment date, even if that person no longer owns the Note on the interest payment date. Because we pay all the interest for
an interest period to the holders on the record date, holders buying and selling the Notes must work out between themselves the appropriate
purchase price. The most common manner is to adjust the sales price of the Notes to prorate interest fairly between buyer and seller
based on their respective ownership periods within the particular interest period.
Payments on Global Notes
We will make
payments on the Notes so long as they are represented by Global Notes in accordance with the applicable policies of the depositary in
effect from time to time. Under those policies, payments will be made directly to the depositary, or its nominee, and not to any
indirect holders who own beneficial interest in the Global Notes. An indirect holder’s right to those payments will be governed
by the rules and practices of the depositary and its participants.
Payments on Certificated
Securities
In the event
the Notes become represented by certificated, non-global Notes, we will make payments on the Notes as follows. We will pay interest
that is due on an interest payment date by check mailed on the interest payment date to the holder of the Note at his or her address
shown on the register maintained by the registrar as of the close of business on the record date. We will make all payments of principal
by check or wire transfer at the office of the trustee in the contiguous United States and/or at other offices that may be specified
in the indenture or a notice to holders against surrender of the Note.
Payment When Offices Are
Closed
If any payment is due on the Notes
on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business
day in this situation will be treated under the indenture as if they were made on the original due date. Such payment will not result
in a default under the Notes or the indenture, and no interest will accrue on the payment amount from the original due date to the next
day that is a business day.
Book-entry and other indirect
holders should consult their banks or brokers for information on how they will receive payments on the Notes.
Form, Exchange and Transfer
of Certificated Registered Securities
Notes in physical,
certificated form will be issued and delivered in exchange for beneficial interests in a Global Note to each person that DTC identifies
as an owner of a beneficial interest in such Global Note only if:
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DTC notifies
us at any time that it is unwilling or unable to continue as depositary for the Global Notes; |
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DTC ceases
to be registered as a clearing agency under the Exchange Act; or |
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an Event
of Default with respect to such Global Notes has occurred and is continuing. |
Holders may
exchange their certificated securities for Notes of smaller denominations or combined into fewer Notes of larger denominations, as long
as the total principal amount is not changed and as long as the denomination is equal to or greater than $25 and multiples of $25 in
excess thereof.
Holders may exchange or transfer
their certificated securities at the office of the transfer agent. We have appointed the trustee to act as our transfer agent for registering
the Notes in the name of holders transferring Notes. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts.
Holders will not be required to pay
a service charge for any registration of transfer or exchange of their certificated securities, but they may be required to pay any tax
or other governmental charge associated with the registration of transfer or exchange. The transfer or exchange will be made only if
our transfer agent is satisfied with the holder’s proof of legal ownership.
If we redeem any of the Notes, we
may block the transfer or exchange of those Notes selected for redemption during the period beginning 15 days before the day we deliver
the notice of redemption and ending on the day of such delivery, in order to determine or fix the list of holders. We may also refuse
to register transfers or exchanges of any certificated Notes selected for redemption, except that we will continue to permit transfers
and exchanges of the unredeemed portion of any Note that will be partially redeemed.
About the Trustee
Wilmington Trust, National Association
will be the trustee under the indenture and will be the paying agent, transfer agent and registrar for the Notes. The trustee may resign
or be removed with respect to the Notes provided that a successor trustee is appointed.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
For additional information concerning Certain
Relationships and Related Party Transactions, see our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March
31, 2023. See “Incorporation of Certain Information by Reference.”
MATERIAL U.S. FEDERAL
TAX CONSIDERATIONS
General
The following is a summary of the
material U.S. federal income tax consequences of the ownership and disposition of the Notes. This summary applies only to Notes held
as capital assets (generally, assets held for investment) by those initial holders who purchase Notes at their “issue price,”
which will equal the first price at which a substantial amount of the Notes is sold for money to the public (not including bond houses,
brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). This summary is
based on the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), administrative pronouncements, judicial
decisions and applicable U.S. Treasury regulations, changes to any of which subsequent to the date of this prospectus may affect the
U.S. federal income tax consequences described herein. This summary does not describe all of the U.S. federal income tax consequences
that may be relevant to holders in light of their particular circumstances or to holders subject to special rules, such as certain financial
institutions, tax-exempt organizations, insurance companies, dealers in securities or foreign currencies, traders in securities that
have elected the mark-to-market method of accounting, certain former citizens or long-term residents of the United States, persons holding
Notes as part of a straddle, hedge or other integrated transaction, U.S. Holders (as defined below) whose functional currency is not
the U.S. dollar, partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes, or persons
subject to the alternative minimum tax.
If an entity or arrangement treated
as a partnership for U.S. federal income tax purposes holds Notes, the U.S. federal income tax treatment of a partner generally will
depend upon the status of the partner and the activities of the partnership. Partnerships and partners of partnerships considering an
investment in Notes are urged to consult their tax advisers as to the particular U.S. federal income tax consequences to them of holding
and disposing of the Notes. Further, this summary does not address the U.S. federal estate and gift tax, the Medicare tax on net investment
income or the state, local and non-U.S. tax consequences of holding and disposing of the Notes.
Certain
Contingent Payments
In
certain circumstances, we may redeem the Notes in exchange for payments by us in excess of stated interest or principal or at times earlier
than the final maturity. See “Description of Notes—Optional Redemption” and “Description of
Notes—Purchase of Notes upon a Triggering Event” above. The possibility of such redemptions may implicate special rules
under Treasury regulations governing “contingent payment debt instruments.” According to those Treasury regulations, the
possibility that we will be required to make such a contingent payment on the Notes will not affect the amount of income a holder recognizes
in advance of the payment if there is only a remote chance as of the date the Notes are issued that such payment will be made. We believe
and intend to take the position that the contingencies on the Notes will not cause the “contingent payment debt instrument”
rules of the Treasury regulations to apply to the Notes. Our position that the “contingent payment debt instrument” rules
of the Treasury regulations will not apply to the Notes is binding on a holder unless such holder discloses its contrary position to
the IRS in the manner required by applicable Treasury regulations. Our position is not, however, binding on the IRS, and if the
IRS were to challenge this position successfully, a holder might be required to, among other things, accrue interest income based on
a projected payment schedule and comparable yield, which may be in excess of stated interest, and treat as ordinary income rather than
capital gain any income realized on the taxable disposition of a Note. In the event a contingency on the Notes occurs, it could affect
the amount, timing and character of the income or loss recognized by a holder. Prospective holders should consult their tax advisers
regarding the tax consequences if the Notes were treated as contingent payment debt instruments. The remainder of this discussion assumes
that the Notes will not be considered contingent payment debt instruments.
THIS SUMMARY IS FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS WITH RESPECT TO THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NOTES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION
OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Tax Consequences to U.S. Holders
As used herein, the term “U.S.
Holder” means, for U.S. federal income tax purposes, a beneficial owner of a Note that is: (i) an individual citizen or resident
of the United States; (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized
in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source; or (iv) a trust if (1) a United States court can exercise primary supervision
over the administration of the trust and one or more “United States persons” within the meaning of Section 7701(a)(30) of
the Code can control all substantial decisions of the trust, or (2) the trust was in existence on August 20, 1996, and has elected to
continue to be treated as a United States person.
Payments of Interest
Stated interest paid on a Note generally
will be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. Holder’s
regular method of accounting for U.S. federal income tax purposes. It is expected, and the rest of this discussion assumes, the Notes
are sold in this offering at par, or at a de minimis discount from par, such that the Notes will be issued without original issue
discount for U.S. federal income tax purposes. For this purpose, a discount from par is considered de minimis if it is less than 0.25%
of the stated redemption price at maturity of the Notes (generally, their principal amount) multiplied by the number of complete years
to maturity from their original issue date.
Sale, Exchange, Retirement or Other
Taxable Disposition of the Notes
Upon the sale, exchange, retirement
or other taxable disposition of a Note, a U.S. Holder will recognize taxable gain or loss equal to the difference, if any, between the
amount realized on the sale, exchange, retirement or other taxable disposition and the U.S. Holder’s tax basis in the Note at that
time. For these purposes, the amount realized generally will include the sum of the cash and the fair market value of any property received
in exchange for the Note. However, the amount realized does not include any amount attributable to accrued but unpaid interest, which
will be treated as ordinary interest income, as described above in “—Payments of Interest,” to the extent not
previously included in income by the U.S. Holder. A U.S. Holder’s tax basis in a Note generally will equal the cost of the Note
to the U.S. Holder. Gain or loss realized on the sale, exchange, retirement or other taxable disposition of a Note generally will be
capital gain or loss and will be long-term capital gain or loss if at the time of the sale, exchange, retirement or other taxable disposition
the Note has been held for more than one year. Under current law, long-term capital gains of certain non-corporate holders generally
are taxed at preferential rates. The deductibility of capital losses is subject to limitations.
Backup Withholding and Information
Reporting
Information returns generally will
be filed with the IRS in connection with payments on the Notes and the proceeds from a sale or other disposition of the Notes. A U.S.
Holder generally will be subject to backup withholding on these payments if the U.S. Holder fails to provide its taxpayer identification
number to the paying agent and comply with certain certification procedures or otherwise establish an exemption from backup withholding.
Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as
a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund of any excess
amounts withheld, provided that the required information is timely furnished to the IRS.
Tax Consequences to Non-U.S.
Holders
As used herein, the term “Non-U.S.
Holder” means, for U.S. federal income tax purposes, a beneficial owner of a Note that is an individual, corporation, estate or
trust that is not a U.S. Holder (as defined above).
Payments of Interest
Subject to the discussions below under
“—Backup Withholding and Information Reporting” and “—FATCA Withholding,” payments
of interest on the Notes by the Company or any applicable withholding agent to any Non-U.S. Holder generally will not be subject to U.S.
federal income tax or withholding tax, provided that: (a) the Non-U.S. Holder does not own, actually or constructively, 10% or more of
the total combined voting power of all classes
of stock of the Company that are entitled to vote; (b) the Non-U.S. Holder is not a controlled
foreign corporation related, directly or indirectly, to the Company through stock ownership; (c) the
Non-U.S. Holder is not a bank receiving interest described in section 881(c)(3)(A) of the Code; and (d) the Non-U.S. Holder either
(x) certifies on IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form), under penalties of perjury, that it is not a United
States person or (y) holds the Notes through certain foreign intermediaries and satisfies the certification requirements of the applicable
U.S. Treasury regulations.
Subject to the discussion below under
“—United States Trade or Business,” a Non-U.S. Holder that does not qualify for exemption from withholding as
described above generally will be subject to U.S. federal withholding tax at a rate of 30% on payments of interest on the Notes. A Non-U.S.
