UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE
13D
Under the Securities Exchange Act of 1934
(Amendment No. 19)*
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Ontrak, Inc. |
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(Name of Issuer) |
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Common Stock, $0.0001 par value per share |
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(Title of Class of Securities) |
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44919F 104 |
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(CUSIP Number of Class of Securities) |
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Terren S. Peizer
Acuitas Group Holdings, LLC
200 Dorado Beach Drive #3831
Dorado, Puerto Rico 00646
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
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October 31, 2023 |
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(Date of Event which Requires Filing of this Statement) |
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If
the filing person has previously filed a Statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D
and is filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include
a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7(b) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be
filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this
cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934
(“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 44919F 104 |
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Page 2
of 4 Pages |
1 |
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Acuitas Group Holdings, LLC |
2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) ¨
(b) ¨ |
3 |
SEC USE ONLY |
4 |
SOURCE OF FUNDS (See Instructions)
OO |
5 |
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |
¨ |
6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
California |
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH |
7 |
SOLE VOTING POWER
0 |
8 |
SHARED VOTING POWER
26,864,097 |
9 |
SOLE DISPOSITIVE POWER
0 |
10 |
SHARED DISPOSITIVE POWER
26,864,097 |
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,864,097 |
12 |
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |
¨ |
13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
90.15%1 |
14 |
TYPE OF REPORTING PERSON (See Instructions)
OO |
1 |
Based on 29,799,147 Shares deemed outstanding pursuant to Rule 13d-3(d)(1), calculated as the sum of (i) 4,917,039 Shares issued and outstanding
as of October 31, 2023, as disclosed to the Reporting Persons, (ii) an aggregate of 7,037,039 Shares underlying the Keep Well Warrants
previously issued to Acuitas Capital, and (iii) 17,845,069 Shares issuable to Acuitas Capital upon the initial Notes Conversion prior
to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal to $0.90 per share, and without giving
effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following
the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 below. |
SCHEDULE 13D
CUSIP No. 44919F 104 |
|
Page 3
of 4 Pages |
1 |
NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Terren S. Peizer |
2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) ¨
(b) ¨ |
3 |
SEC USE ONLY |
4 |
SOURCE OF FUNDS (See Instructions)
OO |
5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |
¨ |
6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America |
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH |
7 |
SOLE VOTING POWER
26,864,097 |
8 |
SHARED VOTING POWER
0 |
9 |
SOLE DISPOSITIVE POWER
26,864,097 |
10 |
SHARED DISPOSITIVE POWER
0 |
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,864,097 |
12 |
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |
¨ |
13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
90.15%2 |
14 |
TYPE OF REPORTING PERSON (See Instructions)
HC; IN |
2 |
Based on 29,799,147 Shares deemed outstanding pursuant to Rule 13d-3(d)(1), calculated as the sum of (i) 4,917,039 Shares issued and outstanding
as of October 31, 2023, as disclosed to the Reporting Persons, (ii) an aggregate of 7,037,039 Shares underlying the Keep Well Warrants
previously issued to Acuitas Capital, and (iii) 17,845,069 Shares issuable to Acuitas Capital upon the initial Notes Conversion prior
to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal to $0.90 per share, and without giving
effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following
the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 below. |
SCHEDULE 13D
CUSIP No. 44919F 104 |
|
Page 4 of 4 Pages |
AMENDMENT NO. 19 TO SCHEDULE 13D
This Amendment No. 19
to Schedule 13D (this “Amendment”) is being filed by Acuitas Group Holdings, LLC, a California limited liability company
(“Acuitas”), and Terren S. Peizer (“Mr. Peizer”) (collectively, the “Reporting Persons”)
to amend the Schedule 13D originally filed with the Securities and Exchange Commission (the “SEC”) on October 20,
2010, as amended by Amendment No. 1 to Schedule 13D filed on December 6, 2011, Amendment No. 2 to Schedule 13D filed on
April 27, 2012, Amendment No. 3 to Schedule 13D filed on September 20, 2012, Amendment No. 4 to Schedule 13D filed
on February 14, 2013, Amendment No. 5 to Schedule 13D filed on May 11, 2021, Amendment No. 6 to Schedule 13D filed
on July 27, 2021, Amendment No. 7 to Schedule 13D filed on August 16, 2021, Amendment No. 8 to Schedule 13D filed
on November 2, 2021, Amendment No. 9 to Schedule 13D filed on April 18, 2022, Amendment No. 10 to Schedule 13D filed on September
2, 2022, Amendment No. 11 to Schedule 13D filed on September 8, 2022, Amendment No. 12 to Schedule 13D filed on November 22, 2022, Amendment
No. 13 to Schedule 13D filed on January 4, 2023, Amendment No. 14 to Schedule 13D filed on January 6, 2023, Amendment No. 15 to Schedule
13D filed on February 23, 2023, Amendment No. 16 to Schedule 13D filed on March 7, 2023, Amendment No. 17 to Schedule 13D filed on March
8, 2023, and Amendment No. 18 to Schedule 13D filed on June 27, 2023 (as amended and supplemented, the “Original Statement”
and, as amended and supplemented by this Amendment, the “Statement”), relating to common stock, par value $0.0001 per
share (the “Shares”), of Ontrak, Inc., a Delaware corporation (the “Company”). Capitalized
terms used herein but not defined have the respective meanings ascribed to them in the Original Statement.
ITEM 4. |
PURPOSE OF TRANSACTION |
Item 4 of the Statement is
hereby amended and supplemented by adding the following information:
“On
October 31, 2023, the Company, certain of its subsidiaries, Acuitas Capital LLC (“Acuitas Capital”), an entity wholly
owned by Acuitas, and U.S. Bank Trust Company, National Association, entered into an amendment (the “Fifth Amendment”)
to the Master Note Purchase Agreement, dated as of April 15, 2022, among the parties, as amended by that certain First Amendment made
as of August 12, 2022, that certain Second Amendment made as of November 19, 2022, that certain Third Amendment made as of December 30,
2022, and that certain Fourth Amendment made as of June 23, 2023 (the “Fourth Amendment”) (as amended prior to entering
into the Fifth Amendment, the “Existing Keep Well Agreement” and, as amended by the Fifth Amendment, the “Keep
Well Agreement”).
As of October 31, 2023, the
aggregate principal amount borrowed by the Company under the Keep Well Agreement, plus all accrued and unpaid interest thereon, was approximately
$23.0 million. The amounts borrowed under the Keep Well Agreement are evidenced by senior secured convertible notes (the “Keep
Well Notes”). As previously disclosed, in accordance with the terms of the Existing Keep Well Agreement, Acuitas Capital delivered
an aggregate of $6.0 million to the Company in June 2023 and September 2023, which funds were deposited into a segregated account (the
funds so deposited, the “Escrowed Funds” and the account into which the proceeds are so deposited, the “Keep
Well Escrow Account”). Pursuant to the Existing Keep Well Agreement, if the Company completed a Qualified Financing (as defined
in the Existing Keep Well Agreement) on or prior to October 31, 2023, Acuitas Capital agreed to invest all of the Escrowed Funds (other
than any accrued interest thereon) then on deposit in the Keep Well Escrow Account in the Qualified Financing on the same terms as all
other investors in the Qualified Financing. If the Company did not complete a Qualified Financing on or prior to October 31, 2023, on
such date, the Company was required to withdraw the Escrowed Funds (other than any accrued interest thereon) then on deposit in the Keep
Well Escrow Account, and such withdrawal was to be treated as a sale by the Company to Acuitas Capital of a Keep Well Note with a principal
amount equal to the amount withdrawn by the Company on such date and the Company would issue a warrant (each, a “Keep Well Warrant”)
to Acuitas Capital in connection with such withdrawal. Under the Existing Keep Well Agreement, a “Qualified Financing”
was generally defined as any financing in which the Company issues or sells any of its equity securities for cash to one or more third
party investors resulting in gross proceeds to the Company of at least $10.0 million exclusive of any amount invested by Acuitas Capital
in such financing.
In June 2023, the Company
filed a registration statement on Form S-1 (File No. 333-273029) with the U.S. Securities Exchange Commission (the “SEC”)
related to a potential public offering (the “Offering”) of the Company’s common stock, pre-funded warrants to
purchase Shares (the “Public Pre-Funded Offering Warrants”) and warrants to purchase Shares (the “Public Offering
Warrants”). As of the date hereof, that registration statement has not been declared effective by the SEC.
The following is a summary
of the Fifth Amendment. The summary does not purport to be complete and is qualified in its entirety by reference to the full text of
the Fifth Amendment, which is attached hereto as Exhibit 99.22 and incorporated by reference herein.
Changes
to Qualified Financing. Under the Fifth Amendment, the minimum amount to be raised in an equity financing for such financing
to constitute a “Qualified Financing” was reduced from $10.0 million to $8.0 million, and the deadline by when a Qualified
Financing must be completed before the Company is required to withdraw the Escrowed Funds was extended from October 31, 2023 to January
31, 2024.
