Exhibit 10.35
January5,2017
Reference is hereby made to that certain Financing Agreement datedas ofOctober30, 2014 (as amended, restated, supplementedor otherwise modified and in effect immediately prior to the consummationofthe Payoff(asdefined below),the"Financing Agreement"),by and among Social Reality,Inc., aDelaware corporation(the"Company"),Steel Media,a California corporation("Steel");togetherwiththeCompany, each aBorrowerand collectively,the ("Borrowers"),the Company,as the Borrower Representative,theGuarantorsparty thereto(together withthe Borrowers,the"Credit Parties"),the Lenders party theretoandVictory Park Management, LLC, as administrativeagent and collateral agent(the"Agent")for the Lendersandthe Holders party thereto. Capitalizedterms used herein and not otherwise defined hereinshallhave the respective meanings ascribed thereto inthe FinancingAgreement and/or the Warrants, as applicable.
Reference is further made to that certain Securities Purchase Agreement,datedasof the date hereof(asi neffect onthe dateofthis letter agreement (this"letter agreement"),the"SPA";the SPA,togetherwith each ofthedocuments and instruments entered into in connection therewith,referred to herein as the"SPA Documents,"ineachcaseas amendedfrom time to time, but in no eventamendedor otherwise modified inamanner that increases the amounts payable by the Company in cash thereunder),pursuant to which the Company issellingto the buyers named therein,andsuchbuyers are purchasing from the Company,on the date hereof up to$4,000,000ofitssecurities, consistingofsharesof Common Stock,Series A Warrants and Series B Warrants(in each case, asdefined in theSPA),all upon the terms and conditions set forth therein,in each case as amendedfromtime to time,butinnoevent amendedor otherwise modified in a manner that increases theamountspayable by theCompany in cashthereunder(the ("Financing Transaction"). The Company has provided to the Agent copies of theSPA,theSeriesA Warrantsandthe Series B Warrants.
In connection with the execution and delivery of the SPA by theCompanyand the other parties thereto, andtheconcurrentclosing of the transactions contemplated thereby, the Company is delivering to the Agent,pursuant to andin accordancewith the terms of that certain Note Payoff Letter,dated as of the date hereof(the"PayoffLetter"),an amount equal to $_______ in full satisfaction of all of theCreditParties'respective Obligations with respect to the Notes (the"Payoff').
NOW, THEREFORE,i n consideration of the agreements,provisions and covenantscontainedhereinand for other goodand valuable consideration,the receipt andsufficiencyof which are hereby acknowledged, each ofthe undersigned agrees as follows:
1.
Financing Transaction. Pursuant to Section 8.2 l of the Financing Agreement,theCompany isrequired to deliver the Future Offering Notice to a Holder andsuchHolderisentitled to exercisesuchHolder'sPurchase Option.Subject to and effective upon the satisfaction of theconditionsprecedentsetforth inSection4 hereof, includingfor the avoidance of doubt the consummation of the Payoff,with respect to theoffer and saleby theCompanyof up to $4,000,000 of its securities pursuant to theFinancingTransaction, (i)the parties hereto acknowledgeandagree that this letter shallserveas the Future Offering Notice with respect to theFinancingTransaction;(ii) the Holder declines its Holder Purchase Option,pursuant to Section 8.21 of theFinancingAgreement,with respect to the Company securities sold pursuant to the SPA in the FinancingTransaction, and (i ii)the Agent consents to the offer and sale of the Company's securities in the Financing Transaction pursuanttotheSPA,inaccordancewith Section 8.20 of the Financing Agreement.
2.
Put Right. Subject to and effective upon the satisfaction of the conditions precedentset forth in Section4 hereof,including for the avoidance of doubt the consummation of the Payoff, (i)the Holder agrees not toexercisethe Put Right pursuant to Section 10 of the Warrant prior to the date that is one hundred thirty-five(135) days after the closing of the Financing Transaction on the date of this letter agreement (the"Put Standstill Period"),and(ii)following any exercise of the Put Right after the expiration of the Put Standstill Period,the dateofthe Put RightClosing(as such term is defined in the Warrant) shall be as mutually determined by theCompany andthe Holder,but in any eventshalloccur no later than 45 days following the delivery of the Put Right Notice.
