Filed Pursuant to Rule 424(b)(4)
File Number 333-274511
PROSPECTUS
$30,000,000
SWK HOLDINGS
CORPORATION
9.00%
Senior Notes due 2027
We are offering
$30,000,000 in aggregate principal amount of our 9.00% Senior Notes due 2027 (the “Notes”). Interest on the Notes
will accrue from October 3, 2023, and will be paid quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, commencing on December 31, 2023 and at maturity. The Notes will mature on January 31, 2027. We may redeem the Notes
for cash, in whole or in part, at any time or from time to time at our option (i) on or after September 30, 2025 (the “First
Call Date”) and prior to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or after
September 30, 2026, at a price equal to the sum of 100% of their principal amount, as described elsewhere in this prospectus, plus
(in each case noted above) accrued and unpaid interest to, but excluding, the date of redemption. In addition, at any time prior to the
First Call Date, we may, at our option, redeem the Notes for cash, in whole at any time or in part from time to time at a redemption
price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined herein), plus (iii) accrued
and unpaid interest, if any, to, but excluding, the date of redemption. See “Description of Notes—Optional Redemption.”
Additionally, upon the occurrence of a Triggering Event (defined below), holders of the Notes may require us to make an offer to repurchase
all or any portion of the Notes for cash at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and
unpaid interest, if any, to, but excluding, the date of purchase. The Notes will be issued in denominations of $25, or any integral
multiples of $25 in excess thereof or in units, each representing $25. The Notes will be our senior unsecured obligations, will rank
pari passu (or equally) in right of payment with all of our existing and future senior unsecured indebtedness and will be senior
to any other indebtedness expressly made subordinate to the Notes. The Notes will be effectively subordinated to all of our existing
and future secured indebtedness (to the extent of the value of the assets securing such indebtedness) and structurally subordinated to
all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables.
Investing
in the Notes involves a high degree of risk. See “Risk Factors” beginning on page 11 and in the documents incorporated
by reference in this prospectus to read about factors you should consider before you make an investment decision.
Neither the U.S. Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
We have applied
to list the Notes on the Nasdaq Global Market (the “Nasdaq”) under the symbol “SWKHL.” If approved for listing,
trading on such exchange is expected to begin within 30 business days of October 3, 2023, the original issue date. If such listing
is obtained, we have no obligation to maintain such listing, and we may delist the Notes at any time
| | |
Per
Note | | |
Total(2)(3) | |
| Public offering price | |
$ | 25.00 | | |
$ | 30,000,000 | |
| Underwriting discount(1) | |
$ | 0.7875 | | |
$ | 945,000 | |
| Proceeds, before expenses, payable to us(2) | |
$ | 24.2125 | | |
$ | 29,055,000 | |
| (1) |
See “Underwriting” for a description
of all underwriting compensation payable in connection with this offering. |
| (2) |
B. Riley Securities, Inc.
(“B. Riley”), as representative of the underwriters, may exercise an option to purchase up to an additional $4,500,000
in aggregate principal amount of Notes offered hereby, within 30 days of the date of this prospectus. If this option is exercised
in full, the total offering price will be $34,500,000, the total underwriting discount paid by us will be $1,086,750, and
total proceeds to us, before expenses, will be approximately $33,413,250. |
| (3) |
Total expenses of the offering
payable by us, excluding underwriting discounts and commissions and the Structuring Fee (as defined in “Underwriting”),
are estimated to be $428,533. |
The underwriters
expect to deliver the Notes to purchasers in book-entry form through the facilities of The Depository Trust Company (“DTC”)
for the accounts of its direct and indirect participants, including Euroclear Bank SA/NV, as operator of the Euroclear System, and Clearstream
Banking, S.A., on or about October 3, 2023.
Joint Book-Running Managers
| B.
Riley Securities |
Ladenburg Thalmann |
William
Blair |
Co-Managers
The date of
this prospectus is September 28, 2023
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
You should rely only on the information
contained in or incorporated by reference herein and in any free writing prospectus that we have authorized in connection with this offering.