Holder may be entitled to the benefits of an income tax treaty under which interest on the Notes is subject to an exemption from, or
reduced rate of, U.S. federal withholding tax, provided such holder provides to the applicable withholding agent a properly executed
IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form) claiming the exemption or reduction and complies with any other applicable
procedures.
A Non-U.S.
Holder is urged to consult its tax adviser regarding the availability of the above exemptions and the procedure for obtaining such
exemptions, if available. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge or
reason to know that the statements on the form are false.
Sale, Exchange, Retirement or Other
Taxable Disposition of the Notes
Subject to the discussion below under
“—Backup Withholding and Information Reporting” and “—FATCA Withholding,” a Non-U.S.
Holder of a Note generally will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale, exchange,
retirement or other taxable disposition of the Note, unless:
|
(i) |
the gain is effectively connected
with the conduct by the Non-U.S. Holder of a trade or business in the United States, subject to an applicable income tax treaty providing
otherwise; or |
|
(ii) |
the Non-U.S. Holder is an
individual who is present in the United States for 183 or more days in the taxable year of the disposition and certain other requirements
are met. |
If you are a Non-U.S. Holder described
in (i) above, you generally will be subject to tax as described below in “—United States Trade or Business.”
If you are a Non-U.S. Holder described in (ii) above, you generally will be subject to a flat 30% (or lower applicable treaty rate) U.S.
federal income tax on the gain derived from the sale, exchange, retirement or other taxable disposition of a Note, which may be offset
by certain U.S. source capital losses.
United States Trade or Business
If a Non-U.S. Holder of a Note is
engaged in a trade or business in the United States, and if income or gain on the Note is effectively connected with the conduct of this
trade or business, the Non-U.S. Holder, although exempt from the withholding tax on interest discussed above, generally will be taxed
on such income or gain in the same manner as a U.S. Holder (see “—Tax Consequences to U.S. Holders” above),
subject to an applicable income tax treaty providing otherwise. Such a Non-U.S. Holder will be required to provide to the applicable
withholding agent a properly executed IRS Form W-8ECI in order to claim an exemption from withholding tax on interest. In addition to
regular U.S. federal income tax, Non-U.S. Holders that are corporations may be subject to a U.S. branch profits tax on their effectively
connected earnings and profits, subject to adjustments, at a 30% rate (or lower applicable treaty rate, if any). Non-U.S. Holders engaged
in a trade or business in the United States should consult their tax advisers with respect to other U.S. tax consequences of the ownership
and disposition of Notes.
Backup Withholding and Information
Reporting
Information returns generally will
be filed with the IRS in connection with payments of interest on the Notes. Copies of the information returns reporting such interest
payments and any withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under
the provisions of an applicable income tax treaty or other agreement. Unless the Non-U.S. Holder complies with certification procedures
to establish that it is not a United States person, information returns may be filed with the IRS in connection with the proceeds
from
a sale or other disposition of the Notes, and the Non-U.S. Holder may be subject to U.S. backup withholding on payments on the Notes
or on the proceeds from a sale or other disposition of the Notes. Compliance with the certification procedures required as to non-U.S.
status in order to claim the exemption from withholding tax on interest described above will satisfy the certification requirements necessary
to avoid backup withholding as well. Backup withholding is not an additional tax. The amount of any backup withholding from a payment
to a Non-U.S. Holder will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability and may entitle
the Non-U.S. Holder to a refund of any excess amounts withheld, provided that the required information is timely furnished to the IRS.
FATCA Withholding
Sections
1471 through 1474 of the Code, the U.S. Treasury regulations promulgated thereunder, and IRS administrative guidance, which are commonly
referred to as the “Foreign Account Tax Compliance Act” (“FATCA”) generally impose withholding at a rate
of 30% in certain circumstances on interest payable on the Notes held by or through certain financial institutions (including investment
funds), unless such institution (a) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information
with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons or by certain non-U.S.
entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (b) if required under an intergovernmental
agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will
exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign
country may modify these requirements. Accordingly, the entity through which the Notes are held will affect the determination of whether
such withholding is required. Similarly, interest payable on the Notes held by an investor that is a non-financial non-U.S. entity
that does not qualify under certain exemptions generally will be subject to withholding at a rate of 30%, unless such entity either
(a) certifies that such entity does not have any “substantial United States owners” or (b) provides certain information regarding
the entity’s “substantial United States owners,” which we will in turn provide to the U.S. Department of the Treasury.
Withholding
under FATCA would also have applied to payments of gross proceeds from dispositions of Notes after December 31, 2018. However, proposed
U.S. Treasury regulations would eliminate FATCA withholding on gross proceeds from a disposition of Notes. In the preamble to such proposed
regulations, the U.S. Treasury Department stated that taxpayers generally may rely on these proposed U.S. Treasury regulations until
final U.S. Treasury regulations are issued. A Non-U.S. Holder should consult its tax adviser regarding the possible implications
of FATCA on an investment in the Notes.
UNDERWRITING
B. Riley is acting as book-running
manager and representative of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting
agreement among us and the underwriters dated , 2023 (the “Underwriting Agreement”), we have agreed to sell to the underwriters,
and each of the underwriters has agreed, severally and not jointly, to purchase from us, the principal amount of Notes set forth opposite
its name below.
Underwriter | |
| Principal
Amount of Notes | |
B. Riley Securities, Inc. | |
$ | | |
Total | |
$ | | |
Subject to the terms and conditions
set forth in the Underwriting Agreement, the underwriters have agreed, severally and not jointly, to purchase all of the Notes sold under
the Underwriting Agreement. These conditions include, among others, the continued accuracy of representations and warranties made by
us in the Underwriting Agreement, delivery of legal opinions and the absence of any material changes in our assets, business or prospects
after the date of this prospectus.
We have granted to the underwriters
the option to purchase up to an additional $ of Notes at the public offering price, less the underwriting discounts (the “Option”).
If any Notes are purchased pursuant to the Option, the underwriters will, severally but not jointly, purchase the Notes in approximately
the same proportions as set forth in the above table. A purchaser who acquires any Notes forming part of the underwriters’ Option
acquires such Notes under this prospectus, regardless of whether the position is ultimately filled through the exercise of the Option
or secondary market purchases.
We have agreed to indemnify the underwriters
against certain liabilities, including, among other things, liabilities under the Securities Act or to contribute to payments the underwriters
may be required to make in respect of those liabilities.
We expect to
deliver the Notes against payment for such Notes on or about , 2023, which
will be the second business day following the trade date of the Notes.
Discounts and Expenses
B. Riley has
advised us that the underwriters propose initially to offer the Notes to the public at the public offering price and to dealers at that
price less a concession not in excess of $ per Note. After the underwriters have
made a reasonable effort to sell all of the Notes at the offering price, such offering price may be decreased and may be further changed
from time to time to an amount not greater than the offering price set forth herein, and the compensation realized by the underwriters
will effectively be decreased by the amount that the price paid by purchasers for the Notes is less than the original offering price.
Any such reduction will not affect the net proceeds received by us. The underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
The following table shows the per
Note price to the public and price to the dealers and total underwriting discount that we are to pay to the underwriters in connection
with this offering assuming no exercise of the Option and assuming a full exercise of the option.
| |
| No
Exercise of Option | | |
| Full
Exercise of Option | |
| |
| Price
to the Public | | |
| Price
to the Dealers(1) | | |
| Underwriting
Discount(2) | | |
| Net
Proceeds(3) | | |
| Price
to the Public | | |
| Price
to the Dealers(1) | | |
| Underwriting
Discount(2) | | |
| Net
Proceeds(3) | |
Per
Note | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
Total | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
|
(1) |
The public offering price
less a weighted average concession of $ per Note. |
|
(2) |
Pursuant to the terms of the
Underwriting Agreement, the underwriters will receive a discount equal to
% per Note. |
|
(3) |
After deducting the underwriting discount but
before deducting the Structuring Fee and expenses of the offering, estimated to be $ . |
We have agreed
to reimburse the underwriters for their reasonable out-of-pocket expenses, including attorneys’ fees, up to $125,000. In
addition to the underwriting discounts, we have agreed to pay to B. Riley a structuring fee (the “Structuring Fee”) equal
to 1% of the gross offering proceeds, which Structuring Fee is to be paid in cash at the closing of this offering, and any additional
closing in connection with the exercise of the Option. We estimate that the total expenses of this offering, including registration,
filing and listing fees, printing fees, legal and accounting expenses and underwriter reimbursements, but excluding underwriting discounts,
commissions and the Structuring Fee, will be approximately $ .
Stock Exchange Listing
We will apply
to list the Notes on the Nasdaq. If the application is approved, trading of the Notes on the Nasdaq is expected to begin within 30 business
days after the date of initial delivery of the Notes. We have been advised by the underwriters that they presently intend to make a market
in the Notes after completion of the offering pending any listing of the Notes on the Nasdaq. However, the underwriters will have
no obligation to make a market in the Notes and may cease market-making activities at any time without any notice, in their sole discretion.
Accordingly, an active trading market on the Nasdaq for the Notes may not develop or, even if one develops, may not last, in which case
the liquidity and market price of the Notes could be adversely affected, the difference between bid and asked prices could be substantial
and your ability to transfer the Notes at the time and price desired will be limited.
Price Stabilization, Short Positions
Until the distribution of the Notes
is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our Notes. However, the representative
may engage in transactions that have the effect of stabilizing the price of the Notes, such as purchases and other activities that peg,
fix or maintain that price.
In connection with this offering,
the underwriters may bid for or purchase and sell our Notes in the open market. These transactions may include short sales and purchases
on the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of
our Notes than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater
than the Underwriters’ option to purchase additional Notes in this offering. The underwriters may close out any covered short position
by either exercising their option to purchase additional Notes or purchasing Notes in the open market. In determining the source of Notes
to close out the covered short position, the underwriters will consider, among other things, the price of Notes available for purchase
in the open market as compared to the price at which they may purchase additional Notes pursuant to the option granted to them. “Naked”
short sales are sales in excess of the option to purchase additional Notes. The underwriters must close out any naked short position
by purchasing Notes in the open market. A naked short position is more likely to be created if the underwriters are concerned that there
may be downward pressure on the price of our Notes in the open market after pricing that could adversely affect investors who purchase
in this offering.
Similar to other purchase transactions,
the underwriters’ purchases to cover the syndicate short sales and other activities may have the effect of raising or maintaining
the market price of the Notes or preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes
may be higher than the price that might otherwise exist in the open market. If these activities are commenced, they may be discontinued
at any time. The underwriters may conduct these transactions on the Nasdaq, in the over-the-counter market or otherwise.
The underwriters also may impose a
penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by
it because the representative has repurchased Notes sold by or for the account of such underwriter in stabilizing or short covering transactions.