Conversion
of Keep Well Notes. Under the Fifth Amendment, if the Company completes a Qualified Financing, Acuitas Capital has agreed to
convert into Shares the aggregate principal amount of the Keep Well Notes plus all accrued and unpaid interest thereon, minus (a) $7.0
million, minus (b) the principal amount of any Keep Well Notes purchased with funds from a segregated Keep Well Escrow Account prior to
the closing of the offering, if any, in accordance with the terms (including the conversion price) of the Existing Keep Well Agreement
and the Keep Well Notes (the “Notes Conversion”); provided that if the offering price per share at which the Shares
and accompanying Public Offering Warrants are sold to the public in the Offering (the “Offering Price”) is less than
the conversion price at which Keep Well Notes are converted, upon the effectiveness of the Stockholder Approval (as defined below): (1)
the Company will issue to Acuitas Capital such additional Shares such that the total number of Shares issued in respect of the Notes Conversion
plus such additional Shares would equal the number of shares that the Company would have issued in respect of the Notes Conversion if
the Keep Well Notes converted in the Notes Conversion were converted at a conversion price equal to the Offering Price; and (2) the exercise
price of the warrants issued to Acuitas Capital in connection with the Notes Conversion (the “Conversion Warrants”)
would be reduced to the Offering Price and the number of Shares subject to the Conversion Warrants would be increased to the number of
Shares that would have been subject to the Conversion Warrants if the Keep Well Notes were converted at a conversion price equal to the
Offering Price.
Private
Placement. In lieu of the provisions set forth in the Fourth Amendment concerning the investment of Escrowed Funds in the Offering,
the Fifth Amendment provides that if the Offering constitutes a Qualified Financing, the Company and Acuitas Capital will immediately
prior to, or simultaneously with the closing of the Offering, consummate a private placement (the “Private Placement”)
of $11.0 million of unregistered pre-funded warrants to purchase Shares (the “Private Placement Pre-Funded Warrants”)
and unregistered warrants to purchase Shares (the “Private Placement Warrants” and, together with the Private Placement
Pre-Funded Warrants, the “Private Placement Securities”). The material terms of the Private Placement Securities will
be substantially similar to the material terms of the Public Pre-Funded Offering Warrants and the Public Offering Warrants, except that
the Private Placement Securities will have registration rights. The consideration for the Private Placement Securities purchased by Acuitas
Capital will consist of (a) the Escrowed Funds then held in the Keep Well Escrow Account, and (b) a reduction of the aggregate amounts
outstanding under the Keep Well Notes (after giving effect to the Notes Conversion) to $2.0 million (the “Surviving Notes”).
Each Private Placement Pre-Funded Warrant will be sold together with two Private Placement Warrants, with each Private Placement Warrant
exercisable for one Share.
Surviving
Notes. Under the Fifth Amendment, the maturity date of the Surviving Notes was extended from September 30, 2024 to the date
that is two years and six months after the closing date of the Offering, unless the Surviving Notes become due and payable in full earlier,
whether by acceleration or otherwise. In addition, if the Offering Price is lower than $0.90, then, subject to the effectiveness of Stockholder
Approval, the $0.90 floor on the conversion price of the Surviving Notes will be replaced with the Offering Price.
Stockholder
Approval. Under the Fifth Amendment, the Company is required to seek stockholder approval (the “Stockholder Approval”)
in accordance with the rules of the Nasdaq Stock Market (the “Listing Rules”) of (A) the issuance of the Shares issuable
upon exercise of (x) the Public Offering Warrants and the Public Offering Pre-Funded Warrants sold in the Offering and (y) the Private
Placement Securities that, in the aggregate for clauses (x) and (y) above, are in excess of the maximum number of Shares permitted to
be issued without such approval under the Listing Rules (which amount is equal to 19.99% of the total number of Shares outstanding immediately
following the Notes Conversion and immediately prior to the closing of the Offering and/or the Private Placement), (B) the amendment to
the conversion price of the Surviving Notes described above, (C) the elimination of the provision in the Existing Keep Well Agreement
that prohibited the issuance of Shares upon the conversion of any Keep Well Note or the exercise of any warrant issued under the Keep
Well Agreement to the extent that, immediately after giving effect to the issuance of any such shares, Acuitas Capital would beneficially
own Shares representing more than 90% of the total number of Shares outstanding as of the time of such issuance, and (D) any other terms
of the Offering, the Private Placement and/or the Fifth Amendment that require approval of the Company’s stockholders under the
Listing Rules (collectively, the “Stockholder Approval Matters”).
Support
Agreement. In connection with entering the Fifth Amendment, on October 31, 2023, the Company, Acuitas and Acuitas Capital
entered into a support agreement (the “Support Agreement”), pursuant to which Acuitas and Acuitas Capital have agreed
to vote the Shares they beneficially own in favor of the Stockholder Approval Matters. The foregoing summary of the Support Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Support Agreement, which is attached
hereto as Exhibit 99.23 and incorporated by reference herein.”
ITEM 5. |
INTEREST IN SECURITIES OF THE ISSUER |
Item 5(a) and (b) of
the Statement is amended and restated in its entirety as follows:
“(a) and (b)
All amount of Shares, as well
as the various exercise prices, conversion prices and similar amounts, reported in this Statement, reflect and give effect to the Company’s
1:6 reverse stock split, effective on July 27, 2023.
All percentages of Shares
outstanding contained herein are based on 29,799,147 Shares deemed outstanding pursuant to Rule 13d-3(d)(1), calculated as the sum of
(i) 4,917,039 Shares issued and outstanding as of October 31, 2023, as disclosed to the Reporting Persons, (ii) an aggregate of 7,037,039
Shares underlying the Keep Well Warrants previously issued to Acuitas Capital, and (iii) 17,845,069 Shares issuable to Acuitas Capital
upon the initial Notes Conversion prior to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal
to $0.90 per share, and without giving effect to the conversion or exercise of any other outstanding securities of the Company or to additional
Shares to be issued following the Stockholder Approval in respect of the Notes Conversion), as described in more detail in Item 4 above.
As of the date hereof, each
of the Reporting Persons may be deemed to have beneficial ownership of 26,864,097 Shares, consisting of:
| (i) | 1,981,989 Shares beneficially owned by the Reporting Persons as of the date hereof; |
| (ii) | an aggregate of 7,037,039 Shares underlying the Keep Well Warrants previously issued to Acuitas Capital;
and |
| (iii) | an aggregate of 17,845,069 Shares issuable to Acuitas Capital upon the initial Notes Conversion prior
to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal to $0.90 per share, and without giving
effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following
the Stockholder Approval in respect of the Notes Conversion). |
The Shares beneficially owned
by the Reporting Persons as of the date hereof represent approximately 90.15% of the total outstanding Shares. Acuitas may be deemed to
share the power to vote or direct the vote and dispose or direct the disposition of all of the 26,864,097 Shares with Mr. Peizer. Mr.
Peizer may be deemed to have the sole power to vote or direct the vote and dispose or direct the disposition of all of the 26,864,097
Shares.
Assuming the exercise of
all of the outstanding Keep Well Warrants (but not including any Keep Well Warrants that would be issuable to Acuitas Capital upon
the withdrawal of the Escrowed Funds) and the conversion of the Keep Well Notes into Shares upon the initial Notes Conversion prior
to the Stockholder Approval pursuant to the Fifth Amendment (as described below), each of the Reporting Persons would be deemed to have
beneficial ownership of 44,709,166 Shares, consisting of:
| (i) | 1,981,989 Shares beneficially owned by the Reporting Persons as of the date hereof; |
| (ii) | an aggregate of 7,037,039 Shares underlying the Keep Well Warrants previously issued to Acuitas Capital; |
| (iii) | an aggregate of 17,845,069 Shares issuable to Acuitas Capital upon the initial Notes Conversion prior
to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal to $0.90 per share, and without giving
effect to the conversion or exercise of any other outstanding securities of the Company or to additional Shares to be issued following
the Stockholder Approval in respect of the Notes Conversion); and |
| (iv) | an aggregate of 17,845,069 Shares underlying the Conversion Warrants issuable to Acuitas Capital upon
the initial Notes Conversion prior to the Stockholder Approval pursuant to the Fifth Amendment (assuming a conversion price equal to $0.90
per share, and without giving effect to any increase in the number of Shares subject thereto following the Stockholder Approval in respect
of the Notes Conversion), as described in more detail in Item 4 above.” |
Item 5(c) of the Statement
is hereby supplemented with the following:
“Except as described
in this Statement, the Reporting Persons had no transactions in the securities of the Company since the most recent filing on Schedule
13D.”
ITEM 6. |
Contracts, arrangements, understandings or relationships with respect to the securities of the issuer |
Item 6 of the Statement is
hereby amended and supplemented to include the information disclosed in Item 4 above, which information is incorporated by reference herein.
ITEM 7. |
MATERIALS TO BE FILED AS EXHIBITS |
Item 7 of the Statement is
hereby amended and supplemented by adding the following:
SIGNATURE
After reasonable inquiry and
to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: November 2, 2023
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ACUITAS GROUP HOLDINGS, LLC |
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By: |
/s/ Terren S. Peizer |
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Terren S. Peizer, Chairman |
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/s/ Terren S. Peizer |
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Terren S. Peizer |
Exhibit 99.2
Execution
Version
FIFTH AMENDMENT TO MASTER NOTE PURCHASE AGREEMENT
This FIFTH AMENDMENT TO
MASTER NOTE PURCHASE AGREEMENT (this “Amendment”) is made as of October 31, 2023 (the “Fifth Amendment
Effective Date”), by and among ONTRAK, INC., a Delaware corporation (the “Company”), as issuer,
certain of its Subsidiaries, as Guarantors, and ACUITAS CAPITAL LLC, a Delaware limited liability company (“Purchaser”),
and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as collateral agent for the Secured Parties
(in such capacity, together with its successors and permitted assigns, the “Collateral Agent”). Capitalized terms used
in this Amendment (including the Recitals), to the extent not otherwise defined herein, shall have the same meaning as in the Note Purchase
Agreement (as defined below).