Neither we nor the underwriters have authorized anyone to provide you with any information or to make any representations other than
those contained in this prospectus or incorporated by reference herein or any applicable
prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor
the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information that others may
give you. Neither we nor the underwriters will make an offer to sell these securities in any jurisdiction where such offer or sale are
not permitted. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in
this prospectus or incorporated by reference herein, any applicable prospectus supplement
or any related free writing prospectus. You should assume that the information appearing in this prospectus or
incorporated by reference herein or any prospectus supplement is accurate as of the date on the front of those documents only,
regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business,
financial condition, results of operations and prospects may have changed since those dates.
We may also provide a prospectus
supplement or post-effective amendment to the registration statement to add information to, or update or change information contained
in, this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in such prospectus supplement or post-effective amendment modifies or supersedes such statement.
Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded
will be deemed not to constitute a part of this prospectus. You should read both this prospectus together
with the other information contained or incorporated by reference in this prospectus and any applicable prospectus supplement
or post-effective amendment to the registration statement together with the additional information to which we refer you in the section
of this prospectus titled “Where You Can Find More Information” and “Incorporation
of Certain Information by Reference.”
This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information”
and “Incorporation of Certain Information by Reference.”
When we refer
to “SWK,” “we,” “our,” “us” and the “Company” in this prospectus,
we mean SWK Holdings Corporation and its consolidated subsidiaries, unless otherwise specified.
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus,
including the documents incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in
releases made by the Securities and Exchange Commission (“SEC”). Such statements include, without limitation, statements
regarding our expectations, hopes or intentions regarding the future. Statements that are not historical fact are forward-looking statements.
These forward-looking statements can often be identified by their use of words such as “expect,” “believe,” “anticipate,”
“outlook,” “could,” “target,” “project,” “intend,” “plan,” “seek,”
“estimate,” “should,” “will,” “may” and “assume,” as well as variations of
such words and similar expressions referring to the future. These cautionary statements are being made pursuant to the Securities Act,
the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws.
The forward-looking statements contained
in or incorporated by reference herein are largely based on our expectations, which reflect estimates and assumptions made by our management.
These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe
such estimates and assumptions to be reasonable, they are inherently uncertain and involve certain risks and uncertainties, many of which
are beyond our control. If any of those risks and uncertainties materialize, actual results could differ materially from those discussed
in any such forward-looking statement. Among the factors that could cause actual results to differ materially from those discussed in
forward-looking statements are those discussed under the heading “Risk Factors” below and those discussed under the
heading “Risk Factors” in other sections of our Annual Report on Form 10-K for the year ended December 31, 2022, as well
as in our other reports filed from time to time with the SEC that are incorporated by reference herein. See “Prospectus Summary—Additional
Information” and “Incorporation of Certain Information by Reference” for information about how to obtain
copies of those documents. All readers are cautioned that the forward-looking statements contained in this prospectus and in the documents
incorporated by reference herein are not guarantees of future performance, and we cannot assure any reader that such statements will
be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated
or implied in the forward-looking statements. All forward-looking statements in this prospectus and the documents incorporated by reference
herein are made only as of the date of the document in which they are contained, based on information available to us as of the date
of that document, and we caution you not to place undue reliance on forward-looking statements in light of the risks and uncertainties
associated with them. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
PROSPECTUS SUMMARY
This summary highlights selected
information contained elsewhere in this prospectus and in the documents incorporated by reference
herein. This summary is not complete and does not contain all of the information that you should consider before deciding whether
to invest in our Notes. You should carefully read the entire prospectus, including the risks associated with an investment in our Notes
discussed in the “Risk Factors” section of this prospectus and incorporated by reference
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as in our other reports filed from
time to time with the SEC that are incorporated by reference herein, before making an investment decision. Some of the statements in
this prospectus are forward-looking statements. See the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
Overview
SWK Holdings Corporation was incorporated
in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, we commenced a strategy of building a specialty
finance and asset management business. In August 2019, we commenced a complementary strategy of building a pharmaceutical development,
manufacturing and intellectual property licensing business. Our operations comprise two reportable segments: “Finance Receivables”
and “Pharmaceutical Development.” We evaluate and invest in a broad range of healthcare related companies and products with
innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and
pharmaceutical industries (collectively, “life science”). We allocate capital to each segment in order to generate income
through the sales of life science products by third parties. We are headquartered in Dallas, Texas.