Neither we nor any of the underwriters
make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on
the price of our Notes. In addition, neither we nor any of the underwriters make any representation that the representative will engage
in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Electronic Offer, Sale and Distribution
of Notes
This prospectus in electronic format
may be made available on websites maintained by one or more of the underwriters, and the underwriters may distribute the prospectus electronically.
Other than this prospectus in electronic
format, the information on any underwriter’s or any selling group member’s website and any information contained in any other
website maintained by an underwriter or any selling group member is not part of this prospectus or the registration statement of which
this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or any selling group member in its capacity
as underwriter or selling group member and should not be relied upon by investors.
Additional
Relationships
The underwriters and their respective
affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and
investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and
other financial and non-financial activities and services. Certain of the underwriters and
their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities
with relationships with us, for which they received or will receive customary fees and expenses.
In the ordinary
course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may
purchase, sell or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit
default swaps and other financial instruments for their own account and for the accounts of their customers, and any investment and trading
activities may involve or relate to assets, securities or instruments of ours (directly, as collateral securing other obligations or
otherwise) or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate
independent investment recommendations, market color or trading ideas or publish or express independent research views in respect of
our assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long or short positions
in our assets, securities and instruments.
LEGAL MATTERS
Goodwin Procter LLP will pass upon
certain legal matters for us in connection with the offering of the Notes. The underwriters are being represented in connection with
the offering by Duane Morris LLP.
EXPERTS
The consolidated
financial statements of SWK Holdings Corporation as of December 31, 2022 and 2021 and for each of the two years in the period ended December
31, 2022, incorporated in its Registration Statement on Form S-1 by reference to its Annual Report on Form 10-K for the year ended
December 31, 2022, have been so incorporated in reliance on the report of BPM LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which constitutes
a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which
is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information
with respect to us and our Notes, we refer you to the registration statement, including the exhibits filed as a part of the registration
statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily
complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or
document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in
all respects by the filed exhibit.
We are subject to the informational
requirements of the Exchange Act, and, in accordance with the Exchange Act, file reports, proxy and information statements and other
information with the SEC. The SEC maintains a website that contains reports, proxy statements and other information about issuers, like
us, that file electronically with the SEC. The address of that website is www.sec.gov. We also anticipate making these documents publicly
available, free of charge, on our website as soon as reasonably practicable after filing such documents with the SEC. Information on,
or accessible through, our website is not part of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate
by reference” certain of the information that we file with it after the date of the filing of the registration statement of which
this prospectus forms a part, which means that we can disclose important information to you by referring you to the documents containing
that information. The information incorporated by reference is considered to be part of this prospectus, and later information that we
file with the SEC will automatically update and supersede this information.
The documents listed below and any future
filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any information furnished pursuant
to Item 2.02 or Item 7.01 on any Current Report on Form 8-K and exhibits filed on such form that are related to such items unless such
Form 8-K expressly provides to the contrary), including all such documents we may file with the SEC after the date on which the registration
statement that includes this prospectus was initially filed with the SEC and prior to the effectiveness of the registration statement
and all such documents we may file with the SEC after the effectiveness of the registration statement, are incorporated by reference
in this prospectus until the termination of the offering under this registration statement:
|
· |
Our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023 (File No. 001-39184); |
|
|
|
|
· |
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on
May 10, 2023 (File No. 001-39184);
|
|
· |
Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on
August 10, 2023 (File No. 001-39184);
|
|
· |
Our
Current Reports on Form 8-K, filed with the SEC on January 3, 2023, March 15, 2023, May 16, 2023, June 14, 2023, and June 30, 2023; and
|
|
· |
Our
Definitive Proxy Statement filed with the SEC on May 1, 2023, pursuant to Section 14 of the Exchange Act. |
We will provide a copy of these filings
(including certain exhibits that are specifically incorporated by reference therein) to each person, including any beneficial owner,
to whom a prospectus is delivered. You may request a copy of any or all of these filings at no cost, by writing or calling us at:
SWK Holdings
Corporation
5956 Sherry Lane, Suite
650
Dallas, TX 75225
Copies of certain information filed
by us with the SEC, including our Annual Report and Quarterly Reports, are also available on our website at www.swkhold.com. Information
contained on our website or that can be access through our website is not incorporated by reference herein.
You should read the information relating
to us in this prospectus together with the information in the documents incorporated by reference. Nothing contained herein shall be
deemed to incorporate information furnished, but not filed, with the SEC.
SWK Holdings
Corporation
$35,000,000
% Senior Notes
due 2028
PROSPECTUS
B. Riley Securities
, 2023
PART II
INFORMATION NOT REQUIRED
IN THE PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution
The following table sets forth the
costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the securities being
registered. All amounts, other than the SEC registration fee, are estimates. We will pay all these expenses.
| |
Amount
to be paid | |
SEC
Registration Fee | |
$ | 4,435.55 | |
FINRA
filing fee | |
$ | * | |
Nasdaq
listing fees and expenses | |
$ | * | |
Accounting
fees and expenses | |
$ | * | |
Legal
fees and expenses | |
$ | * | |
Printing
expenses | |
$ | * | |
Road
show expenses | |
$ | * | |
Trustee
fees and expenses | |
$ | * | |
Miscellaneous
fees and expenses | |
$ | * | |
Total | |
$ | * | |
* To
be completed by amendment
Item 14. Indemnification of
Directors and Officers
Section 145 of the DGCL provides that
a corporation may indemnify directors and officers as well as other employees and individuals against expenses, including attorneys’
fees, judgments, fines and amounts paid in settlement in connection with specified actions, suits and proceedings whether civil, criminal,
administrative, or investigative, other than a derivative action by or in the right of the corporation, if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of
derivative actions, except that indemnification extends only to expenses, including attorneys’ fees, incurred in connection with
the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification
that may be granted by a corporation’s certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement
or otherwise.
Our amended and restated certificate
of incorporation and bylaws provide for indemnification of directors and officers to the fullest extent permitted by law, including payment
of expenses in advance of resolution of any such matter.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling the Company under the foregoing provisions,
we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
Item 16. Exhibits.
(a) Exhibits.
|
|
|
Exhibit
No. |
|
Description |
|
|
1.1** |
|
Form of Underwriting Agreement,
by and between SWK Holdings Corporation and B. Riley Securities, Inc., as Representative of the several underwriters. |
|
|
|
|
3.1 |
|
Third Amended and Restated
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on
August 15, 2022). |
|
|
3.2 |
|
Amended and Restated Bylaws,
dated as of August 12, 2022 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on
August 15, 2022). |
|
|
4.1** |
|
Form of Indenture. |
|
|
4.2** |
|
Form of First Supplemental
Indenture. |
|
|
4.3** |
|
Form of Notes (included as
Exhibit A to Exhibit 4.2 above). |
|
|
|
4.4 |
|
Form
of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-1/A filed on September 21, 1999).
|
4.5 |
|
Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed on March 31, 2023). |
|
|
5.1** |
|
Opinion
of Goodwin Procter LLP regarding validity of the Notes being registered hereunder.
|
10.1 |
|
2010
Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q filed on November 9, 2010).
|
10.2 |
|
SWK
Holdings Corporation 2010 Equity Incentive Plan Restricted Stock Award Agreement (incorporated
by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on
November 9, 2010).
|
10.3 |
|
Registration Rights Agreement, dated as of September 6, 2013, among Double Black Diamond, L.P., Double Black Diamond Offshore Ltd., Black Diamond Offshore, Ltd. and the Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 9, 2013).
|
10.4 |
|
Royalty Agreement, dated April 2, 2013, among SWK Funding LLC, Bess Royalty, L.P. and InSite Vision Incorporated (incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1/A filed on April 1, 2014).
|
10.5 |
|
Stockholders’ Agreement, dated August 18, 2014, among Double Black Diamond Offshore Ltd., Black Diamond Offshore Ltd. and SWK Holdings Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 19, 2014).
|
10.6 |
|
Amendment No. 1 to Stockholders’ Agreement, dated June 28, 2022, among Double Black Diamond Offshore Ltd., Black Diamond Offshore Ltd. and SWK Holdings Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 29, 2022).
|
10.7 |
|
Amendment No. 2 to Stockholders’ Agreement, dated February 27, 2023, among Double Black Diamond Offshore Ltd., Black Diamond Offshore Ltd. and SWK Holdings Corporation (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on March 31, 2023).
|
10.8 |
|
Purchase and Sale Agreement, dated December 13, 2016, between SWK Funding LLC and Opiant Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed on March 29, 2018). |
10.9 |
|
Credit Agreement dated June 28, 2023 by and among the SWK Holdings Corporation, SWK Funding LLC, the Lenders party thereto and First Horizon Bank as a Lender and Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 30, 2023). |
|
|
|
10.10 |
|
Letter Agreement, dated June 30, 2022, by and between the Company and Winston L. Black III (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 8, 2022). |
|
|
|
|
10.11 |
|
Separation and Release Agreement, dated August 31, 2022, by and between the Company and Winston L. Black III (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 9, 2022).
|
10.12 |
|
Employment Agreement, dated January 2, 2023 between SWK Holdings Corporation and Jody Staggs (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 1, 2023).
|
21.1 |
|
Subsidiaries of SWK Holdings Corporation (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed on March 31, 2023). |
|
|
23.1* |
|
Consent of BPM LLP – independent registered public accounting firm. |
|
|
23.2** |
|
Consent of Goodwin Procter
LLP (included in Exhibit 5.1). |
|
|
24.1* |
|
Power of Attorney (included in the signature page hereof). |
|
|
25.1* |
|
Form T-1 Statement of Eligibility under Trust Indenture Act of 1939, as amended, of Trustee. |
|
|
|
107* |
|
Filing Fee Table |
|
|
|
* |
Filed herewith |
** |
To be filed by amendment. |
+ |
Certain schedules and exhibits have been omitted
pursuant to Item 601(a)(5) or Item 601(b)(2) of Regulation S-K. We hereby undertake to furnish copies of the omitted schedule or
exhibit upon request by the Securities and Exchange Commission. |
(b) Financial Statement Schedules.
All financial statement schedules
are omitted because the information called for is not required or is shown either in the financial statements or in the notes thereto.