RECITALS
WHEREAS, the Company, certain
of its Subsidiaries, Purchaser and the Collateral Agent are party to that certain Master Note Purchase Agreement, dated as of April 15,
2022, as amended by that certain First Amendment to Master Note Purchase Agreement made as of August 12, 2022, that certain Second
Amendment to Master Note Purchase Agreement made as of November 19, 2022 (the “Second Amendment”), that certain
Third Amendment to Master Note Purchase Agreement made as of December 30, 2022, and that certain Fourth Amendment to Master Note
Purchase Agreement made as of June 23, 2023 (the “Fourth Amendment,” and as such Master Note Purchase Agreement
amended heretofore, the “Existing Agreement” and, as amended by this Amendment and as may be further amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”), pursuant
to which Purchaser agreed to purchase senior secured notes from the Company, upon the terms and subject to the conditions set forth therein;
WHEREAS, on October 5,
2023, the Company and Purchaser agreed to a form of letter agreement regarding the conversion of the Notes (the “Conversion Letter”);
and
WHEREAS, subject to the terms
contained herein, the Company and Purchaser are willing to amend the terms and conditions of the Existing Agreement and the Notes issued
thereunder and disregard the Conversion Letter.
NOW, THEREFORE, in consideration
of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows, in each case, effective as of the Fifth Amendment Effective
Date:
1. New
Defined Terms. The Existing Agreement is amended to include the following new defined terms:
“Closing Readiness
Event” means the written confirmation of the Company’s counsel for the Offering that all conditions precedent other than
the Notes Conversion and the consummation of the Private Placement have been satisfied or waived by all parties to the Offering (as confirmed
by the Company and counsel for the Placement Agent), and that the Company and the Placement Agent have confirmed that the Offering will
close immediately following the consummation of the Notes Conversion and immediately following or simultaneously with (in the discretion
of the Company after consultation with Purchaser) the consummation of the Private Placement.
“Fifth Amendment”
means the Fifth Amendment to Master Note Purchase Agreement, dated as of October 31, 2023, by and among the Company, certain of its
Subsidiaries, Purchaser and the Collateral Agent.
“Fifth Amendment
Effective Date” shall have the meaning given such term in the Fifth Amendment.
“Offering”
means the Company’s public offering of shares of its common stock, Public Offering Warrants and Public Offering Pre-Funded Warrants
pursuant to the Registration Statement.
“Offering Closing
Date” means the date on which the Offering closes.
“Offering Price”
means the public offering price per share at which the shares of the Company’s common stock and accompanying Public Offering Warrants
are sold to the public in the Offering, which price, for the avoidance of doubt, does not give effect to placement agent fees or other
expenses of the Offering.
“Placement Agent”
means collectively Roth Capital Partners, LLC, and any other placement agent or agents that may supplement or replace Roth Capital Partners,
LLC as placement agent for the Offering.
“Private Placement”
means the purchase by Purchaser from the Company, in a private placement not registered under the Securities Act and exempt from such
registration requirements, of the Private Placement Pre-Funded Warrants and the Private Placement Warrants, for a total purchase price
equal to (x) $11,000,000 minus (y) the aggregate exercise price of the Private Placement Pre-Funded Warrants.
“Private Placement
Pre-Funded Warrants” means the pre-funded warrants to purchase shares of the Company’s common stock to be issued and sold
by the Company to Purchaser in the Private Placement, which warrants shall be substantially identical (including as to purchase price,
exercise price of the warrants, number of warrant shares and terms of the warrants, including price reset and anti-dilution provisions)
to the Public Offering Pre-Funded Warrants, except as set forth in Sections 4.2 and 4.4 of this Amendment.
“Private Placement
Securities” means, collectively, the Private Placement Pre-Funded Warrants and the Private Placement Warrants (and, for the
avoidance of doubt, excludes the shares of the Company’s common stock issuable upon exercise thereof).
“Private Placement
Warrants” means the warrants to purchase shares of the Company’s common stock to be issued and sold by the Company to
Purchaser in the Private Placement, which warrants shall be substantially identical (including as to purchase price, exercise price of
the warrants, number of warrant shares and terms of the warrants, including price reset and anti-dilution provisions) to the Public Offering
Warrants, except as set forth in Sections 4.2 and 4.4 of this Amendment.
“Public Offering
Pre-Funded Warrants” means the pre-funded warrants to purchase shares of the Company’s common stock to be issued and sold
by the Company in the Offering.
“Public Offering
Warrants” means the warrants to purchase shares of the Company’s common stock to be issued and sold by the Company in
the Offering.
“Registration Statement”
means the Company’s registration statement on Form S-1 (SEC File No. 333-273029) filed with the SEC.
“Stockholder Approval”
means the approval by the Company’s stockholders, in accordance with the Listing Rules, of (A) the issuance of shares of the
Company’s common stock issuable upon exercise of (x) the Public Offering Warrants and the Public Offering Pre-Funded Warrants
sold in the Offering and (y) the Private Placement Securities that, in the aggregate for clauses (x) and (y) above, are
in excess of the maximum number of shares of the Company’s common stock permitted to be issued without such approval under the Listing
Rules (which amount is equal to 19.99% of the total number of shares of the Company’s common stock outstanding immediately
following the Notes Conversion and immediately prior to the closing of the Offering and/or the Private Placement), (B) the amendment
of Section 3.2(A) of each of the Surviving Notes, (C) the elimination of Section 8.3 of the Second Amendment and (D) any
other terms of the Offering, the Private Placement and/or this Amendment that require approval of the Company’s stockholders under
the Listing Rules.
2. Qualified
Financing. The definition of “Qualified Financing” is hereby amended to replace the “$10,000,000” set
forth therein with “$8,000,000.”
3. Partial
Conversion of Notes.
3.1 If
the Offering constitutes a Qualified Financing, subject to the occurrence of the Closing Readiness Event, Purchaser, on behalf of itself
and its affiliates, hereby irrevocably agrees to convert into shares of the Company’s common stock an aggregate amount outstanding
under the Notes equal to (x) the entire aggregate principal amount of all the Notes outstanding as of the Offering Closing Date,
and all accrued and unpaid interest thereon, (y) minus (y) $7,000,000 minus (z) the aggregate principal amount
of Notes purchased with Escrowed Funds prior to the closing of the Offering in accordance with the terms of the Existing Agreement and
the Notes, if any (the “Notes Conversion,” and the amount so converted, the “Notes Conversion Amount”).
The Notes Conversion shall be effected in accordance with the terms of the Existing Agreement and the Notes, as modified by Sections 3.2,
3.3 and 3.4 of this Amendment and shall be effective immediately prior to the closing of the Offering on the Offering Closing Date (and,
for the avoidance of doubt, before any shares of the Company’s common stock are issued in the Offering); provided, that, if the
Offering does not close on the same day as the Notes Conversion, the Notes Conversion shall be deemed not to have occurred and all the
Notes converted in the Notes Conversion shall remain outstanding and the Company shall withdraw any instruction letter to the transfer
agent with respect to the issuance of shares of the Company’s common stock in respect of the Notes Conversion, and to the extent
any such shares are issued before the Company effects such withdrawal, Purchaser shall return or instruct the transfer agent to cancel
such shares in the transfer agent’s books and records. Upon execution of this Amendment, Purchaser shall provide to the Company’s
counsel executed notices of conversion for all outstanding Notes, each in the form attached hereto as Exhibit A, with the
conversion amounts left blank (the “Blank Conversion Notices”), which notices of conversion shall be held in escrow
by such counsel in accordance with the terms of this Amendment. If any Escrow Funds are used to purchase Notes following the date of this
Amendment, Purchaser shall provide to the Company’s counsel a Blank Conversion Notice for each such Note purchased promptly following
such purchase. At any time prior to 5:00 p.m. Eastern Time on the Offering Closing Date (such time, the “Notes Selection
Deadline”), Purchaser may select which Notes or portions thereof shall convert in the Notes Conversion (the Notes or portions
thereof converted in the Notes Conversion, whether selected by Purchaser or pursuant to the Company Completed Conversion Notices, the
“Converted Notes”) by delivering to the Company’s counsel executed notices of conversion with completed amounts
to be converted totaling the Notes Conversion Amount as of the Offering Closing Date (the “Purchaser Completed Conversion Notices”)
and, upon receipt thereof, the Company’s counsel shall destroy the Blank Conversion Notices. The Purchaser Completed Conversion
Notices must elect for payment of accrued and unpaid interest outstanding under the Converted Notes as of the Offering Closing Date in
shares of the Company’s common stock, which interest shall then be included in the Notes Conversion Amount. If (x) the Closing
Readiness Event has occurred and (y) the Company’s counsel has not received the Purchaser Completed Conversion Notices by the
Notes Selection Deadline, then the Company may instruct the Company’s counsel to complete the Blank Conversion Notices such that
the total amount to be converted equals the Notes Conversion Amount as of the Offering Closing Date (as so completed, the “Company
Completed Conversion Notices”), and Purchaser hereby consents to such completion of the Blank Conversion Notices by the Company’s
counsel upon the Company’s instructions. The Company’s counsel shall not release either the Purchaser Completed Conversion
Notices or the Company Completed Conversion Notices, as applicable, to the Company prior to the Offering Closing Date, and, subject to
the occurrence of the Closing Readiness Event, the Company’s counsel is hereby instructed by Purchaser to release the Purchaser
Completed Conversion Notices or the Company Completed Conversion Notices, as applicable, to the Company immediately prior to the closing
of the Offering on the Offering Closing Date. Notwithstanding the provisions of Section 2.7(e) of the Appendix (Exhibit A)
to the Existing Agreement or any other provision of the Note Documents, in no event shall the Company be obligated to pay accrued and
unpaid interest on the Converted Notes in cash in connection with the Notes Conversion.