3.
Amendment to Warrants.TheCompany hereby agrees with the Agent and the Holder that, subjecttoand effectiveupon thesatisfactionof the conditions precedentsetforth in Section 4 hereof, includingforthe
avoidance of doubt the consummation of the Payoff, as of the date first written above each of the Warrants is hereby amended as follows:
a.
Section 10 of each of the Warrants is hereby amended by adding the following as new clause (d) thereto:
"(d)
If the Company shall fail to deliver all or any portion of the purchase price ataPut Right Closing with respect to any Put Right Securities, in addition to any remedy the Holder may have under this Warrant, the Financing Agreement or otherwise,such purchase price with respect to such Put Right Securities shall bear interest at a rate equal to the lesser of (i) fourteen percent (14%) per annum, and(ii)the maximum rate of interest allowed under applicable law, in any such case until paid in full. Notwithstanding anything set forth herein to the contrary, until the purchase price with respect to any Put Right Securities is paid in full, this Warrant may be exercised,in whole or in part,by the Holder in accordance with the terms hereof."
b.
As amended hereby, each of the Warrants shall remain in full force and effect. Each of the Credit Parties hereby covenants, acknowledges and agrees that(i)each Holder of a Warrant shall have the right to request, at any time following the date of this letter agreement, for any reason or no reason,including without limitation, in connection with any proposed sale, assignment or other transfer ofaWarrant, that the Company issue a new instrument representing such Warrant, as amended hereby,and (i i) the Company shall promptly, and in no event later than three Business Days following any such Holder'srequest, execute and deliver such new instrument representing such Warrant, as amended hereby,tosuchHolder, at the address specified by such Holder. Upon the receipt by such Holder of the new instrument representing such Holder's Warrant, as amended hereby,such Holder's existing Warrant will be void and of no further force and effect, and such Holder shall return its existing Warrant to the Company for cancellation.
4.
Conditions. This letter agreement shall become effective upon the satisfaction in full ofeach ofthe following conditions:
a.
the consummation of the Payoff pursuant to,and i n accordance with,the Payoff Letter;and
b.
the execution and delivery of this letter agreement and the Payoff Letter by Borrowers,the other Credit Parties, the Lenders and the Agent,as applicable.
5.
Covenants of the Credit Parties.
a.
Each of the covenants, representations and agreements set forth in Sections 2.8, 2.11,8.29, 8.30, 8.31, 8.32, 8.33, 8.34, 8.35, 8.37,13.8,13.10 and 13.12 of the Financing Agreement, eachsolelyas they relate to the Warrants,the Warrant Shares and the Warrant Documents (each,a"SubjectAgreement"and, collectively, the ("Subject Agreements"),is incorporated by reference herein,and each of the Credit Parties hereby remakes and reaffirms each of the Subject Agreements with thesameforceandeffect as if each was separately stated herein and made as of the date hereof.
b.
Each of the Credit Parties hereby covenants, acknowledges and agrees that,during the period beginning with the date of this letter agreement and ending on the first date on which no Warrants are outstanding, no Credit Party shall (and each Credit Partyshallcause each of its Subsidiaries not to, directly or indirectly,other than the incurrence of indebtedness in the ordinary course of business under the factoring arrangement with FAST PAY PARTNERS LLC as in effect on the date hereof (orsimilarasset based arrangement replacing the factoring arrangement with FAST PAY PARTNERS LLC),create,incur orguarantee,assume,or suffer to exist any Indebtedness or engage in any sale and leaseback, syntheticlease or similar transaction,or offer, sell,grant any option to purchase, or otherwise dispose of(orannounce any offer, sale,grant or any option to purchase or other disposition of) any of its debtsecurities,
in any such case without the prior written consent of the Agent. For the avoidance of doubt, the Financing Transaction shall not constitute the incurrence of Indebtedness in violation of this section.