Item 17. Undertakings
The undersigned registrant hereby
undertakes that:
(1) For purposes of determining any
liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining
any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on September 14, 2023.
|
SWK HOLDINGS CORPORATION |
|
|
|
|
By: |
/s/
Jody Staggs |
|
|
Jody Staggs |
|
|
President and Chief Executive
Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS,
that each person whose signature appears below hereby constitutes and appoints Jody Staggs and Yvette Heinrichson, and each of them,
his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this
registration statement, and any registration statement relating to the offering covered by this registration statement and filed pursuant
to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that each of said attorneys in fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the
requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated
below as of September 14, 2023.
|
|
|
Signature |
|
Title |
|
|
/s/
Jody Staggs
Jody Staggs |
|
President and Chief Executive
Officer (Principal Executive Officer) |
|
|
/s/
Yvette Heinrichson
Yvette Heinrichson |
|
Chief Financial Officer (Principal
Financial and Accounting Officer) |
|
|
/s/
Jerry Albright
Jerry Albright |
|
Director |
|
|
/s/
Laurie Dotter
Laurie Dotter |
|
Director |
|
|
/s/
Robert K. Hatcher
Robert K. Hatcher |
|
Director |
|
|
/s/
Marcus Pennington
Marcus Pennington |
|
Director |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference
in this Registration Statement on Form S-1 of our report dated March 31, 2023, relating to the consolidated financial statements of SWK
Holdings Corporation, which appears in the Annual Report on Form 10-K of SWK Holdings Corporation for the year ended December 31, 2022.
We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ BPM LLP
San Francisco, California
September 14, 2023
Exhibit 25.1
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
T-1
o
Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)
WILMINGTON
TRUST, NATIONAL ASSOCIATION
(Exact
name of trustee as specified in its charter)
16-1486454
(I.R.S.
employer identification no.)
1100
North Market Street
Wilmington,
DE 19890-0001
(Address
of principal executive offices)
Kyle
Barry
Senior
Vice President
Wilmington
Trust Company
285
Delaware Ave.
Buffalo,
NY 14202
(716)
839-6909
(Name,
address and telephone number of agent for service)
SWK
Holdings Corporation
(Exact
name of obligor as specified in its charter)
|
Delaware |
77-0435679 |
(State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
5956
Sherry Lane
Suite
650
Dallas,
Texas 75225
(Address
of principal executive offices, including zip code)
Debt
Securities
(Title
of the indenture securities)
ITEM 1. GENERAL
INFORMATION.
Furnish the following
information as to the trustee:
(a) Name
and address of each examining or supervising authority to which it is subject.
Comptroller
of Currency, Washington, D.C.
Federal
Deposit Insurance Corporation, Washington, D.C.
(b) Whether
it is authorized to exercise corporate trust powers.
The
trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS
WITH THE OBLIGOR.
If the
obligor is an affiliate of the trustee, describe each affiliation:
Based upon an examination
of the books and records of the trustee and information available to the trustee, the obligor is not an affiliate of the trustee.
ITEM 3 – 15. Not
applicable.
ITEM
16. LIST OF EXHIBITS.
Listed
below are all exhibits filed as part of this Statement of Eligibility and Qualification.
| 1. | A
copy of the Charter for Wilmington Trust, National Association. |
| 2. | The
authority of Wilmington Trust, National Association to commence business was granted
under the Charter for Wilmington Trust, National Association, incorporated herein by
reference to Exhibit 1 above. |
| 3. | The
authorization to exercise corporate trust powers was granted under the Charter for Wilmington
Trust, National Association, incorporated herein by reference to Exhibit 1 above. |
| 4. | A
copy of the existing By-Laws of Trustee, as now in effect, incorporated herein by reference
to Exhibit 4of this Form T-1. |
| 6. | The
consent of Wilmington Trust, National Association as required by Section 321(b) of the
Trust Indenture Act of 1939, attached hereto as Exhibit 6 of this Form T-1. |
| 7. | Current
Report of the Condition of Wilmington Trust, National Association, published pursuant
to law or the requirements of its supervising or examining authority, attached hereto
as Exhibit 7 of this Form T-1. |
SIGNATURE
Pursuant to the requirements of the
Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust, National Association, a national banking association organized
and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of Guilford and State of Connecticut on the 14th day
of September, 2023.
|
WILMINGTON TRUST, NATIONAL
ASSOCIATION |
|
|
|
|
|
|
By: |
/s/ Nedine Sutton |
|
|
Name: |
Nedine Sutton |
|
|
Title: |
Vice President |
|
|
|
|
|
EXHIBIT
1
CHARTER OF
WILMINGTON TRUST, NATIONAL ASSOCIATION
ARTICLES
OF ASSOCIATION
OF
WILMINGTON
TRUST, NATIONAL ASSOCIATION
For the
purpose of organizing an association to perform any lawful activities of national banks, the undersigned do enter into the following
articles of association:
FIRST. The
title of this association shall be Wilmington Trust, National Association.
SECOND. The
main office of the association shall be in the City of Wilmington, County of New Castle, State of Delaware. The general business
of the association shall be conducted at its main office and its branches.
THIRD. The
board of directors of this association shall consist of not less than five nor more than twenty-five persons, unless the OCC has
exempted the bank from the 25-member limit. The exact number is to be fixed and determined from time to time by resolution of
a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting
thereof. Each director shall own common or preferred stock of the association or of a holding company owning the association,
with an aggregate par, fair market or equity value $1,000. Determination of these values may be based as of either (i) the date
of purchase or (ii) the date the person became a director, whichever value is greater. Any combination of common or preferred
stock of the association or holding company may be used.
Any vacancy
in the board of directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The
board of directors may not increase the number of directors between meetings of shareholders to a number which:
| 1) | exceeds
by more than two the number of directors last elected by shareholders where the number
was 15 or less; or |
| 2) | exceeds
by more than four the number of directors last elected by shareholders where the number
was 16 or more, but in no event shall the number of directors exceed 25, unless the OCC
has exempted the bank from the 25-member limit. |
Directors
shall be elected for terms of one year and until their successors are elected and qualified. Terms of directors, including directors
selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless the
directors resign or are removed from office. Despite the expiration of a director’s term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a decrease in the number of directors and his or her
position is eliminated.
Honorary
or advisory members of the board of directors, without voting power or power of final decision in matters concerning the business
of the association, may be appointed by resolution of a majority of the full board of directors, or by resolution of shareholders
at any annual or special meeting. Honorary or advisory directors shall not be counted to determine the number of directors of
the association or the presence of a quorum in connection with any board action, and shall not be required to own qualifying shares.
FOURTH. There
shall be an annual meeting of the shareholders to elect directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of
each year specified therefor in the bylaws, or, if that day falls on a legal holiday in the state in which the association is
located, on the next following banking day. If no election is held on the day fixed, or in the event of a legal holiday on the
following banking day, an election may be held on any subsequent day within 60 days of the day fixed, to be designated by the
board of directors, or, if the directors fail to fix the day, by shareholders representing two-thirds of the shares issued and
outstanding. In all cases at least 10 days advance notice of the time, place and purpose of a shareholders’ meeting shall
be given to the shareholders by first class mail, unless the OCC determines that an emergency circumstance exists. The sole shareholder
of the bank is permitted to waive notice of the shareholders’ meeting.
In all
elections of directors, the number of votes each common shareholder may cast will be determined by multiplying the number of shares
such shareholder owns by the number of directors to be elected. Those votes may be cumulated and cast for a single candidate or
may be distributed among two or more candidates in the manner selected by the shareholder. If, after the first ballot, subsequent
ballots are necessary to elect directors, a shareholder may not vote shares that he or she has already fully cumulated and voted
in favor of a successful candidate. On all other questions, each common shareholder shall be entitled to one vote for each share
of stock held by him or her.
Nominations
for election to the board of directors may be made by the board of directors or by any stockholder of any outstanding class of
capital stock of the association entitled to vote for election of directors. Nominations other than those made by or on behalf
of the existing management shall be made in writing and be delivered or mailed to the president of the association not less than
14 days nor more than 50 days prior to any meeting of shareholders called for the election of directors; provided, however, that
if less than 21 days notice of the meeting is given to shareholders, such nominations shall be mailed or delivered to the president
of the association not later than the close of business on the seventh day following the day on which the notice of meeting was
mailed. Such notification shall contain the following information to the extent known to the notifying shareholder:
| 1) | The
name and address of each proposed nominee. |
| 2) | The
principal occupation of each proposed nominee. |
| 3) | The
total number of shares of capital stock of the association that will be voted for each
proposed nominee. |
| 4) | The
name and residence address of the notifying shareholder. |
| 5) | The
number of shares of capital stock of the association owned by the notifying shareholder. |
Nominations
not made in accordance herewith may, in his/her discretion, be disregarded by the chairperson of the meeting, and the vote tellers
may disregard all votes cast for each such nominee. No bylaw may unreasonably restrict the nomination of directors by shareholders.
A director
may resign at any time by delivering written notice to the board of directors, its chairperson, or to the association, which resignation
shall be effective when the notice is delivered unless the notice specifies a later effective date.
A director
may be removed by shareholders at a meeting called to remove the director, when notice of the meeting stating that the purpose
or one of the purposes is to remove the director is provided, if there is a failure to fulfill one of the affirmative requirements
for qualification, or for cause; provided, however, that a director may not be removed if the number of votes sufficient to elect
the director under cumulative voting is voted against the director’s removal.
FIFTH. The
authorized amount of capital stock of this association shall be ten thousand shares of common stock of the par value of one hundred
dollars ($100) each; but said capital stock may be increased or decreased from time to time, according to the provisions of the
laws of the United States.
No holder
of shares of the capital stock of any class of the association shall have any preemptive or preferential right of subscription
to any shares of any class of stock of the association, whether now or hereafter authorized, or to any obligations convertible
into stock of the association, issued, or sold, nor any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such price as the board of directors may from time to
time fix. Preemptive rights also must be approved by a vote of holders of two-thirds of the bank’s outstanding voting shares.
Unless otherwise specified in these articles of association or required by law, (1) all matters requiring shareholder action,
including amendments to the articles of association, must be approved by shareholders owning a majority voting interest in the
outstanding voting stock, and (2) each shareholder shall be entitled to one vote per share.
Unless
otherwise specified in these articles of association or required by law, all shares of voting stock shall be voted together as
a class, on any matters requiring shareholder approval. If a proposed amendment would affect two or more classes or series in
the same or a substantially similar way, all the classes or series so affected must vote together as a single voting group on
the proposed amendment.
Shares
of one class or series may be issued as a dividend for shares of the same class or series on a pro rata basis and without consideration.
Shares of one class or series may be issued as share dividends for a different class or series of stock if approved by a majority
of the votes entitled to be cast by the class or series to be issued, unless there are no outstanding shares of the class or series
to be issued. Unless otherwise provided by the board of directors, the record date for determining shareholders entitled to a
share dividend shall be the date authorized by the board of directors for the share dividend.
Unless
otherwise provided in the bylaws, the record date for determining shareholders entitled to notice of and to vote at any meeting
is the close of business on the day before the first notice is mailed or otherwise sent to the shareholders, provided that in
no event may a record date be more than 70 days before the meeting.