3.2 The
parties hereto agree that for administrative convenience and to avoid multiple issuances of the Company’s common stock on the same
day, Section 8.3 of the Second Amendment shall not apply to the Notes Conversion because it would not have applied if such conversion,
the Offering and the Private Placement had occurred simultaneously, and because Purchaser will not receive pursuant to the Notes Conversion
in accordance with this Amendment any additional shares of the Company’s common stock than it would have received pursuant to such
conversion in that case.
3.3 The
Notes converted in the Notes Conversion shall convert at the Conversion Price set forth in the Existing Agreement; provided that, if the
Offering Price is lower than the Conversion Price, then, effective on the earliest date on which the corporate actions approved by Stockholder
Approval may be taken under applicable law, including Rule 14c-2 promulgated under the Exchange Act (such earliest date, the “Stockholder
Approval Effectiveness Date”), Purchaser shall be issued additional shares of the Company’s common stock such that the
total number of shares of the Company’s common stock issued in respect of the Notes Conversion, giving effect to such additional
shares, shall be the number of shares that would have been issued in respect of the Notes Conversion if the Conversion Price was equal
to the Offering Price.
3.4 In
connection with the Notes Conversion, the Company shall issue to Purchaser a warrant to purchase shares of common stock (the “Conversion
Warrant”) in accordance with the terms of the Existing Agreement; provided that, if the Offering Price is lower than the Conversion
Price, then, effective on the Stockholder Approval Effectiveness Date, the exercise price of the Conversion Warrant shall be reduced to
the Offering Price and the number of shares of the Company’s common stock initially issuable upon exercise of the Conversion Warrant
shall be increased to the number of shares of common stock that would have been initially issuable upon exercise of the Conversion Warrant
if the Converted Notes were converted at a conversion price equal to the Offering Price.
3.5 The
Conversion Letter shall not come into effect and is therefore deemed void ab initio.
4. Private
Placement.
4.1 In
lieu of the provisions set forth in the Fourth Amendment concerning investment of Escrowed Funds in the Offering, if the Offering constitutes
a Qualified Financing, the Company and Purchaser shall immediately prior to, or simultaneously with (in the discretion of the Company
after consultation with Purchaser), the closing of the Offering, consummate the Private Placement. The consideration for the Private Placement
Securities purchased by Purchaser shall consist of (a) the Escrowed Funds then held in the Escrow Account and (b) a reduction
of the aggregate amounts outstanding under the Notes (after giving effect to the Notes Conversion) to $2,000,000. Such reduction shall
be deemed a prepayment of principal amounts owed under the Notes and any associated accrued and unpaid interest that would be payable
in accordance with Section 2.7(e) of the Appendix (Exhibit A) to the Existing Agreement, and shall be applied to outstanding
Notes as directed by Purchaser (which directions will be deemed an amendment to Section 2.14 of the Appendix (Exhibit A) to
the Existing Agreement), or in the absence of instructions from the Purchaser prior to the Closing Readiness Event, in accordance with
Section 2.14 of the Appendix (Exhibit A) to the Existing Agreement. For the avoidance of doubt, immediately following the Notes
Conversion and the consummation of the Private Placement, the aggregate outstanding balance of all the Notes then outstanding shall be
$2,000,000, inclusive of principal and associated accrued and unpaid interest thereon (the Note(s) that represents such $2,000,000,
the “Surviving Notes”). All provisions of the Existing Agreement shall apply to the Surviving Notes, except for those
provisions expressly modified in Sections 6.3 through 6.5 of this Amendment. Notwithstanding the provisions of Section 2.7(e) of
the Appendix (Exhibit A) to the Existing Agreement or any other provision of the Note Documents, in no event shall the Company be
obligated to pay any accrued and unpaid interest on the principal amount of any outstanding Notes in cash to Purchaser in connection with
application of the amounts owed under the Notes toward the purchase price of the Private Placement Securities.
4.2 All
Private Placement Securities shall have registration rights equivalent to the registration rights provided in the most recent form of
warrant attached as an exhibit to the Existing Agreement.
4.3 For
the avoidance of doubt, effective on the Stockholder Approval Effectiveness Date, Section 8.3 of the Second Amendment shall not apply
to any exercise of the Private Placement Securities.
4.4 The
Company and Purchaser shall negotiate in good faith the forms of the Private Placement Securities, which terms shall differ from the Public
Offering Warrants and Public Offering Pre-Funded Warrants only as necessary to reflect the terms of Section 4.2 of this Amendment,
the nature of such warrants as warrants issued in a private placement rather than a registered offering under the Securities Act, and
that the Private Placement Securities will not have beneficial ownership below any specified level as a condition to exercisability.
4.5 The
Company agrees to timely file a Form D with respect to the equity securities being offered and sold by the Company in the Private
Placement and under this Amendment (except to the extent already covered by a previously filed Form D) as required under Regulation
D under the Securities Act and to provide a copy thereof to Purchaser promptly upon request. The Company shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify such securities for, sale to Purchaser
under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions
to Purchaser promptly upon request.
5. Acknowledgment
of Dilution. The Company acknowledges that the issuance of the securities being offered and sold by the Company under this Amendment
and in the Private Placement may result in dilution of the outstanding shares of the Company’s common stock, which dilution may
be substantial. The Company further acknowledges that its obligations under the Note Documents, including, without limitation, its obligation
to issue the Conversion Shares, the Warrant Shares and the shares issuable upon exercise of the Private Placement Securities in accordance
with the terms hereof, are unconditional and absolute (except to the extent expressly subject to Stockholder Approval) and are not subject
to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may
have against Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of
the Company.
6. Other
Amendments to the Existing Agreement.
6.1 Section 2.2(e) of
the Fourth Amendment is hereby deleted and replaced with the text “Intentionally Deleted”.
6.2 The
reference to “October 31, 2023” in Section 2.2(i) of the Fourth Amendment is hereby replaced with “January 31,
2024.”
6.3 Effective
upon the Notes Conversion, the definition of “Notes Maturity Date” in the Existing Agreement is hereby deleted in its
entirety and replaced with the following: “Notes Maturity Date” means the earlier of (i) the date that is two
years and six months after the closing date of the Offering (as such term is defined in the Fifth Amendment) and (ii) the date that
the Surviving Notes (as such term is defined in the Fifth Amendment) shall become due and payable in full hereunder, whether by acceleration
or otherwise.”
6.4 The
Surviving Notes shall be convertible into shares of the Company’s common stock in accordance with the terms set forth therein and
in the Existing Agreement; provided that, notwithstanding anything to the contrary in the Existing Agreement, in the Form of Senior
Secured Convertible Note attached as Exhibit A to the Third Amendment or in the related letter agreement, dated February 20,
2023, between the Company and Purchaser, if the Offering Price is lower than $0.90, then, effective on the Stockholder Approval Effectiveness
Date, each of the Surviving Notes shall be deemed to have been amended to delete Sections 3.2(A) and 3.2(B) thereof in its entirety
and replace it with the following:
“(A) The
conversion price in effect on any Conversion Date shall be equal to the lesser of (i) $2.40, subject to adjustment in accordance
with Section 3.2(B), and (ii) the greater of (a) the consolidated closing bid price of the Company’s common stock
as reported on the Exchange on the Trading Day that is immediately prior to the applicable Conversion Date and (b) the Offering Price
(as such term is defined in the Fifth Amendment), subject to adjustment in accordance with Section 3.2(B) (the “Conversion
Price”).
(B) If
the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
payable in shares of its common stock on its outstanding shares of common stock, (ii) subdivides its outstanding shares of common
stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) its outstanding shares of common
stock into a smaller number of shares or (iv) issues, in the event of a reclassification of its shares of common stock, any shares
of the Company, then, for the purpose of determining the Conversion Price in accordance with Section 3.2(A), the dollar amount in
clause (i) of Section 3.2(A) and the amount of the Offering Price referred to in clause (ii) of Section 3.2(A) shall
be multiplied by a fraction the numerator of which shall be the number of shares of the Company’s common stock (excluding any treasury
shares of the Company) outstanding immediately before such event, and the denominator of which shall be the number of shares of the Company’s
common stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this Section shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and
any adjustment made pursuant to clauses (ii) through (iv) of this Section shall become effective immediately after the
effective date of such subdivision, combination or re-classification, as applicable.”
6.5 Effective
on the Stockholder Approval Effectiveness Date, Section 8.3 of the Second Amendment shall be deleted and replaced with the text “Intentionally
Deleted”.
7. Stockholder
Approval.