Finance Receivables Segment
Our Finance Receivables
segment strategy is to be a leading healthcare capital provider by offering sophisticated, customized financing solutions to a broad
range of life science companies, institutions and inventors. This segment is primarily focused on monetizing cash flow streams derived
from commercial-stage products and related intellectual property through royalty purchases and financings, as well as through the creation
of synthetic revenue interests in commercialized products. Our business partners are primarily engaged in selling products that directly
or indirectly cure diseases and/or improve the wellness of people or animals, or they receive royalties paid on the sales of such products.
For example, our biotechnology and pharmaceutical business partners manufacture medication that directly treat disease states, whereas
our life science tools partners sell a wide variety of research instrumentation to help other companies conduct research into disease
states. We have been deploying our assets to earn interest, fees, and other income pursuant to this strategy, and we continue to identify
and review financing and similar opportunities on an ongoing basis with financial solutions that are tailored to the individual needs
of our business partners. In addition, through our wholly-owned subsidiary, SWK Advisors LLC, we can provide non-discretionary investment
advisory services to institutional clients in separately managed accounts to similarly invest in life science finance. We intend to fund
transactions through our own working capital, our revolving credit facility (together with any additional credit facility, or amendment
or refinancing thereof, the “Credit Facilities”) and the net proceeds of this offering, as well as by building our asset
management business by raising additional third-party capital to be invested alongside our capital.
We fill a niche that
we believe is underserved in the sub-$50 million transaction size market. Since many of our competitors that provide longer term, non-traditional
debt and/or royalty-related financing options typically have much greater financial resources than us, they tend not to focus on transaction
sizes below $50 million, as it is generally inefficient for them to do so. In addition, we do not believe that a sufficient number of
other companies offer similar types of long-term financing options to fill the demand of the sub-$50 million market. As such, we believe
we face less competition from such investors in transactions that are less than $50 million.
As of August
5, 2023, and since inception of the strategy, we and our partners have executed transactions with 50 different parties under our specialty
finance strategy, funding an aggregate of approximately $725.7 million in various financial products across the life science sector.
Our portfolio consist primarily of senior debt backed by royalties and synthetic royalties paid by companies in the life science sector,
and purchased royalties generated by sales of life science products and related intellectual property.
The objective
of our Finance Receivables segment is to maximize our portfolio total return in the context of a prudent level of risk, and thus, increase
our net income and book value by generating income from three sources:
| |
1. |
primarily owning or financing through debt
investments, royalties or revenue interests generated by the sales of life science products and related intellectual property; |
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|
|
| |
2. |
receiving interest and other income by advancing
capital in the form of secured debt to companies in the life science sector; and |
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|
|
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3. |
to a lesser extent, realizing capital appreciation
from equity-related investments in the life science sector. |
| |
|
|
In our portfolio
we seek to achieve attractive risk-adjusted returns as well as opportunities with the potential for equity-like returns combined with
downside protection that credit provides.
The majority
of our finance receivables transactions are structured similarly to factoring transactions whereby we provide capital in exchange for
an interest in an existing revenue stream. We primarily provide capital to companies following the commercialization of a product, although
in rare situations we consider pre-approval financings as well. The existing revenue stream can take several forms, but is most commonly
either a royalty derived from the sales of a life science product (1) from the marketing efforts of a third party, such as a royalty
paid to an inventor on the sales of a medicine, or (2) from the marketing efforts of a partner company, such as a medical device company
that directly sells its own products. Our structured debt investments may include warrants or other features, giving us the potential
to realize enhanced returns on a portion of our portfolio. Capital that we provide directly to our partners is generally used for growth
and general working capital purposes, as well as for acquisitions or recapitalizations in select cases. We generally fund the full amount
of transactions up to $25 million through our working capital.