If a shareholder
is entitled to fractional shares pursuant to a stock dividend, consolidation or merger, reverse stock split or otherwise, the
association may: (a) issue fractional shares; (b) in lieu of the issuance of fractional shares, issue script or warrants entitling
the holder to receive a full share upon surrendering enough script or warrants to equal a full share; (c) if there is an established
and active market in the association’s stock, make reasonable arrangements to provide the shareholder with an opportunity
to realize a fair price through sale of the fraction, or purchase of the additional fraction required for a full share; (d) remit
the cash equivalent of the fraction to the shareholder; or (e) sell full shares representing all the fractions at public auction
or to the highest bidder after having solicited and received sealed bids from at least three licensed stock brokers; and distribute
the proceeds pro rata to shareholders who otherwise would be entitled to the fractional shares. The holder of a fractional share
is entitled to exercise the rights for shareholder, including the right to vote, to receive dividends, and to participate in the
assets of the association upon liquidation, in proportion to the fractional interest. The holder of script or warrants is not
entitled to any of these rights unless the script or warrants explicitly provide for such rights. The script or warrants may be
subject to such additional conditions as: (1) that the script or warrants will become void if not exchanged for full shares before
a specified date; and (2) that the shares for which the script or warrants are exchangeable may be sold at the option of the association
and the proceeds paid to scriptholders.
The association,
at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval
of the shareholders. Obligations classified as debt, whether or not subordinated, which may be issued by the association without
the approval of shareholders, do not carry voting rights on any issue, including an increase or decrease in the aggregate number
of the securities, or the exchange or reclassification of all or part of securities into securities of another class or series.
SIXTH. The
board of directors shall appoint one of its members president of this association, and one of its members chairperson of the board
and shall have the power to appoint one or more vice presidents, a secretary who shall keep minutes of the directors’ and
shareholders’ meetings and be responsible for authenticating the records of the association, and such other officers and
employees as may be required to transact the business of this association.
A duly
appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance
with the bylaws.
The board
of directors shall have the power to:
| 1) | Define
the duties of the officers, employees, and agents of the association. |
| 2) | Delegate
the performance of its duties, but not the responsibility for its duties, to the officers,
employees, and agents of the association. |
| 3) | Fix
the compensation and enter into employment contracts with its officers and employees
upon reasonable terms and conditions consistent with applicable law. |
| 4) | Dismiss
officers and employees. |
| 5) | Require
bonds from officers and employees and to fix the penalty thereof. |
| 6) | Ratify
written policies authorized by the association’s management or committees of the
board. |
| 7) | Regulate
the manner in which any increase or decrease of the capital of the association shall
be made, provided that nothing herein shall restrict the power of shareholders to increase
or decrease the capital of the association in accordance with law, and nothing shall
raise or lower from two-thirds the percentage required for shareholder approval to increase
or reduce the capital. |
| 8) | Manage
and administer the business and affairs of the association. |
| 9) | Adopt
initial bylaws, not inconsistent with law or the articles of association, for managing
the business and regulating the affairs of the association. |
| 10) | Amend
or repeal bylaws, except to the extent that the articles of association reserve this
power in whole or in part to shareholders. |
| 12) | Generally
perform all acts that are legal for a board of directors to perform. |
SEVENTH. The
board of directors shall have the power to change the location of the main office to any other place within the limits of Wilmington,
Delaware, without the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of such association
for a relocation outside such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any
other location within or outside the limits of Wilmington Delaware, but not more than 30 miles beyond such limits. The board of
directors shall have the power to establish or change the location of any branch or branches of the association to any other location
permitted under applicable law, without approval of shareholders, subject to approval by the Comptroller of the Currency.
EIGHTH. The
corporate existence of this association shall continue until termination according to the laws of the United States.
NINTH. The
board of directors of this association, or any one or more shareholders owning, in the aggregate, not less than 50 percent of
the stock of this association, may call a special meeting of shareholders at any time. Unless otherwise provided by the bylaws
or the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders
shall be given at least 10 days prior to the meeting by first-class mail, unless the OCC determines that an emergency circumstance
exists. If the association is a wholly-owned subsidiary, the sole shareholder may waive notice of the shareholders’ meeting.
Unless otherwise provided by the bylaws or these articles, any action requiring approval of shareholders must be effected at a
duly called annual or special meeting.
TENTH. For
purposes of this Article Tenth, the term “institution-affiliated party” shall mean any institution-affiliated party
of the association as such term is defined in 12 U.S.C. 1813(u).
Any institution-affiliated
party (or his or her heirs, executors or administrators) may be indemnified or reimbursed by the association for reasonable expenses
actually incurred in connection with any threatened, pending or completed actions or proceedings and appeals therein, whether
civil, criminal, governmental, administrative or investigative, in accordance with and to the fullest extent permitted by law,
as such law now or hereafter exists; provided, however, that when an administrative proceeding or action instituted by a federal
banking agency results in a final order or settlement pursuant to which such person: (i) is assessed a civil money penalty, (ii)
is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii) is required
to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association, then
the association shall require the repayment of all legal fees and expenses advanced pursuant to the next succeeding paragraph
and may not indemnify such institution-affiliated parties (or their heirs, executors or administrators) for expenses, including
expenses for legal fees, penalties or other payments incurred. The association shall provide indemnification in connection with
an action or proceeding (or part thereof) initiated by an institution-affiliated party (or by his or her heirs, executors or administrators)
only if such action or proceeding (or part thereof) was authorized by the board of directors.
Expenses
incurred by an institution-affiliated party (or by his or her heirs, executors or administrators) in connection with any action
or proceeding under 12 U.S.C. 164 or 1818 may be paid by the association in advance of the final disposition of such action or
proceeding upon (a) a determination by the board of directors acting by a quorum consisting of directors who are not parties to
such action or proceeding that the institution-affiliated party (or his or her heirs, executors or administrators) has a reasonable
basis for prevailing on the merits, (b) a determination that the indemnified individual (or his or her heirs, executors or administrators)
will have the financial capacity to reimburse the bank in the event he or she does not prevail, (c) a determination that the payment
of expenses and fees by the association will not adversely affect the safety and soundness of the association, and (d) receipt
of an undertaking by or on behalf of such institution-affiliated party (or by his or her heirs, executors or administrators) to
repay such advancement in the event of a final order or settlement pursuant to which such person: (i) is assessed a civil money
penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii)
is required to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association.
In all other instances, expenses incurred by an institution-affiliated party (or by his or her heirs, executors or administrators)
in connection with any action or proceeding as to which indemnification may be given under these articles of association may be
paid by the association in advance of the final disposition of such action or proceeding upon (a) receipt of an undertaking by
or on behalf of such institution-affiliated party (or by or on behalf of his or her heirs, executors or administrators) to repay
such advancement in the event that such institution-affiliated party (or his or her heirs, executors or administrators) is ultimately
found not to be entitled to indemnification as authorized by these articles of association and (b) approval by the board of directors
acting by a quorum consisting of directors who are not parties to such action or proceeding or, if such a quorum is not obtainable,
then approval by stockholders. To the extent permitted by law, the board of directors or, if applicable, the stockholders, shall
not be required to find that the institution-affiliated party has met the applicable standard of conduct provided by law for indemnification
in connection with such action or proceeding.
In the
event that a majority of the members of the board of directors are named as respondents in an administrative proceeding or civil
action and request indemnification, the remaining members of the board may authorize independent legal counsel to review the indemnification
request and provide the remaining members of the board with a written opinion of counsel as to whether the conditions delineated
in the first four paragraphs of this Article Tenth have been met. If independent legal counsel opines that said conditions have
been met, the remaining members of the board of directors may rely on such opinion in authorizing the requested indemnification.
In the
event that all of the members of the board of directors are named as respondents in an administrative proceeding or civil action
and request indemnification, the board shall authorize independent legal counsel to review the indemnification request and provide
the board with a written opinion of counsel as to whether the conditions delineated in the first four paragraphs of this Article
Tenth have been met. If legal counsel opines that said conditions have been met, the board of directors may rely on such opinion
in authorizing the requested indemnification.
To the
extent permitted under applicable law, the rights of indemnification and to the advancement of expenses provided in these articles
of association (a) shall be available with respect to events occurring prior to the adoption of these articles of association,
(b) shall continue to exist after any restrictive amendment of these articles of association with respect to events occurring
prior to such amendment, (c) may be interpreted on the basis of applicable law in effect at the time of the occurrence of the
event or events giving rise to the action or proceeding, or on the basis of applicable law in effect at the time such rights are
claimed, and (d) are in the nature of contract rights which may be enforced in any court of competent jurisdiction as if the association
and the institution-affiliated party (or his or her heirs, executors or administrators) for whom such rights are sought were parties
to a separate written agreement.
The rights
of indemnification and to the advancement of expenses provided in these articles of association shall not, to the extent permitted
under applicable law, be deemed exclusive of any other rights to which any such institution affiliated party (or his or her heirs,
executors or administrators) may now or hereafter be otherwise entitled whether contained in these articles of association, the
bylaws, a resolution of stockholders, a resolution of the board of directors, or an agreement providing such indemnification,
the creation of such other rights being hereby expressly authorized. Without limiting the generality of the foregoing, the rights
of indemnification and to the advancement of expenses provided in these articles of association shall not be deemed exclusive
of any rights, pursuant to statute or otherwise, of any such institution-affiliated party (or of his or her heirs, executors or
administrators) in any such action or proceeding to have assessed or allowed in his or her favor, against the association or otherwise,
his or her costs and expenses incurred therein or in connection therewith or any part thereof.
If this
Article Tenth or any part hereof shall be held unenforceable in any respect by a court of competent jurisdiction, it shall be
deemed modified to the minimum extent necessary to make it enforceable, and the remainder of this Article Tenth shall remain fully
enforceable.
The association
may, upon affirmative vote of a majority of its board of directors, purchase insurance to indemnify its institution-affiliated
parties to the extent that such indemnification is allowed in these articles of association; provided, however, that no such insurance
shall include coverage to pay or reimburse any institution-affiliated party for the cost of any judgment or civil money penalty
assessed against such person in an administrative proceeding or civil action commenced by any federal banking agency. Such insurance
may, but need not, be for the benefit of all institution-affiliated parties.
ELEVENTH. These
articles of association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders
of a majority of the stock of this association, unless the vote of the holders of a greater amount of stock is required by law,
and in that case by the vote of the holders of such greater amount. The association’s board of directors may propose one
or more amendments to the articles of association for submission to the shareholders.
EXHIBIT
4
BY-LAWS
OF WILMINGTON TRUST, NATIONAL ASSOCIATION
WILMINGTON
TRUST, NATIONAL ASSOCIATION
AMENDED
AND RESTATED BYLAWS
(Effective
as of March 28, 2022)
AMENDED
AND RESTATED BYLAWS
OF
WILMINGTON
TRUST, NATIONAL ASSOCIATION
ARTICLE
I
Meetings
of Shareholders
Section 1.