7.1 The
Company hereby agrees to seek the Stockholder Approval. As promptly as practicable after the execution of this Amendment, the Company
shall file a preliminary information statement related to the Stockholder Approval, and the Company shall thereafter mail a definitive
information statement to the Company’s stockholders in accordance with the rules of the SEC. If for any reason the Company
cannot obtain Stockholder Approval via written consent as contemplated by the Support Agreement (including any objection to such process
by the staff of the Exchange), the Company shall call a special meeting of stockholders (the “Stockholder Meeting”)
at the earliest practical date following the determination that Stockholder Approval by written consent is not feasible, and the Company
shall file a preliminary and definitive proxy statement for the Stockholder Meeting as promptly as practicable thereafter and shall hold
the Stockholder Meeting for the purpose of obtaining Stockholder Approval, with the recommendation of the Company’s board of directors
to the Company’s stockholders that such stockholders vote in favor of the matters contemplated by the Stockholder Approval, and
the Company shall solicit proxies from its stockholders in connection therewith in the same manner as the Company has historically solicited
proxies at its annual meetings of stockholders for management proposals in such proxy statements, and all management-appointed proxyholders
shall vote their proxies in favor of such matters. In accordance with the Company’s bylaws and the Listing Rules, the voting standard
at the Stockholder Meeting for the proposals to approve the matters contemplated by the Stockholder Approval will be the affirmative vote
of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. Further
and in accordance with the Listing Rules, Purchaser and its Affiliates will be permitted to vote all shares of the Company’s common
stock owned by them as of the record date for the Stockholder Meeting at such meeting on the matters contemplated by the Stockholder Approval.
7.2 The
Company shall further be obligated to Purchaser to perform all covenants provided to purchasers in the Offering related to Stockholder
Approval as if such covenants were included in this Amendment mutatis mutandis.
7.3 Simultaneously
with executing and delivering this Amendment, Purchaser has executed and delivered to the Company the Support Agreement attached hereto
as Exhibit B.
8. Security.
Each Note Party expressly acknowledges and agrees that all collateral, security interests, liens, pledges and mortgages granted to the
Collateral Agent for the benefit of the Secured Parties in connection with the Existing Agreement, this Amendment, or hereafter granted
to the Collateral Agent for the benefit of the Secured Parties, and all other supplements to the Existing Agreement or any other Note
Document, shall extend to and cover all of the Obligations of the Note Parties to Purchasers, now existing or hereafter arising, including,
without limitation, those arising in connection with the Note Purchase Agreement, as amended by this Amendment, and the Surviving Notes,
upon the terms set forth in such agreements, and all of such security interests, liens, pledges, and mortgages are hereby ratified, reaffirmed,
confirmed and approved. Each Note Party hereby restates, ratifies and reaffirms each and every term and condition set forth in the Note
Purchase Agreement, as amended hereby, and the other Note Documents, effective as of the date hereof, including, without limitation, the
grant of security interests and liens by the Company and the other Note Parties under the Collateral Documents and confirms and agrees
that such security interests and liens hereafter secure all of the Obligations as amended hereby. The validity and enforceability of any
appointment of the Collateral Agent as proxy or attorney-in-fact under any Collateral Document is ratified and reaffirmed as of the date
hereof, which appointment remains IRREVOCABLE and coupled with an interest until the Payment in Full of all Secured Obligations, for the
purpose of carrying out the provisions of the Collateral Documents, in accordance with the terms of, and to the extent provided in, such
Collateral Documents.
9. Representations
and Warranties. Each Note Party represents and warrants to Purchaser and the Collateral Agent as follows:
9.1 it
has all necessary power and authority to execute and deliver this Amendment and the documents contemplated hereby, and perform its obligations
hereunder and thereunder;
9.2 this
Amendment, the documents contemplated hereby and the Existing Agreement, as amended hereby, constitute the legal, valid and binding obligations
of such Note Party and are enforceable against such Note Party in accordance with their terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in an proceeding in equity or at law) and/or principles of good faith and fair dealing;
9.3 the
execution, delivery or performance by such Note Party of this Amendment or any document contemplated herein are within its powers, have
been duly authorized by all necessary action pursuant to its organizational documents (but not pursuant to the Listing Rules), require
no further action by or in respect of, or filing with, any governmental authority (subject to compliance with Section 4.5 of this
Amendment) and do not violate, conflict with or cause a breach or a default under (x) any law or any of the organizational documents
of such Note Party or (y) any agreement or instrument binding upon it, except for such violations, conflicts breaches or defaults
as could not, with respect to this clause (y), reasonably be expected to have a Material Adverse Effect;
9.4 both
immediately before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Default or Event
of Default has occurred and is continuing as of the date hereof;
9.5 as
of the date hereof, and after giving effect to this Amendment and the transactions contemplated hereby, the representations and warranties
of the Note Parties contained in the Existing Agreement and any Note Document are true and correct in all material respects (provided
that if such representation or warranty is by its terms qualified by concepts of materiality, such representation and warranty are true
and correct in all respects) on and as of the date hereof, in each case except to the extent such representations and warranties expressly
relate to an earlier date in which case such representations and warranties are true and correct in all material respects (subject to
the foregoing parenthetical with respect to materiality) as of such earlier date;
9.6 such
Note Party shall not be a party to any agreement or other arrangement that prohibits the grant, creation, assumption or perfection of
any Lien upon such Note Party’s properties or assets, whether now owned or hereafter acquired, to secure the Obligations; and
9.7 since
June 30, 2023, there has been no Material Adverse Effect.
10. Investment
Representations by Purchaser. Purchaser hereby represents and warrants to the Company as follows:
10.1 Investor
Status. It (i) is an “accredited investor”, as that term is defined in Regulation D under the Securities Act, (ii) has
such knowledge, skill, sophistication and experience in business and financial matters, based on actual participation, that it is capable
of evaluating the merits and risks of the Notes Conversion and the Private Placement and the suitability thereof for Purchaser, (iii) is
a sophisticated purchaser with respect to the Notes Conversion and the Private Placement, (iv) is able to bear the economic risk
associated with the Notes Conversion and the Private Placement, (v) has had an opportunity to ask questions of the principal officers
and representatives of Company and to obtain any additional information necessary to permit an evaluation of the benefits and risks associated
with the investments to be made hereby, (vi) has been provided adequate information concerning the business and financial condition
of Company to make an informed decision regarding the Notes Conversion and the Private Placement, (vii) has such knowledge and experience,
and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the purchase of securities
of the type contemplated in this Amendment, and (viii) has independently and without reliance upon Company, and based on such information
as Purchaser has deemed appropriate, made its own analysis and decision to enter into this Amendment, except that Purchaser has relied
upon Company’s express representations and warranties in this Amendment.
10.2 Investment
for Own Account. Purchaser is engaging in the Notes Conversion and purchasing securities in the Private Placement for investment for
its own account and not with a view towards the sale or distribution of any securities to be received thereupon in violation of applicable
securities laws of the United States or any state thereof. Purchaser acknowledges there are restrictions on its ability to resell all
securities to be received pursuant to the Notes Conversion and the Private Placement under applicable securities laws.
10.3 Transfer
Restrictions. Purchaser understands that the Notes Conversion and the Private Placement are intended to be exempt from registration
under the Securities Act pursuant to Section 4(a)(2) thereof or another exemption thereunder; Company is not registering the
securities issuable in connection with the Notes Conversion or the Private Placement under the Securities Act or any state securities
laws; and there is no existing public or other market for the warrants to be issued in the Note Conversion or the Private Placement Securities.
Purchaser understands that any certificate representing the securities that are issued to Purchaser upon the Notes Conversion and the
Private Placement may bear, in Company’s discretion, an appropriate restrictive legend reflecting the lack of such registration.
11. Reference
to, and Effect on, Note Purchase Agreement and the Note Documents.
11.1 Ratification
of Note Purchase Agreement and the Note Documents. Except as specifically amended above or in connection with this Amendment (as applicable),
the Existing Agreement and the Note Documents shall remain in full force and effect. Notwithstanding anything contained herein, the terms
of this Amendment are not intended to and do not effect a novation of the Existing Agreement or any Note Document. Each Note Party hereby
ratifies and reaffirms each of the terms and conditions of the Existing Agreement, as amended hereby, and the Note Documents, as amended
in connection herewith, to which it is a party and all of its obligations thereunder.
11.2 No
Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of
the Collateral Agent or any Purchaser under the Existing Agreement or any of the Note Documents.
11.3 References.
Upon the effectiveness of this Amendment each reference in (i) the Existing Agreement to “this Agreement,” “hereunder,”
“hereof,” or words of similar import and (ii) any Note Document to “the Note Purchase Agreement,” or words
of similar import shall, in each case and except as otherwise specifically stated therein, mean and be a reference to the Existing Agreement,
as amended hereby.
12. Incorporation
of Note Purchase Agreement Provisions. The provisions contained in Section 10.14 (Applicable Law), Section 10.15 (Consent
to Jurisdiction) and Section 10.16 (Waiver of Jury Trial) of the Appendix (Exhibit A) to the Existing Agreement are incorporated
herein by reference to the same extent as if reproduced herein in their entirety.
13. Conflict.
If there is an express conflict between the terms of this Amendment and the terms of the Existing Agreement, or any of the other agreements
or documents executed in connection therewith or referred to or incorporated therein, the terms of this Amendment shall govern and control.
If there is an express conflict between the terms of this Amendment and the terms of any other Note Document, the terms of this Amendment
shall govern and control.
14. Entire
Agreement. The Existing Agreement, as amended by this Amendment, constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof.
15. Counterparts.
This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. Delivery by facsimile or electronic transmission of a portable document file (also known as a
..pdf file) of an executed counterpart signature page shall be effective as a manually executed counterpart signature hereof.