In circumstances
where a transaction is greater than $25 million, we typically seek to syndicate amounts in excess of $25 million to both other investors
and our investment advisory clients. We do not expect to earn investment advisory income in transactions where we partner with investors
other than our investment advisory clients.
We source our investment
opportunities through a combination of our senior management’s proprietary relationships within the industry, outbound business
development efforts and inbound inquiries from companies, institutions and inventors interested in learning about our capital financing
alternatives. Our investment advisory clients generally do not originate investment opportunities for us.
Pharmaceutical Development
Segment
During 2019,
we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). Enteris
is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug delivery
technologies, the Peptelligence® platform.
Our Pharmaceutical
Development segment seeks to generate income by providing customers pharmaceutical development, formulation and manufacturing services.
We also intend
to continue to out-license our Peptelligence® technology to pharmaceutical companies to create novel and important oral therapeutic
treatments for a wide variety of indications. These licenses generate milestones and royalties for Enteris.
We seek to out-license
to pharmaceutical companies our existing internal product pipeline of off-patent, previously approved drug compounds with which we have
created novel formulations using our proprietary technology to develop treatments that have meaningful therapeutic benefits for patients
and caregivers. We do not expect to fund additional clinical research and development.
Tax Attributes
We view our ability
to carry forward our net operating losses, or NOLs, as an important and substantial asset. However, at this time, under current law,
we do not anticipate that our current business strategies will generate sufficient income to permit us to utilize our NOLs that are not
carried forward indefinitely prior to their respective expiration dates. As such, it is possible that we might pursue additional strategies
that we believe might result in our ability to utilize more of our NOLs.
Corporate Information
We file annual,
quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the
“Exchange Act’’), with the SEC. Our SEC filings are available to the public from the SEC’s internet site at http://www.sec.gov.
Our internet site is http://www.swkhold.com.
We will make available free of charge through our website in the “Investor Relations - SEC Filings” section our annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors
and executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. Also, posted on our website in the “Investor Relations
- Corporate Governance” section are charters for our Audit Committee, Compensation Committee and Governance and Nominating Committee
as well as our Code of Ethics and Insider Trading Policy governing our directors, officers and employees. Information on or accessible
through our website is not a part of, and is not incorporated into, this prospectus.
Our principal executive offices
are located at 5956 Sherry Lane, Suite 650, Dallas, Texas 75225, and our telephone number is (972) 687-7250. We maintain a website at
www.swkhold.com. Information on our website is not incorporated by reference into or otherwise part of this prospectus.
Summary Risk Factors
An investment in the Notes involves
a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk
Factors” section of this prospectus and in the documents incorporated by reference herein.
These risks include, but are not limited to, the following:
Risks Related to Finance Receivables
Segment
| · | We
may suffer losses on our principal invested in credit and royalty transactions. |
| | | |
| · | We
operate in a highly competitive market for investment opportunities. |
| | | |
| · | We
generally do not control our partner companies. |
| | | |
| · | Economic
recessions or downturns could impair the ability of our partner companies to repay loans,
which, in turn, could increase our non-performing assets, decrease the value of our assets,
reduce our volume of new loans and have a material adverse effect on our results of operations. |
| | | |
| · | If
we make investments in unsecured debt backed by royalties or revenue interests, those investments
might not generate sufficient cash flow to service our debt obligations. |
| | | |
| · | Our
quarterly and annual operating results are subject to fluctuation as a result of the nature
of our business, and if we fail to achieve our investment objective, the market price of
our common stock may decline. |
| | | |
| · | Our
investments in royalty-related transactions depend on third parties to market royalty-generating
products. |
| | | |
| · | Our
Finance Receivables segment has a limited number of assets, which subjects our aggregate
returns, and the value of our common stock, to a greater risk of significant loss if any
of our debt securities declines in value or if any of our royalty investments substantially
underperforms our expectations. |
| · | Our
allowance for credit losses may prove inadequate. |
| | | |
| · | Fluctuations
in the price of our publicly traded equity holdings and the price at which we sell such holdings
may affect the price of our common stock. |
| | | |