Annual Meeting. The annual meeting of the shareholders to elect directors
and transact whatever other business may properly come before the meeting shall be held at the
main office of the association, Rodney Square North, 1100 Market Street, City of Wilmington,
State of Delaware, at 1:00 o’clock p.m. on the first Tuesday in March of each year, or at such
other place and time as the board of directors may designate, or if that date falls on a legal
holiday in Delaware, on the next following banking day. Notice of the meeting
shall be mailed by first class mail, postage prepaid, at least 10 days and no more than 60 days prior to the date
thereof, addressed to each shareholder at his/her address appearing on the books of the
association. If, for any cause, an election of directors is not made on that
date, or in the event of a legal holiday, on the next following banking day, an election
may be held on any subsequent day within 60 days of the date fixed, to be designated
by the board of directors, or, if the directors fail to fix the date, by shareholders
representing two-thirds of the shares. In these
circumstances, at least 10
days’ notice must
be given by first
class mail to shareholders.
Section 2.
Special Meetings. Except as otherwise specifically provided by statute,
special meetings of the shareholders may be called for any purpose at any time by the board of
directors or by
any one or
more shareholders owning,
in the aggregate,
not less than fifty
percent of the stock of the association.
Every such special meeting, unless otherwise provided by law, shall be called
by mailing, postage prepaid, not less than 10 days nor more than 60 days prior to the
date fixed for the meeting, to each shareholder at the address appearing on the books of the
association a notice
stating the purpose of
the meeting.
The board of directors may fix a
record date for determining shareholders entitled to notice and to vote at any meeting,
in reasonable proximity to the date of giving notice to the shareholders of such meeting.
The record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs a demand
for the meeting describing the purpose or
purposes for which it is to be held.
A special meeting
may be called by shareholders or the board of directors to amend the articles of association
or bylaws, whether or not such bylaws may be amended by the board of directors in
the absence of
shareholder approval.
If an annual or special shareholders’
meeting is adjourned to a different date, time, or place, notice need not be given
of the new date, time or place, if the new date, time or place is announced at the
meeting before adjournment, unless any additional items of business are to be considered,
or the association becomes aware of an intervening event materially affecting any matter
to be voted on more than 10 days prior to the date to which the meeting is adjourned. If
a new record
date for the adjourned
meeting is fixed, however,
notice of the adjourned
meeting must be given to persons who are shareholders as of the new record date. If,
however, the meeting to elect the directors is adjourned before the election takes place, at least ten days’
notice of the
new election must be
given to the shareholders by first-class
mail.
Section 3.
Nominations of Directors. Nominations for election to the board of directors
may be made by the board of directors or by any stockholder of any outstanding class of capital
stock of the association entitled to vote for the election of directors. Nominations,
other than those made by or on behalf of the existing management of the association,
shall be made in writing and shall be delivered or mailed to the president of the
association and the Comptroller of the Currency, Washington, D.C., not less than
14 days nor more than 50 days prior to any meeting
of shareholders called for the election
of directors; provided,
however, that if
less than 21 days’ notice
of the meeting is given to shareholders, such nomination shall be mailed or delivered
to the president
of the association
not later than
the close of
business on the
seventh day following
the day on
which the notice
of meeting was
mailed. Such notification
shall contain the
following information to the extent
known to the notifying shareholder:
| (1) | The
name and
address of each
proposed nominee; |
| (2) | The
principal occupation
of each
proposed nominee; |
| (3) | The
total number of shares of capital stock of the association that will be voted for
each proposed nominee; |
| (4) | The
name and
residence of the
notifying shareholder;
and |
| (5) | The
number of shares of capital stock of the association owned by the notifying
shareholder. |
Nominations not
made in accordance
herewith may, in
his/her discretion, be
disregarded by the chairperson of the meeting, and upon his/her instructions,
the vote tellers may disregard all votes cast for
each such nominee.
Section 4.
Proxies. Shareholders may
vote at any
meeting of the
shareholders by proxies duly authorized
in writing, but no officer or employee of this association shall act as proxy.
Proxies shall be valid only for one meeting, to be specified therein, and any adjournments
of such meeting. Proxies shall be dated and filed with the records of the meeting.
Proxies with facsimile signatures may be used and unexecuted proxies may be counted
upon receipt of a written confirmation from the shareholder.
Proxies meeting the above requirements submitted at any
time during a meeting
shall be accepted.
Section 5.
Quorum. A majority of the outstanding capital stock, represented in person
or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided
by law, or by the shareholders or directors pursuant to Article IX, Section 2, but less than a
quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned,
without further notice. A majority of the votes cast shall decide every question
or matter submitted to the
shareholders at any
meeting, unless otherwise
provided by law
or by the articles of association,
or by the
shareholders or directors
pursuant to Article
IX, Section 2. If
a meeting for the election of
directors is not held on the fixed date, at least 10 days’ notice must be given by
first-class mail to the shareholders.
ARTICLE
II
Directors
Section 1.
Board of Directors. The board of directors shall have the power to manage
and administer the business and affairs of the association. Except as expressly limited
by law, all corporate powers of the association shall be vested in and may be exercised
by the board of directors.
Section 2.
Number. The board of directors shall consist of not less than five nor
more than twenty-five members, unless the OCC has exempted the bank from the 25-member
limit. The exact number within such minimum and maximum limits is to be fixed and
determined from time to time by resolution of a majority of the full board of directors
or by resolution of a majority of
the shareholders at any meeting thereof.
Section 3.
Organization Meeting. The secretary or treasurer, upon receiving the
certificate of the judges of the result of any election, shall notify the directors-elect of their
election and of the time at which they are required to meet at the main office of the association,
or at such other place in the cities of Wilmington, Delaware or Buffalo, New York, to organize
the new board of directors and elect and appoint officers of the association for the succeeding
year. Such meeting shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within 30 days thereof. If, at the time fixed for such meeting,
there shall not be a quorum, the directors present may adjourn the meeting, from time
to time, until a quorum is obtained.
Section 4.
Regular Meetings. The Board of Directors may, at any time and from time
to time, by resolution designate
the place, date and
hour for the
holding of a regular
meeting, but in the absence of any such designation, regular meetings of the
board of directors shall be held, without notice, on the first Tuesday of each March,
June and September, and on the second Tuesday of each December at the main office
or other such place as the board of directors may designate.
When any regular meeting of the board of directors falls upon a holiday, the meeting
shall be held on the next banking business day unless the board of directors shall designate
another day.
Section 5.
Special Meetings. Special meetings of the board of directors may be called
by the Chairman of the
Board of the association,
or at the request
of two or
more directors. Each
member of the board of directors shall be given notice by telegram, first class mail, or in person
stating the time and place
of each special meeting.
Section 6.
Quorum. A majority of the entire board then in office shall constitute
a quorum at any meeting, except when otherwise provided by law or these bylaws, but
a lesser number may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned, without further
notice. If the number
of directors present at
the meeting is reduced
below the number that would constitute a quorum, no business may be transacted,
except selecting directors to fill vacancies in conformance with Article II, Section
7. If a quorum is present, the board of
directors may take action through the vote of a majority of the directors who are in attendance.
Section 7.
Meetings by Conference Telephone. Any one or more members of the
board of directors or any committee thereof may participate in a meeting of such board or
committees by means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time. Participation
in a meeting by such means shall
constitute presence in person at
such meeting.
Section 8.
Procedures. The order of
business and all
other matters of
procedure at every meeting of the board of directors may be determined by
the person presiding at the meeting.
Section 9.
Removal of Directors. Any director may be removed for cause, at any
meeting of stockholders notice
of which shall
have referred to
the proposed action,
by vote of
the stockholders. Any
director may be
removed without cause,
at any meeting
of stockholders notice
of which shall have referred
to the proposed
action, by the vote of the holders
of a majority of the shares of the Corporation entitled to vote.
Any director may be removed for cause, at any meeting of the directors notice
of which shall have referred to the proposed action, by
vote of a
majority of the entire
Board of Directors.
Section 10.
Vacancies. When any vacancy occurs among the directors, a majority of the
remaining members of the board of directors, according to the laws of the United States, may
appoint a director to fill such vacancy at any regular meeting of the board of directors, or at a
special meeting called for that purpose at which a quorum is present, or if the directors remaining
in office constitute fewer than a quorum of the board of directors, by the affirmative vote of a
majority of all the directors remaining in office, or by shareholders at a special meeting called for
that purpose in conformance with Section 2 of Article I. At any such shareholder
meeting, each shareholder entitled to vote shall have the right to multiply the number
of votes he or she is entitled to
cast by the
number of vacancies
being filled and
cast the product
for a single
candidate or distribute the product among two or more candidates. A vacancy
that will occur at a specific later date (by reason of a resignation effective at
a later date) may be filled before the vacancy
occurs but the new director
may not take office
until the vacancy occurs.
ARTICLE
III
Committees
of the Board
The board
of directors has power over
and is solely responsible
for the management,
supervision, and administration of the association. The board of directors
may delegate its power, but none of its responsibilities, to such persons or committees
as the board may determine.
The board of directors must
formally ratify written policies authorized by committees of the board of directors
before such policies become effective. Each committee must have one or
more member(s), and who may be an officer of the association or an officer or director of any
affiliate of the association, who serve at the pleasure of the board of directors.
Provisions of the articles of association
and these bylaws
governing place of
meetings, notice of
meeting, quorum and voting requirements
of the board of directors, apply to committees and their members as well.
The creation of a committee and appointment of members to it must be approved by the
board of directors.
Section 1.
Loan Committee. There shall be a loan committee composed of not less than
2 directors, appointed by the board of directors annually or more often. The loan
committee, on behalf of the bank, shall have power to discount and purchase bills,
notes and other evidences of debt, to buy and sell bills of exchange, to examine and
approve loans and discounts, to exercise authority regarding loans and discounts,
and to exercise, when the board of directors is not in session, all other powers of
the board of directors that may lawfully be delegated. The loan
committee shall keep minutes of its meetings, and such minutes shall be submitted at the next
regular meeting of the board of directors at which a quorum is present, and any action taken by
the board of directors with respect thereto shall be entered in the minutes of the board of
directors.
Section 2.
Investment Committee. There shall be an investment committee composed
of not less than 2 directors, appointed by the board of directors annually or more often.
The investment committee, on behalf of the bank, shall have the power to ensure
adherence to the investment policy, to recommend amendments thereto, to purchase and
sell securities, to exercise authority regarding investments and to exercise, when
the board of directors is not in session, all other powers of the board of directors
regarding investment securities that may be lawfully delegated.
The investment committee shall keep minutes of its meetings, and such minutes shall
be submitted at the next regular meeting of the board of directors at which a quorum is present,
and any action taken by the board of directors with respect thereto shall be entered in the minutes
of the board of
directors.