16. Severability.
In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder
of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby.
17. Status
as a Note Document. This Amendment constitutes a Note Document.
18. Headings.
Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction
of, or to be taken into consideration in interpreting, this Amendment.
19. Successors
and Assigns. All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
20. Recitals.
The Recitals constitute statements of the Company and Purchaser, and not statements of the Collateral Agent.
21. Collateral
Agent. By its execution hereof, the Purchaser authorizes and directs the Collateral Agent to enter into this Amendment.
[Signature page follows]
IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
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ISSUER: |
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ONTRAK, INC. |
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By: |
/s/ Brandon LaVerne |
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Name: |
Brandon LaVerne |
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Title: |
Interim Chief Executive Officer |
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GUARANTORS: |
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LIFEDOJO INC. |
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By: |
/s/ Brandon LaVerne |
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Name: |
Brandon LaVerne |
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Title: |
President |
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LD ACQUISITION HOLDINGS, INC. |
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By: |
/s/ Brandon LaVerne |
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Name: |
Brandon LaVerne |
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Title: |
President |
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PURCHASER: |
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ACUITAS CAPITAL LLC |
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By: |
/s/ Terren S. Peizer |
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Name: |
Terren S. Peizer |
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Title: |
Chairman |
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COLLATERAL AGENT: |
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U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION |
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By: |
/s/ Fonda Hall |
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Name: |
Fonda Hall |
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Title: |
Vice President |
Exhibit A
Form of Conversion Notice
[Attached]
NOTICE OF CONVERSION
The undersigned hereby elects
to convert the principal amount of the Senior Secured Convertible Note issued by ONTRAK, INC. (the “Company”) with the
issuance date shown below, plus the accrued and unpaid interest thereon as shown below, into shares of the Company’s common stock
in accordance with and pursuant to the terms of said Senior Secured Convertible Note. If shares of Common Stock are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to
the holder for any conversion, except for such transfer taxes, if any.
Note Issuance Date: |
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Conversion Date: |
The closing date of the offering described in the Company’s Form S-1 registration statement, SEC File No. 333-273029 |
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Principal amount to be converted: |
$ |
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Payment of interest in common stock: |
x |
Yes |
¨ |
No |
If yes, dollar amount of interest to be converted: |
$ |
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Number of shares of common stock to be issued: |
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Address for Delivery of Common Stock Certificates: |
200 Dorado Beach Drive #3831 |
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Dorado, Puerto Rico 00646 |
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[Signature page follows]
Holder: |
Acuitas Capital LLC |
Signature: |
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Printed Name: |
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Exhibit B
Form of Support Agreement
[Attached]
SUPPORT
Agreement
This Support Agreement (this
“Agreement”), dated as of October 31, 2023, by and among Ontrak, Inc., a Delaware corporation (the “Company”),
and the stockholders listed on the signature page hereto under the heading “Stockholders” (“Stockholders”).
whereas,
the Company and Acuitas Capital LLC (“Purchaser”) entered into that certain Fifth Amendment to Master Note Purchase
Agreement, dated as of April 15, 2022, among the Company, as issuer, certain of its subsidiaries, as guarantors, Purchaser and the
collateral agent party thereto, as previously amended (the “Fifth Amendment”), when provides for (a) modifications
to the securities previously sold under such Master Note Purchase Agreement (as amended, the “Keep Well Agreement”);
(b) the conversion of certain secured notes issued to Purchase pursuant to the Keep Well Agreement, and (c) the investment by
Purchaser in a private placement transaction by the Company (the “Private Placement”);
WHEREAS,
the Company and certain Buyers intend to enter into a Securities Purchase Agreement (the “Purchase Agreement”), dated
as of the effective date of the Registration Statement (as defined in the Fifth Amendment), pursuant to which, among other things, the
Company will issue and sell to the Buyers, and the Buyers will subscribe for and purchase from the Company, shares of its Common Stock,
par value $0.0001 per share (the “Common Stock”), and warrants to purchase shares of Common Stock;
WHEREAS,
as shown on Appendix A attached hereto, Stockholders will own a majority of the outstanding voting shares of the common stock of
the Company immediately following the conversion of Senior Secured Convertible Notes as contemplated by the Fifth Amendment; and
WHEREAS,
as a condition to the Company’s willingness to enter into the Fifth Amendment and the willingness of the Buyers to enter into the
Purchase Agreement and to consummate the transactions contemplated thereby (collectively, the “Transactions”), the
Company and the Buyers have required that Stockholders agree, and in compliance with the Fifth Amendment and in order to induce the Buyers
to enter into the Purchase Agreement, Stockholders have agreed, to enter into this Agreement with respect to (i) all the shares of
Common Stock now owned and which may hereafter be acquired by Stockholders or their respective controlled affiliates and (ii) any
other securities, if any, which any Stockholder or its controlled affiliates is currently entitled to vote, or after the date hereof,
becomes entitled to vote, at any meeting of stockholders of the Company (the securities described in clauses (i) and (ii) above,
the “Covered Securities”).
NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and agreements contained herein, and intending to be legally bound hereby,
the parties hereto hereby agree as follows:
ARTICLE I
VOTING AGREEMENT OF THE STOCKHOLDERS
SECTION 1.01.
Voting Agreement. Stockholders hereby agree that, during the period commencing with the execution and delivery of this Agreement
and continuing until the termination of this Agreement in accordance with Section 4.01, at any meeting of the stockholders
of the Company, however called, and in any action by written consent of the Company’s stockholders proposed by the Company, with
respect to any of the following, Stockholders shall: (a) vote all of the Covered Securities that such Stockholder or its controlled
affiliates are entitled to vote thereon in favor of, or consent on behalf of itself and all of its controlled affiliates to, all of the
corporate actions subject to Stockholder Approval (as defined in the Fifth Amendment), as described in Section 7.1 of the Fifth Amendment;
and (b) vote all of the Covered Securities that such Stockholder or its controlled affiliates are entitled to vote thereon against,
or decline (on behalf of itself and all of its controlled affiliates) to consent to, any proposal or any other corporate action or agreement
that would result in a breach by Purchaser of the Keep Well Agreement or impede, delay or otherwise adversely affect the consummation
of the transactions contemplated by the Purchase Agreement or any similar agreements entered into by the Company and the Buyers in connection
with the Private Placement (the “Private Placement Agreements”). Stockholders acknowledges receipt and review of a
copy of the form of Purchase Agreement and the other Transaction Documents (as defined in the Purchase Agreement) that are included with
the Registration Statement.
SECTION 1.02. Voting
on Other Matters. Notwithstanding anything in Section 1.01 to the contrary, (a) Stockholders shall not be required
to vote or execute written consents with respect to the Covered Securities to approve any amendments or modifications of any of the Private
Placement Agreements or other Transaction Documents, or take any other action that could result in the amendment or modification of any
of the Private Placement Agreements or other Transaction Documents, or a waiver of a provision thereof, and (b) Stockholders shall
remain free to vote or execute consents with respect to the Covered Securities with respect to any matter not covered by Section 1.01
in any manner that such Stockholder deems appropriate.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERs
Each Stockholder hereby represents
and warrants, severally but not jointly, to each of the Buyers as follows:
SECTION 2.01.
Authority Relative to This Agreement. Each Stockholder has all necessary legal capacity, power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Stockholder and constitutes a legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, except (a) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to, or affecting generally the enforcement
of creditors’ and other obligees’ rights, (b) where the remedy of specific performance or other forms of equitable relief
may be subject to certain equitable defenses and principles and to the discretion of the court before which the proceeding may be brought,
and (c) where rights to indemnity and contribution thereunder may be limited by applicable law and public policy.
SECTION 2.02.
No Conflict. (a) The execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement
by such Stockholder shall not, (i) conflict with or violate any foreign, federal, state or local law, statute, ordinance, rule, regulation,
order, judgment or decree applicable to such Stockholder or by which the Covered Securities are bound or affected or (ii) result
in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien, charge, pledge,
option, security interest, encumbrance, tax, right of first refusal, preemptive right or other restriction (each, a “Lien”)
on any of the Covered Securities pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which such Stockholder is a party or by which such Stockholder or the Covered Securities are bound,
except, in the case of clauses (i) and (ii) above, any such conflict, breach, default, termination, amendment, acceleration,
cancellation or Lien that would not reasonably be expected, individually or in the aggregate, to prevent, materially delay or materially
impair such Stockholder’s ability to perform its obligations hereunder.
(b) The execution and
delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder shall not, require
any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by such Stockholder.
SECTION 2.03.
Title to the Stock and Convertible Notes. As of the date hereof, such Stockholder is the owner of the number of shares of Common
Stock or balance outstanding of Senior Secured Convertible Notes set forth opposite its name on Appendix A attached hereto.
Such shares of Common Stock represent all the Common Stock owned, either of record or beneficially, by Stockholder as of the date hereof,
other than the Senior Secured Convertible Notes and warrants to purchase Common Stock that have not been exercised as of the date hereof.
Such shares of Common Stock or Senior Secured Convertible Notes, as applicable, are owned free and clear of all Liens or limitations on
such Stockholder’s voting rights of any nature whatsoever, except for (a) the limitations or restrictions under this Agreement,
(b) any limitations or restrictions imposed under applicable securities laws, (c) any restrictions on ownership and transfer
of securities contained in the Company’s certificate of incorporation or (d) any limitations or restrictions that would not
reasonably be expected, individually or in the aggregate, to prevent, materially delay or materially impair such Stockholder’s ability
to perform its obligations hereunder. No Stockholder has appointed or granted any proxy, which appointment or grant is still effective,
with respect to any of the Covered Securities.