| · | Our
financial condition and results of operations will depend on our ability to manage future
growth of our Finance Receivables segment effectively. |
Risks Related
to Our Business and Structure
| · | Our
ability to use NOL carryforwards to offset future taxable income for U.S. federal income
tax purposes may be limited, and our future cash tax liability may increase. |
| | | |
| · | If
we are unable to obtain additional debt or equity financing on commercially reasonable terms
our business could be materially adversely affected. |
| | | |
| · | Our
use of leverage may limit our operational flexibility and increase our overall risk, which
may adversely affect our business and results of operations. |
| | | |
| · | Funds
affiliated with Carlson Capital, L.P. can control or exert significant influence over
our management and policies through their ownership of a large amount of our common stock. |
| | | |
| · | If
there are substantial sales of shares of our common stock, the price of our common stock
could decline. |
| | | |
| · | We
have adopted provisions in our certificate of incorporation and bylaws, and have entered
into the Rights Agreement, which could delay or prevent an acquisition of the Company. |
| | | |
| · | If
we were deemed an investment company under the Investment Company Act of 1940 (the “1940
Act”), applicable restrictions could make it impractical for us to continue our business
as contemplated and could have a material adverse effect on our business. |
Risks Associated
with Investments in the Health Care and Life Science Industries
| · | Public
health epidemics, pandemics or outbreaks, including COVID-19, could adversely affect our
and our partner companies’ businesses. |
| | | |
| · | Healthcare
and life science industries are subject to extensive government regulation, litigation risk,
reimbursement risk and certain other risks particular to those industries. |
| | | |
| · | Some
of our partner companies may be unable to protect their proprietary rights and may infringe
on the proprietary rights of others. |
| | | |
| · | The
pharmaceutical industry is subject to numerous risks, including competition, extensive government
regulation, product liability, patent exclusivity and commercial difficulties. |
| | | |
| · | The
development of products by life science companies requires significant research and development,
clinical trials and regulatory approvals. |
| | | |
| · | The
potential inability of our partner companies’ and counterparties to charge desired
prices with respect to prescription drugs could impact their revenues and in turn their ability
to repay us or the magnitude of their payments to us. |
Risks Related
to Pharmaceutical Development Segment
| · | Enteris’
licensees may not be successful in efforts to develop products for many years, if ever. |
| | | |
| · | Enteris’
licensees may not be successful in their efforts to gain regulatory approval for any of their
product candidates and, if approved, the approval may not be on a timely basis. |
| | | |
| · | Current
and future legislation may increase the difficulty and cost for Enteris or its partners to
obtain marketing approval of and the commercialization of their product candidates. This
could affect the timing as well as the amount of royalty income Enteris may earn as a result. |
| | | |
| · | Enteris’
success depends upon its ability to protect its intellectual property rights. |
| | | |
| · | If
Enteris encounters issues with its suppliers or if its licensees encounter issues with their
contract manufacturers, Enteris may need to qualify alternative manufacturers or suppliers,
which could impair Enteris’ and its licensees’ ability to sufficiently and timely
manufacture and supply pharmaceutical products. |
| | | |
| · | Enteris’
production facilities have been impacted by COVID-19 and global supply chain constraints,
and any future impacts might adversely affect its operations and financial condition. |
Risks Related to this Offering
and the Notes
| · | We
may be able to incur substantially more debt, which could have important consequences to
you. |
| | | |
| · | The
Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness
that we currently have or that we may incur in the future. |
| | | |
| · | The
Notes will be structurally subordinated to the indebtedness and other liabilities of our
subsidiaries. |
| | | |
| · | The
indenture governing the Notes will contain limited protection for holders of the Notes. |
| | | |
| · | We
may not be able to generate sufficient cash to service all of our debt, and may be forced
to take other actions to satisfy our obligations under such indebtedness, which may not be
successful. |
| | | |
| · | An
increase in market interest rates could result in a decrease in the value of the Notes. |
| | | |
| · | An
active trading market for the Notes may not develop, which could limit the market price of
the Notes in the secondary market and your ability to sell them. |
| | | |
| · | The
ratings for the Notes could at any time be revised downward or withdrawn entirely at the
discretion of the issuing rating agency. |
| | | |
| · | We
have broad discretion in the use of the net proceeds of this offering and may not use them
effectively. |
THE OFFERING
The summary below describes
the principal terms of the Notes. Some of the terms and conditions described below are subject to important limitations and exceptions.