6.
[Intentionally Omitted]
7.
Representations and Warranties of the Credit Parties. To induce each Lender and the Agent to execute and deliver this letter agreement,each Credit Party represents,warrants and covenants that:
a.
the execution,delivery and performance by each Credit Party of this letter agreement,the Payoff Letter,the Warrants (as amended hereby),the SPA Documents and all documents and instrumentsdelivered in connection herewith and therewith have been duly authorized by all necessary action required on its part and no further consent or authorization is required by any Credit Party or their respective boardsof directors (or similar governing bodies) or shareholders or other equity holders,and this letter agreement,the Payoff Letter,the Warrants (as amended hereby), the SPA Documentsand all documentsand instruments delivered in connection herewith are legal,valid and binding obligationsofsuch Credit Partyenforceable against such Credit Party in accordance with its terms except as such enforceability maybe limited by general principles of equity or applicable bankruptcy,insolvency,reorganization,moratorium,liquidation orsimilar laws relating to,or affecting generally,the enforcement of applicablecreditors'rightsand remedies.
b.
neither the execution,delivery and performance of this letter agreement,the Payoff Letter,the Warrants (as amended hereby) or the SPA Documents nor the consummation of the transactionscontemplated hereby or thereby does or shall (i) result in a violation of any Credit Party'scertificate of incorporation,certificate of formation,bylaws,limited liability company agreement or othergoverningdocuments,or the terms of any Capital Stock or other Equity Interests of any Credit Party;(ii) conflict with,or constitute a breach or default (or an event which,with notice or lapse of time or both,would become a breach or default) under, or give to others any rights of termination,amendment,acceleration or cancellation of,any agreement,indenture or instrument to which any Credit Party is a party;(iii) result in any"price reset"or other material change in or other modification to the terms of any Indebtedness, Equity Interests or other securities of any Credit Party;or (iv) result in a violation of any law,rule,regulation,order,judgment or decree.No Credit Party is required to obtain any consent,authorization or order of or make any filing or registration with,any court or governmental agency or any regulatory or self-regulatory agency,including without limitation the Principal Market,in order for it to execute,deliver or performanyof its obligations under this letter agreement, the Payoff Letter,the Warrants(as amended hereby)or,except as expressly contemplated thereby, the SPA Documents.
8.
Reference to and Effect Upon the Transaction Documents.
a.
Except as specifically amended hereby or as otherwise expressly set forth in the Payoff Letter,all terms,conditions,covenants,representations and warranties contained in the Warrant Documents(as amended hereby),and all rights of the Lenders, the Holders and the Agent and all of the obligationsunder the Warrant Documents (as amended hereby),shall remain in full force and effect.Each Credit Party hereby confirms that each of the Warrant Documents (as amended hereby) is in full force and effect,and that no Credit Party has any right of setoff,recoupment or other offset or any defense,claim or counterclaim with respect to any Warrant Document (as amended hereby) or the Credit Parties'obligations thereunder.
b.
Except as expressly set forth herein or in the Payoff Letter,the execution,delivery and effectiveness of this letter agreement and any consents or waivers set forth herein shall not directly or indirectly:(i) constitute a consent or waiver of any future violations of any Warrant Document;(ii) amend,modify or operate as a waiver of any provision of any Warrant Document or any right,power or remedyof any Lender,any Holder or the Agent,or (iii) constitute a course of dealing or other basisfor altering any obligations under the Warrant Documents.
c.