ARTICLE III
COVENANTS
SECTION 3.01.
No Disposition of Stock. Each Stockholder hereby covenants and agrees that, until the termination of this Agreement in accordance
with Section 4.01, except as contemplated by this Agreement, such Stockholder shall not offer or agree to sell, transfer,
tender, assign, hypothecate, pledge or otherwise dispose of, grant a proxy or power of attorney with respect to, or create or permit to
exist any Lien or limitation on such Stockholder’s voting rights of any nature whatsoever (other than any limitations or restrictions
imposed under applicable securities laws) with respect to the Covered Securities; provided, however, that such Stockholder
may assign, sell or transfer any Covered Securities provided that the recipient of such Covered Securities has delivered to the Company
a written agreement in a form reasonably satisfactory to the Company that the recipient shall be bound by, and the Covered Securities
so transferred, assigned or sold shall remain subject to this Agreement.
SECTION 3.02.
Company Cooperation. The Company hereby covenants and agrees that it will not, and such Stockholder irrevocably and unconditionally
acknowledges and agrees that the Company will not (and waives any rights against the Company in relation thereto), recognize any Lien
on any of the Covered Securities unless the provisions of Section 3.01 have been complied with.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01.
Termination. This Agreement shall automatically terminate without further action and shall have no further force and effect upon
the earliest to occur of (a) the date that the Company obtains the Stockholder Approval (as defined in the Fifth Amendment), (b) following
effectiveness of the Registration Statement and entry into the Purchase Agreement, the termination of the Purchase Agreement in accordance
with its terms.
SECTION 4.02. Further
Assurances. Stockholders will execute and deliver such further documents and instruments and take all further action as may be reasonably
necessary in order to consummate the transactions contemplated hereby.
SECTION 4.03.
Third Party Beneficiary; Specific Performance. Each Buyer is an express third-party beneficiary of this Agreement and shall have
the right to enforce this Agreement against the Company and Stockholders as if each such Buyer was a party hereto. In addition to being
entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Buyers (without being joined
by any other Buyer) and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations contained herein and hereby agree to waive
and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
SECTION 4.04.
Entire Agreement. This Agreement, together with the Keep Well Agreement, contains the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents.
SECTION 4.05.
Amendment. The provisions of this Agreement may not be amended or waived, nor may this Agreement be terminated by the Company,
without the prior written consent of all Stockholders and the Buyers.
SECTION 4.06.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
SECTION 4.07.
Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors,
officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address set forth on the signature pages to this Agreement (and service so made shall be deemed complete three
days after the same has been posted) and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. IN
ANY ACTION OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY,
TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.
SECTION 4.08. No Recourse.
All actions (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise
under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution or performance
of this Agreement may be made only against (and are those solely of) the persons that are expressly identified as parties to this Agreement
in the preamble to this Agreement. No other person, including any former, current or future equity holder, controlling person, director,
officer, employee, member, partner, manager, agent, attorney, representative or affiliate of any party hereto, or any former, current
or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, agent, attorney,
representative or affiliate of any of the foregoing, shall have any liability (whether in contract or in tort, in law or in equity, or
granted by statute) for any claims, causes of action, obligations or liabilities arising under, out of, in connection with or related
in any manner to this Agreement or based on, in respect of or by reason of this Agreement or its negotiation, execution, performance or
breach.
[Signature page follows.]
In
witness whereof, each Stockholder and the Company has duly executed this Agreement as of the date first written above.
|
Company: |
|
|
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ONTRAK, Inc. |
|
|
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By: |
|
|
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Name: Brandon H. LaVerne |
|
|
Title: Interim Chief Executive Officer and Chief Operating Officer |
[Company Signature Page to Ontrak Support Agreement]
|
STOCKHOLDERS: |
|
|
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Acuitas
Group Holdings, LLC |
|
|
|
By: |
|
|
|
Name: Terren S. Peizer |
|
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Title: Chairman |
|
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E-mail address: [REDACTED] |
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Acuitas
CAPITAL LLC |
|
|
|
By: |
|
|
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Name: Terren S. Peizer |
|
|
Title: Chairman |
|
|
|
E-mail address: [REDACTED] |
[Stockholders
Signature Page to Ontrak Support Agreement]
APPENDIX
A
Stockholder | |
Voting Shares of
Common Stock
Owned | | |
Outstanding
Balance of Senior
Secured
Convertible Notes | | |
Percent
of Voting
Shares of Common
Stock Owned by
Stockholder Giving
Effect to Notes
Conversion as
Contemplated by
Fifth Amendment1 | |
Acuitas Group Holdings, LLC | |
| 1,981,989 | | |
$ | 0 | | |
| 8.7 | % |
| |
| | | |
| | | |
| | |
Acuitas Capital LLC (pre-Notes Conversion) | |
| -- | | |
$ | 23,060,561.84 | | |
| | |
| |
| | | |
| | | |
| | |
Acuitas Capital LLC (post-Notes Conversion1) | |
| 17,845,069 | | |
$ | 7,000,000 | 2 | |
| 78.4 | % |
| |
| | | |
| | | |
| | |
Controlled Affiliates | |
| -- | | |
| -- | | |
| -- | |
| |
| | | |
| | | |
| | |
Total (post-Notes Conversion1): | |
| 19,827,058 | | |
$ | 7,000,000 | 2 | |
| 87.1 | % |
1
Gives effect to the initial Notes Conversion prior to Stockholder Approval, assuming a conversion price of $0.90. Does not
give effect to conversion or exercise of any other outstanding securities of the Company or to additional shares to be issued following
Stockholder Approval in respect of the Notes Conversion.
2
Purchaser has committed to invest $5,000,000 of this Amount in the Private Placement, so that $2,000,000 of Senior Secured
Convertible Notes will be outstanding following the Private Placement.
Exhibit 99.3
SUPPORT
Agreement
This Support Agreement (this
“Agreement”), dated as of October 31, 2023, by and among Ontrak, Inc., a Delaware corporation (the “Company”),
and the stockholders listed on the signature page hereto under the heading “Stockholders” (“Stockholders”).
whereas,
the Company and Acuitas Capital LLC (“Purchaser”) entered into that certain Fifth Amendment to Master Note Purchase
Agreement, dated as of April 15, 2022, among the Company, as issuer, certain of its subsidiaries, as guarantors, Purchaser and the
collateral agent party thereto, as previously amended (the “Fifth Amendment”), when provides for (a) modifications
to the securities previously sold under such Master Note Purchase Agreement (as amended, the “Keep Well Agreement”);
(b) the conversion of certain secured notes issued to Purchase pursuant to the Keep Well Agreement, and (c) the investment by
Purchaser in a private placement transaction by the Company (the “Private Placement”);
WHEREAS,
the Company and certain Buyers intend to enter into a Securities Purchase Agreement (the “Purchase Agreement”), dated
as of the effective date of the Registration Statement (as defined in the Fifth Amendment), pursuant to which, among other things, the
Company will issue and sell to the Buyers, and the Buyers will subscribe for and purchase from the Company, shares of its Common Stock,
par value $0.0001 per share (the “Common Stock”), and warrants to purchase shares of Common Stock;
WHEREAS,
as shown on Appendix A attached hereto, Stockholders will own a majority of the outstanding voting shares of the common stock of
the Company immediately following the conversion of Senior Secured Convertible Notes as contemplated by the Fifth Amendment; and
WHEREAS,
as a condition to the Company’s willingness to enter into the Fifth Amendment and the willingness of the Buyers to enter into the
Purchase Agreement and to consummate the transactions contemplated thereby (collectively, the “Transactions”), the
Company and the Buyers have required that Stockholders agree, and in compliance with the Fifth Amendment and in order to induce the Buyers
to enter into the Purchase Agreement, Stockholders have agreed, to enter into this Agreement with respect to (i) all the shares of
Common Stock now owned and which may hereafter be acquired by Stockholders or their respective controlled affiliates and (ii) any
other securities, if any, which any Stockholder or its controlled affiliates is currently entitled to vote, or after the date hereof,
becomes entitled to vote, at any meeting of stockholders of the Company (the securities described in clauses (i) and (ii) above,
the “Covered Securities”).
NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and agreements contained herein, and intending to be legally bound hereby,
the parties hereto hereby agree as follows:
ARTICLE I
VOTING AGREEMENT OF THE STOCKHOLDERS
SECTION 1.01.
Voting Agreement. Stockholders hereby agree that, during the period commencing with the execution and delivery of this Agreement
and continuing until the termination of this Agreement in accordance with Section 4.01, at any meeting of the stockholders
of the Company, however called, and in any action by written consent of the Company’s stockholders proposed by the Company, with
respect to any of the following, Stockholders shall: (a) vote all of the Covered Securities that such Stockholder or its controlled
affiliates are entitled to vote thereon in favor of, or consent on behalf of itself and all of its controlled affiliates to, all of the
corporate actions subject to Stockholder Approval (as defined in the Fifth Amendment), as described in Section 7.1 of the Fifth Amendment;
and (b) vote all of the Covered Securities that such Stockholder or its controlled affiliates are entitled to vote thereon against,
or decline (on behalf of itself and all of its controlled affiliates) to consent to, any proposal or any other corporate action or agreement
that would result in a breach by Purchaser of the Keep Well Agreement or impede, delay or otherwise adversely affect the consummation
of the transactions contemplated by the Purchase Agreement or any similar agreements entered into by the Company and the Buyers in connection
with the Private Placement (the “Private Placement Agreements”). Stockholders acknowledges receipt and review of a
copy of the form of Purchase Agreement and the other Transaction Documents (as defined in the Purchase Agreement) that are included with
the Registration Statement.