Section 3.
Examining Committee. There shall be an examining committee composed
of not less than 2 directors, exclusive of any active officers, appointed by the board of directors
annually or more often. The duty of that committee shall be to examine at least
once during each calendar year and within 15 months of the last examination the affairs
of the association or cause suitable examinations to be made by auditors responsible
only to the board of directors and to report the result of such examination in writing
to the board of directors at the next regular meeting thereafter.
Such report shall state whether the association is in a sound condition, and whether
adequate internal controls and procedures are being maintained and shall recommend to the
board of directors such changes in the manner of conducting the affairs of the association as
shall be deemed advisable.
Notwithstanding the provisions
of the first paragraph of this section 3, the responsibility and authority of the
Examining Committee may, if authorized by law, be given over to a duly constituted
audit committee of the association’s parent corporation by a resolution duly adopted
by the board of directors.
Section 4.
Trust Audit Committee. There shall be a trust audit committee in
conformance with Section 1 of Article
V.
Section 5.
Other Committees. The board of directors may appoint, from time to time,
from its own members, compensation, special litigation and other committees of one or more
persons, for such
purposes and with such powers
as the board
of directors may
determine.
However, a
committee may not:
| (1) | Authorize
distributions of
assets or
dividends; |
| (2) | Approve
action required
to be
approved by
shareholders; |
| (3) | Fill
vacancies on
the board
of directors
or any
of its
committees; |
| (4) | Amend
articles of association; |
| (5) | Adopt,
amend or
repeal bylaws; or |
| (6) | Authorize
or approve issuance or sale or contract for sale of shares, or determine
the designation and relative rights, preferences and limitations of a class or
series of
shares. |
Section 6.
Committee Members’ Fees.
Committee members may
receive a fee
for their services as committee
members and traveling and other out-of-pocket expenses incurred in attending any meeting
of a committee of which they are a member. The fee may be a fixed sum
to be paid for attending each meeting or a fixed sum to be paid quarterly, or semiannually,
irrespective of the number of meetings attended or not attended. The amount of the fee and the
basis on which it shall be
paid shall be determined by the
board of directors.
ARTICLE
IV
Officers
and Employees
Section 1. Officers.
The board of directors shall annually, at the Annual Reorganization Meeting of the board of directors following the
annual meeting of the shareholders, appoint or elect a Chairperson of the Board, a
Chief Executive Officer and a President, and one or more Vice Presidents however denominated,
a Corporate Secretary, a Treasurer, a Chief Auditor, and such other officers as it
may determine. At the Annual Reorganization Meeting, the board of
directors shall also elect or reelect all of the officers of the association to hold office until the
next Annual Reorganization Meeting. In the interim between Annual Reorganization
Meetings, the officers of the association may be elected as follows and shall hold
office until the next Annual Reorganization meeting unless otherwise determined by
the board of directors or such authorized officer(s):
The head of
the Human Resources
Department of M&T
Bank or his
or her designee or designees,
may appoint officers up to and including the rank of Senior Executive Vice President,
including (without limitation as to title or number) one or more Executive Vice Presidents,
Senior Vice Presidents,
Vice Presidents, Assistant Vice
Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Auditors, and
any other officer positions as they deem necessary and appropriate, except for any “SEC-Reporting Officers” of M&T
Bank Corporation for purposes of Section 16 of the Securities Exchange Act of 1934, as such officers may only be appointed by
the Board of Directors.
Section 2.
Chairperson of the Board. The board of directors shall appoint one of its
members to be the chairperson of the board to serve at its pleasure. Such person shall
preside at all meetings of the board of directors.
The chairperson of the board shall supervise the carrying out of the policies
adopted or approved by the board of directors; shall have general executive powers,
as well as the specific powers conferred by these bylaws; and shall also have and may exercise
such further powers and duties as from time to time may be conferred upon or assigned by
the board of directors.
Section 3.
President. The board of directors shall appoint one of its members to be
the president of the association. In the
absence of the chairperson, the president shall preside at any meeting of the board
of directors. The president shall have general executive powers and shall have and
may exercise any and all other powers and duties pertaining by law, regulation, or practice
to the office
of president, or
imposed by these bylaws.
The president shall also
have and may exercise such further
powers and duties as from time to time may be conferred or assigned by
the board of directors.
Section 4.
Vice President. The board of directors may appoint one or more vice
presidents. Each vice president shall have such powers and duties as may be
assigned by the board of directors. One
vice president shall be designated by the board of directors, in the absence of
the president, to
perform all the duties of
the president.
Section 5.
Secretary. The board of directors shall appoint a secretary, treasurer,
or other designated officer who shall be secretary of the board of directors and of
the association and who shall keep accurate minutes of all meetings.
The secretary shall attend to the giving of all notices required by these
bylaws; shall be custodian of the corporate seal, records, documents and papers of
the association; shall provide for the keeping of proper records of all transactions of the
association; shall have and may exercise any and all other powers and duties pertaining by law,
regulation or practice to the office of treasurer, or imposed by these bylaws; and shall also
perform such other
duties as may be
assigned from time to time,
by the board of
directors.
Section 6.
Other Officers. The board of directors may appoint one or more assistant
vice presidents, one or more trust officers, one or more officers, one or more assistant secretaries,
one or more assistant treasurers, one or more managers and assistant managers of branches and
such other officers and attorneys in fact as from time to time may appear to the board of directors
to be required or desirable to transact the business of the association. Such
officers shall respectively exercise such powers
and perform such
duties as pertain
to their several offices,
or as may be conferred upon or assigned to them by the board of directors,
the chairperson of the board, or the president.
The board of directors may authorize an officer to appoint one or more officers
or assistant officers.
Section 7.
Tenure of Office. The president and all other officers shall hold office
for the current year for which the board of directors was elected, unless they shall
resign, become disqualified, or be removed; and any vacancy occurring in the office
of president shall be filled promptly by
the board of directors.
Section 8.
Resignation. An officer may resign at any time by delivering notice to
the association. A
resignation is effective when
the notice is
given unless the
notice specifies a
later effective date.
ARTICLE
V
Fiduciary
Activities
Section 1.
Trust Audit Committee. There shall be a Trust Audit Committee composed
of not less than 2 directors, appointed by the board of directors, which shall, at least once during
each calendar year make suitable audits of the association’s fiduciary activities or cause suitable
audits to be made by auditors responsible only to the board, and at such time shall ascertain
whether fiduciary powers have been administered according to law, Part 9 of the Regulations of
the Comptroller of the Currency, and sound fiduciary principles. Such committee:
(1) must not include any officers of the bank or an affiliate who participate significantly
in the administration of the bank’s fiduciary activities; and (2) must consist
of a majority of members who are not also members of any committee to which the board
of directors has delegated power to manage and control
the fiduciary activities of
the bank.
Notwithstanding the provisions
of the first paragraph of this section 1, the responsibility and authority of the
Trust Audit Committee may, if authorized by law, be given over to a duly constituted
audit committee of the association’s parent corporation by a resolution duly adopted
by the board of
directors.
Section 2.
Fiduciary Files. There shall be maintained by the association all fiduciary
records necessary to assure that its fiduciary responsibilities have been properly undertaken and
discharged.
Section 3.
Trust Investments. Funds held in a fiduciary capacity shall be invested
according to the instrument establishing the fiduciary relationship and applicable law. Where
such instrument does
not specify the
character and class of
investments to be
made, but does
vest in the association investment discretion, funds held pursuant to such
instrument shall be invested in investments
in which corporate fiduciaries may
invest under applicable law.
ARTICLE
VI
Stock
and Stock Certificates
Section 1.
Transfers. Shares of stock shall be transferable on the books of the
association, and a transfer book shall be kept in which all transfers of stock shall be recorded.
Every person becoming
a shareholder by such transfer
shall in proportion
to such shareholder’s shares,
succeed to all rights of the prior holder of such shares. The board of directors may
impose conditions upon
the transfer of
the stock reasonably calculated
to simplify the
work of the association with respect to stock transfers, voting at shareholder
meetings and related matters and to
protect it against fraudulent transfers.
Section 2. Stock Certificates.
Certificates of stock shall bear the signature of the president (which may be engraved,
printed or impressed) and shall be signed manually or by facsimile process by the
secretary, assistant secretary, treasurer, assistant treasurer, or any other officer
appointed by the board
of directors for
that purpose, to
be known as
an authorized officer,
and the seal of the association shall be engraved thereon. Each certificate
shall recite on its face that the stock represented thereby is transferable only upon
the books of the association properly endorsed.
The board of directors may
adopt or use procedures for replacing lost, stolen, or destroyed stock certificates
as permitted by law.
The association
may establish a
procedure through which
the beneficial owner
of shares that are registered
in the name of a nominee may be recognized by the association as the shareholder.
The procedure may set forth:
| (1) | The
types of
nominees to
which it
applies; |
| (2) | The
rights or
privileges that
the association
recognizes in
a beneficial
owner; |
| (3) | How
the nominee may request the association to recognize the beneficial owner
as the
shareholder; |
| (4) | The
information that
must be
provided when
the procedure
is selected; |
| (5) | The
period over
which the
association will
continue to recognize
the beneficial
owner as the
shareholder; |
| (6) | Other
aspects of
the rights
and duties created. |
ARTICLE
VII
Corporate
Seal
Section 1.
Seal. The seal of the association shall be in such form as may be determined
from time to time by the board of directors. The president, the treasurer, the secretary or any
assistant treasurer or assistant secretary, or other officer thereunto designated by the board of
directors shall have
authority to affix
the corporate seal
to any document
requiring such seal
and to attest the same. The seal
on any corporate obligation for the payment of money may be facsimile.
ARTICLE
VIII
Miscellaneous
Provisions
Section 1.
Fiscal Year. The
fiscal year of the
association shall be the
calendar year.
Section 2.
Execution of Instruments. All agreements, indentures, mortgages, deeds,
conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions,
settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other
instruments or documents may be signed, executed, acknowledged, verified, delivered or
accepted on behalf of the association by any officer elected or appointed pursuant to Article IV
of these bylaws.
Any such instruments
may also be
executed, acknowledged, verified,
delivered or accepted on behalf of the association in such other manner and by such other officers as the
board of directors may from time to time direct. The provisions of this section
2 are supplementary to any other
provision of these bylaws.
Section 3.
Records. The articles of association, the bylaws and the proceedings of
all meetings of the shareholders, the board of directors, and standing committees
of the board of directors shall
be recorded in
appropriate minute books
provided for that
purpose. The minutes
of each meeting shall be signed by the secretary, treasurer or other officer appointed to act as
secretary of the meeting.
Section 4.