From and after the date hereof,(i) all references to the term"Warrants"asused in any Transaction Document, shall mean the Warrants (as amended hereby),(ii) all referencesto theterm
"Securities"as usedinany Transaction Document, shall include, without limitation,the Warrants (as amended hereby), (iii) all references to the term"Warrant Documents" as used in any Transaction Document,shall include,without limitation,this letter agreement,the Payoff Letter and the Warrants(asamended hereby), (iv) all references to the term"TransactionDocuments" as used in any Transaction Document shall include, without limitation,this letter agreement,the Payoff Letter,the Warrants(asamended hereby), and any other agreements, instruments and other documents executed or delivered in connection herewith.
9.
Governing Law; Jurisdiction. All questions concerning the construction,validity,enforcement and interpretation of this letter agreement shall be governed by the internal laws of the State of Illinois, withoutgivingeffect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or anyotherjurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Eachparty hereby irrevocablysubmitsto the exclusive jurisdiction of thestateand federal courtssitting in Chicago,Illinois,for the adjudication of any dispute hereunder or in connection herewith or withanytransaction contemplated hereby or discussed herein,and hereby irrevocably waives,and agrees not to assert in anysuit, actionor proceeding,any claim that it is not personally subject to the jurisdiction ofanysuch court,thatsuch suit, action orproceedingisbrought in an inconvenient forum or that the venue of such suit,action or proceeding is improper.Eachparty hereby irrevocably waives personal service of process and consents to process beingservedinany such suit,action or proceeding by mailing a copy thereof to such party at the address forsuchnotices to it under this letter agreement and agrees that such service shall constitute good andsufficientservice of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
10.
Successors and Assigns. This letter agreement shall be binding upon andshallinure to the benefit of the parties hereto and their respective successors and permitted assigns. The successorsandassigns ofsuch entities shallinclude their respective receivers, trustees or debtors-in-possession.
11.
Severability.The invalidity,illegality,or unenforceability of any provision in or obligation under this letter agreement in any jurisdiction shall not affect or impair the validity,legality,or enforceabilityofthe remaining provisions or obligations under this letteragreementor ofsuchprovision or obligation inanyother jurisdiction. If feasible,any such offending provision shall be deemed modified to be with in the limits ofenforceabilityor validity;provided that if the offending provision cannot besomodified,itshallbestrickenandall otherprovisions of this letter agreement in all other respects shall remainvalidand enforceable.
Thisletter agreement may be executed in one or more counterparts, each of whichshallbe deemedan originalbut all of which together shall constitute one and thesameinstrument. This letter agreement may be delivered by facsimile,email orsimilarelectronic transmission,each of whichshallbe deemed theequivalent of anoriginallysigneddocument and shall be fully admissible in any enforcement proceedings regarding thisletteragreement.
[Signature Pages Follow]
IN WITNESS WHEREOF,each party has caused its signature page to this letter agreement to be duly executed as of the date first written above.
| | |
| CREDIT PARTIES: |
| |
| SOCIAL REALITY, INC. |
| | |
| By: | /s/ Christopher Miglino |
| Name: | Christopher Miglino |
| Its: | Duly Authorized Signatory |
| | |
| | |
| STEEL MEDIA |
| | |
| By: | /s/ Christopher Miglino |
| Name: | Christopher Miglino |
| Its: | Duly Authorized Signatory |
| | |
| | |
| FIVE DELTA, INC., |
| | |
| By: | /s/ Christopher Miglino |
| Name: | Christopher Miglino |
| Its: | Duly Authorized Signatory |
| | |
| AGENT: |
| | |
| VICTORY PARK MANAGEMENT, LLC, as Agent |
| | |
| By: | /s/ Scott Zemnick |
| Name: | Scott Zemnick |
| Its: | Manager |
| | |
| LENDERS: |
| | |
| VPC SBIC I, LP |
| | |
| By: Victory Park Capital Advisors, LLC |
| Its: Investment Manager |
| | |
| By: | /s/ Scott Zemnick |
| Name: | Scott Zemnick |
| Title: | General Counsel |
[Signature Pageto Letter Agreement]