SECTION 1.02. Voting
on Other Matters. Notwithstanding anything in Section 1.01 to the contrary, (a) Stockholders shall not be required
to vote or execute written consents with respect to the Covered Securities to approve any amendments or modifications of any of the Private
Placement Agreements or other Transaction Documents, or take any other action that could result in the amendment or modification of any
of the Private Placement Agreements or other Transaction Documents, or a waiver of a provision thereof, and (b) Stockholders shall
remain free to vote or execute consents with respect to the Covered Securities with respect to any matter not covered by Section 1.01
in any manner that such Stockholder deems appropriate.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERs
Each Stockholder hereby represents
and warrants, severally but not jointly, to each of the Buyers as follows:
SECTION 2.01.
Authority Relative to This Agreement. Each Stockholder has all necessary legal capacity, power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Stockholder and constitutes a legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, except (a) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to, or affecting generally the enforcement
of creditors’ and other obligees’ rights, (b) where the remedy of specific performance or other forms of equitable relief
may be subject to certain equitable defenses and principles and to the discretion of the court before which the proceeding may be brought,
and (c) where rights to indemnity and contribution thereunder may be limited by applicable law and public policy.
SECTION 2.02.
No Conflict. (a) The execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement
by such Stockholder shall not, (i) conflict with or violate any foreign, federal, state or local law, statute, ordinance, rule, regulation,
order, judgment or decree applicable to such Stockholder or by which the Covered Securities are bound or affected or (ii) result
in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien, charge, pledge,
option, security interest, encumbrance, tax, right of first refusal, preemptive right or other restriction (each, a “Lien”)
on any of the Covered Securities pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which such Stockholder is a party or by which such Stockholder or the Covered Securities are bound,
except, in the case of clauses (i) and (ii) above, any such conflict, breach, default, termination, amendment, acceleration,
cancellation or Lien that would not reasonably be expected, individually or in the aggregate, to prevent, materially delay or materially
impair such Stockholder’s ability to perform its obligations hereunder.
(b) The execution and
delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder shall not, require
any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by such Stockholder.
SECTION 2.03.
Title to the Stock and Convertible Notes. As of the date hereof, such Stockholder is the owner of the number of shares of Common
Stock or balance outstanding of Senior Secured Convertible Notes set forth opposite its name on Appendix A attached hereto.
Such shares of Common Stock represent all the Common Stock owned, either of record or beneficially, by Stockholder as of the date hereof,
other than the Senior Secured Convertible Notes and warrants to purchase Common Stock that have not been exercised as of the date hereof.
Such shares of Common Stock or Senior Secured Convertible Notes, as applicable, are owned free and clear of all Liens or limitations on
such Stockholder’s voting rights of any nature whatsoever, except for (a) the limitations or restrictions under this Agreement,
(b) any limitations or restrictions imposed under applicable securities laws, (c) any restrictions on ownership and transfer
of securities contained in the Company’s certificate of incorporation or (d) any limitations or restrictions that would not
reasonably be expected, individually or in the aggregate, to prevent, materially delay or materially impair such Stockholder’s ability
to perform its obligations hereunder. No Stockholder has appointed or granted any proxy, which appointment or grant is still effective,
with respect to any of the Covered Securities.
ARTICLE III
COVENANTS
SECTION 3.01.
No Disposition of Stock. Each Stockholder hereby covenants and agrees that, until the termination of this Agreement in accordance
with Section 4.01, except as contemplated by this Agreement, such Stockholder shall not offer or agree to sell, transfer,
tender, assign, hypothecate, pledge or otherwise dispose of, grant a proxy or power of attorney with respect to, or create or permit to
exist any Lien or limitation on such Stockholder’s voting rights of any nature whatsoever (other than any limitations or restrictions
imposed under applicable securities laws) with respect to the Covered Securities; provided, however, that such Stockholder
may assign, sell or transfer any Covered Securities provided that the recipient of such Covered Securities has delivered to the Company
a written agreement in a form reasonably satisfactory to the Company that the recipient shall be bound by, and the Covered Securities
so transferred, assigned or sold shall remain subject to this Agreement.
SECTION 3.02.
Company Cooperation. The Company hereby covenants and agrees that it will not, and such Stockholder irrevocably and unconditionally
acknowledges and agrees that the Company will not (and waives any rights against the Company in relation thereto), recognize any Lien
on any of the Covered Securities unless the provisions of Section 3.01 have been complied with.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01.
Termination. This Agreement shall automatically terminate without further action and shall have no further force and effect upon
the earliest to occur of (a) the date that the Company obtains the Stockholder Approval (as defined in the Fifth Amendment), (b) following
effectiveness of the Registration Statement and entry into the Purchase Agreement, the termination of the Purchase Agreement in accordance
with its terms.
SECTION 4.02. Further
Assurances. Stockholders will execute and deliver such further documents and instruments and take all further action as may be reasonably
necessary in order to consummate the transactions contemplated hereby.
SECTION 4.03.
Third Party Beneficiary; Specific Performance. Each Buyer is an express third-party beneficiary of this Agreement and shall have
the right to enforce this Agreement against the Company and Stockholders as if each such Buyer was a party hereto. In addition to being
entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Buyers (without being joined
by any other Buyer) and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations contained herein and hereby agree to waive
and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
SECTION 4.04.
Entire Agreement. This Agreement, together with the Keep Well Agreement, contains the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents.
SECTION 4.05.
Amendment. The provisions of this Agreement may not be amended or waived, nor may this Agreement be terminated by the Company,
without the prior written consent of all Stockholders and the Buyers.
SECTION 4.06.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
SECTION 4.07.
Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors,
officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address set forth on the signature pages to this Agreement (and service so made shall be deemed complete three
days after the same has been posted) and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. IN
ANY ACTION OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY,
TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.
SECTION 4.08. No Recourse.
All actions (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise
under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution or performance
of this Agreement may be made only against (and are those solely of) the persons that are expressly identified as parties to this Agreement
in the preamble to this Agreement. No other person, including any former, current or future equity holder, controlling person, director,
officer, employee, member, partner, manager, agent, attorney, representative or affiliate of any party hereto, or any former, current
or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, agent, attorney,
representative or affiliate of any of the foregoing, shall have any liability (whether in contract or in tort, in law or in equity, or
granted by statute) for any claims, causes of action, obligations or liabilities arising under, out of, in connection with or related
in any manner to this Agreement or based on, in respect of or by reason of this Agreement or its negotiation, execution, performance or
breach.
[Signature page follows.]
In
witness whereof, each Stockholder and the Company has duly executed this Agreement as of the date first written above.
|
Company: |
|
|
|
ONTRAK, Inc. |
|
|
|
By: |
/s/ Brandon LaVerne |
|
|
Name: Brandon H. LaVerne |
|
|
Title: Interim Chief Executive Officer and Chief Operating Officer |
[Company Signature Page to Ontrak Support Agreement]
|
STOCKHOLDERS: |
|
|
|
Acuitas
Group Holdings, LLC |
|
|
|
By: |
/s/ Terren S. Peizer |
|
|
Name: Terren S. Peizer |
|
|
Title: Chairman |
|
|
|
E-mail address: [REDACTED] |
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Acuitas
CAPITAL LLC |
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By: |
/s/ Terren S. Peizer |
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Name: Terren S. Peizer |
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Title: Chairman |
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E-mail address: [REDACTED] |
[Stockholders
Signature Page to Ontrak Support Agreement]
APPENDIX
A
Stockholder | |
Voting Shares of
Common Stock
Owned | | |
Outstanding
Balance of Senior
Secured
Convertible Notes | | |
Percent
of Voting
Shares of Common
Stock Owned by
Stockholder Giving
Effect to Notes
Conversion as
Contemplated by
Fifth Amendment1 | |
Acuitas Group Holdings, LLC | |
| 1,981,989 | | |
$ | 0 | | |
| 8.7 | % |
| |
| | | |
| | | |
| | |
Acuitas Capital LLC (pre-Notes Conversion) | |
| -- | | |
$ | 23,060,561.84 | | |
| | |
| |
| | | |
| | | |
| | |
Acuitas Capital LLC (post-Notes Conversion1) | |
| 17,845,069 | | |
$ | 7,000,000 | 2 | |
| 78.4 | % |
| |
| | | |
| | | |
| | |
Controlled Affiliates | |
| -- | | |
| -- | | |
| -- | |
| |
| | | |
| | | |
| | |
Total (post-Notes Conversion1): | |
| 19,827,058 | | |
$ | 7,000,000 | 2 | |
| 87.1 | % |
1
Gives effect to the initial Notes Conversion prior to Stockholder Approval, assuming a conversion price of $0.90. Does not
give effect to conversion or exercise of any other outstanding securities of the Company or to additional shares to be issued following
Stockholder Approval in respect of the Notes Conversion.
2
Purchaser has committed to invest $5,000,000 of this Amount in the Private Placement, so that $2,000,000 of Senior Secured
Convertible Notes will be outstanding following the Private Placement.
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