Corporate Governance Procedures. To the extent not inconsistent with
federal banking statutes and regulations, or safe and sound banking practices, the association
may follow the Delaware General Corporation Law, Del. Code Ann. tit. 8 (1991, as amended
1994, and as
amended thereafter) with
respect to matters
of corporate governance
procedures.
Section 5.
Indemnification. For purposes of this Section 5 of Article VIII, the term
“institution-affiliated party”
shall mean any
institution-affiliated party of the
association as such
term is defined in 12 U.S.C. 1813(u).
Any institution-affiliated party
(or his or her heirs, executors or administrators) may be indemnified or reimbursed
by the association for reasonable expenses actually incurred in connection with
any threatened, pending or
completed actions or proceedings
and appeals therein,
whether civil, criminal,
governmental, administrative or investigative,
in accordance with and to the fullest
extent permitted by law, as such law now or hereafter exists; provided, however, that
when an administrative proceeding or action instituted by a federal banking agency results
in a final order or settlement pursuant to which such person: (i) is assessed a civil money
penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs
of the association, or (iii) is required to cease and desist from or to take any affirmative action
described in 12 U.S.C. 1818(b) with respect to the association, then the association shall require
the repayment of all legal fees and expenses advanced pursuant to the next succeeding paragraph
and may not indemnify such institution-affiliated parties (or their heirs, executors or
administrators) for expenses, including expenses for legal fees, penalties or other payments
incurred. The association shall provide indemnification in connection with
an action or proceeding (or part thereof) initiated by an institution-affiliated party
(or by his or her heirs, executors or administrators) only if such action or proceeding
(or part thereof) was authorized by the board
of directors.
Expenses incurred by an institution-affiliated
party (or by his or her heirs, executors or administrators) in connection with any
action or proceeding under 12 U.S.C. 164 or 1818 may be paid by
the association in
advance of the
final disposition of
such action or proceeding
upon (a) a determination by the board of directors acting by a quorum consisting
of directors who are not parties to such action or proceeding that the institution-affiliated
party (or his or her heirs, executors or administrators) has a reasonable basis for
prevailing on the merits, (b) a determination that the indemnified individual (or
his or her heirs, executors or administrators) will have the financial capacity
to reimburse the bank in the event
he or she does
not prevail, (c) a
determination that the
payment of expenses
and fees by
the association will
not adversely affect the safety
and soundness of the association, and (d) receipt of an undertaking by or on behalf
of such institution-affiliated party (or by his or her heirs, executors or administrators) to
repay such advancement
in the event
of a final order or settlement
pursuant to which such
person: (i) is assessed a civil money penalty, (ii) is removed from office or prohibited from
participating in the conduct of the affairs of the association, or (iii) is required to cease and desist
from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the
association. In all other instances, expenses incurred by an institution-affiliated
party (or by his or her
heirs, executors or administrators)
in connection with
any action or
proceeding as to
which indemnification may be given under these articles of association may
be paid by the association in advance
of the final
disposition of such
action or proceeding
upon (a) receipt of
an undertaking by or on behalf of such institution-affiliated party (or by
or on behalf of his or her heirs, executors or administrators) to repay such advancement
in the event that such institution- affiliated party (or his or her heirs, executors
or administrators) is ultimately found not to be entitled to indemnification as authorized
by these bylaws and (b) approval by the board of directors acting by a quorum consisting
of directors who are not parties to such action or proceeding or, if such a quorum
is not obtainable, then approval by stockholders. To the extent
permitted by law, the
board of directors or, if applicable,
the stockholders, shall
not be required
to find that the institution-affiliated party has met the applicable standard of conduct provided by
law for indemnification in connection
with such action or proceeding.
In the event that a majority
of the members of the board of directors are named as respondents in an administrative
proceeding or civil action and request indemnification, the remaining members of the
board may authorize independent legal counsel to review the indemnification request
and provide the remaining members of the board with a written opinion of counsel as
to whether the conditions delineated in the first four paragraphs of this Section 5 of Article
VIII have been met. If independent legal counsel opines that said conditions have
been met, the remaining members of the board of directors may rely on such opinion
in authorizing the requested indemnification.
In the event
that all of
the members of
the board of
directors are named
as respondents in
an administrative proceeding or civil action and request indemnification, the board shall
authorize independent legal counsel to review the indemnification request and provide the board
with a written opinion of counsel as to whether the conditions delineated in the first four
paragraphs of this Section 5 of Article VIII have been met. If legal counsel
opines that said conditions have been met, the board of directors may rely on such
opinion in authorizing the requested indemnification.
To the extent permitted under
applicable law, the rights of indemnification and to the advancement of expenses provided
in these articles of association (a) shall be available with respect to
events occurring prior
to the adoption
of these bylaws,
(b) shall continue
to exist after any restrictive amendment of these bylaws with respect to events
occurring prior to such amendment, (c) may be interpreted on the basis of applicable
law in effect at the time of the occurrence of the event or events giving rise to
the action or proceeding, or on the basis of applicable law in effect at the time
such rights are claimed, and (d) are in the nature of contract rights
which may be
enforced in any
court of competent
jurisdiction as if
the association and
the institution-affiliated party (or his or her heirs, executors or administrators)
for whom such rights are sought were parties
to a separate written
agreement.
The rights of indemnification
and to the advancement of expenses provided in these bylaws shall not, to the extent
permitted under applicable law, be deemed exclusive of any other rights to which any
such institution-affiliated party (or his or her heirs, executors or administrators)
may now or
hereafter be otherwise
entitled whether contained
in the association’s
articles of association, these bylaws, a resolution of stockholders, a resolution of the board of
directors, or an agreement providing such indemnification, the creation of such other rights being
hereby expressly authorized. Without limiting the generality of the foregoing, the rights of
indemnification and to the advancement of expenses provided in these bylaws shall not be
deemed exclusive of any rights, pursuant to statute or otherwise, of any such institution-affiliated
party (or of his or her heirs, executors or administrators) in any such action or proceeding to have
assessed or allowed in his or her favor, against the association or otherwise, his or her costs and
expenses incurred therein or
in connection therewith or any part thereof.
If this Section 5 of Article
VIII or any part hereof shall be held unenforceable in any respect by a court of competent
jurisdiction, it shall be deemed modified to the minimum extent necessary to
make it enforceable,
and the remainder of this
Section 5 of
Article VIII shall
remain fully enforceable.
The association may, upon affirmative
vote of a majority of its board of directors, purchase insurance to indemnify its
institution-affiliated parties to the extent that such indemnification is allowed
in these bylaws; provided, however, that no such insurance shall include coverage
for a final order assessing
civil money penalties
against such persons
by a bank
regulatory agency. Such insurance may, but need not, be for the benefit of
all institution- affiliated parties.
ARTICLE
IX
Inspection
and Amendments
Section 1.
Inspection. A copy of the bylaws of the association, with all amendments,
shall at all times
be kept in a
convenient place at the
main office of
the association, and
shall be open for
inspection to all shareholders during banking hours.
Section 2.
Amendments. The bylaws
of the association may
be amended, altered
or repealed, at any regular meeting of the board of directors, by a vote of
a majority of the total number of the directors except as provided below, and provided
that the following language accompany any such change.
I,
, certify that: (1) I am the duly constituted (secretary or treasurer)
of
and secretary of its board of directors, and as such officer am the official
custodian of its records; (2) the foregoing bylaws are the bylaws of the
association, and all of them
are now lawfully in
force and effect.
I have
hereunto affixed my official signature on this
day of .
(Secretary or
Treasurer)
The association’s shareholders
may amend or repeal the bylaws even though the bylaws also may be
amended or repealed by the
board of directors.
EXHIBIT
6
Section
321(b) Consent
Pursuant to Section 321(b)
of the Trust Indenture Act of 1939, as amended, Wilmington Trust, National Association hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission
upon requests therefor.
|
WILMINGTON TRUST, NATIONAL
ASSOCIATION |
|
|
|
Dated: September 14,
2023 |
By: |
/s/ Nedine Sutton |
|
|
Name: Nedine Sutton |
|
|
Title: Vice President |
EXHIBIT
7
R E P O R
T O F C O N D I T I O N
WILMINGTON
TRUST, NATIONAL ASSOCIATION
As of the
close of business on March 31, 2023
ASSETS | |
| Thousands
of Dollars | |
Cash
and balances due from depository institutions: | |
| 483,261 | |
Securities: | |
| 5,714 | |
Federal
funds sold and securities purchased under agreement to resell: | |
| 0 | |
Loans
and leases held for sale: | |
| 0 | |
Loans
and leases net of unearned income, allowance: | |
| 54,850 | |
Premises
and fixed asset | |
| 31,287 | |
Other
real estate owned: | |
| 55 | |
Investments
in unconsolidated subsidiaries and associated companies: | |
| 0 | |
Direct
and indirect investments in real estate ventures: | |
| 0 | |
Intangible
assets: | |
| 0 | |
Other
assets: | |
| 84,217 | |
Total
Assets: | |
| 659,384 | |
LIABILITIES | |
| Thousands
of Dollars | |
Deposits | |
| 9,240 | |
Federal
funds purchased and securities sold under agreements to repurchase | |
| 0 | |
Other
borrowed money: | |
| 0 | |
Other
Liabilities: | |
| 85,255 | |
Total
Liabilities | |
| 94,495 | |
EQUITY
CAPITAL | |
| Thousands
of Dollars | |
Common
Stock | |
| 1,000 | |
Surplus | |
| 340,722 | |
Retained
Earnings | |
| 223,448 | |
Accumulated
other comprehensive income | |
| (281 | ) |
Total
Equity Capital | |
| 564,889 | |
| |
| | |
Total
Liabilities and Equity Capital | |
| 659,384 | |
Exhibit 107
Calculation
of Filing Fee Table
S-1
(Form Type)
SWK Holdings
Corporation
(Exact Name of Registrant
as Specified in its Charter)
Table 1: Newly
Registered Securities
Security
Type |
Security
Class
Title |
Fee
Calculation |
Amount
Registered |
Proposed
Maximum
Offering Price
Per Note |
Maximum
Aggregate
Offering
Price(1)(2) |
Fee
Rate |
Amount
of
Registration
Fee |
Debt |
Senior
Notes Due 2028 |
457(o) |
N/A |
N/A |
$40,250,000 |
0.00011020 |
$4,435.55 |
Total
Offering Amounts |
$40,250,000 |
|
$4,435.55 |
Total
Fees Previously Paid |
— |
|
— |
Total
Fee Offsets |
— |
|
— |
Net
Fee Due |
|
|
$4,435.55 |
(1) |
Estimated solely for the purpose of calculating
the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
|
|
(2) |
Includes up to $5,250,000 in aggregate principal
amount of additional notes which may be issued upon the exercise of a 30-day option granted to the underwriters. |
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