See “Description of Notes” for a more detailed description of the terms and conditions of the Notes. All capitalized terms
not defined herein have the meanings specified in “Description of Notes.” Unless otherwise indicated, the information in
this prospectus assumes that the underwriters do not exercise their option to purchase additional Notes.
| Issuer: |
SWK Holdings Corporation |
| Notes Offered:
|
$30,000,000 in aggregate
principal amount of 9.00% Senior Notes due 2027 (or $34,500,000 in aggregate principal amount of 9.00% Senior Notes
due 2027 if the underwriters’ option is exercised in full). |
| Offering Price:
|
100% of the principal amount. |
| Maturity Date:
|
The Notes will mature on January 31, 2027,
unless redeemed prior to maturity. |
| Interest Rate
and Payment Dates: |
9.00%
interest per annum on the aggregate principal amount of the Notes, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year, commencing on December 31, 2023 and at maturity. |
| Ranking: |
The Notes will be our senior unsecured obligations
and will rank: |
| |
· |
senior to the outstanding
shares of our common stock; |
| |
· |
senior to any of our future
subordinated debt; |
| |
· |
pari passu (or equally)
with all of our existing and future senior unsecured indebtedness; |
| |
· |
effectively subordinated
to any existing or future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant
security), to the extent of the value of the assets securing such indebtedness; and |
| |
· |
structurally subordinated
to all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables. |
| |
As of June 30, 2023, we had no outstanding indebtedness. |
| Guarantors:
|
The Notes will not be guaranteed by any of our
subsidiaries or affiliates. |
| Optional Redemption:
|
We may redeem the Notes for
cash, in whole or in part, at any time or from time to time at our option (i) on or after September 30, 2025 (the “First Call
Date”) and prior to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or
after September 30, 2026 at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued
and unpaid interest to, but excluding, the date of redemption. At any time prior to the First Call Date, we may, at our option, redeem
the Notes for cash, in whole at any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount
of Notes redeemed, plus (ii) a Make-Whole Amount (as defined herein), plus (iii) accrued and unpaid interest, if any, to, but excluding,
the date of redemption. See “Description of Notes—Optional Redemption” for additional details.
|
Purchase
of the Notes Upon Triggering Event: |
Upon the occurrence of a
Triggering Event, as defined below, we must offer to purchase the Notes at 100% of their principal amount, plus accrued and unpaid
interest, if any, to but excluding the date of the purchase. For more details, see “Description of Notes—Purchase
of Notes upon a Triggering Event.” |
| Sinking Fund:
|
The Notes will not be subject to any sinking funding
(i.e., no amounts will be set aside by us to ensure repayment of the Notes at maturity). |
| Use of Proceeds:
|
We anticipate using the net proceeds of this offering
for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making capital expenditures
and funding working capital. For additional information, see “Use of Proceeds.” |
| Events of
Default: |
Events of default generally will include failure
to pay principal, failure to pay interest, failure to observe or perform any other covenant or warranty in the Notes or in the indenture
that governs the Notes, and certain events of bankruptcy, insolvency or reorganization. See “Description of Notes—Events
of Default.” |
| Other Covenants: |
In addition to any covenants described
elsewhere in this prospectus, so long as the Notes are outstanding the following covenants will apply to the Notes: |
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|
|
|
| |
· |
We agree that for the period
of time during which the Notes are outstanding, we will not (i) make additional borrowings, including through the issuance of additional
debt or the sale of additional debt securities, unless our “asset coverage” (as defined in the 1940 Act), except to the
extent modified by this covenant, equals at least 150% after such borrowings, and (ii) declare any cash dividend or distribution
upon any class of our capital stock, or purchase any such capital stock if our asset coverage were below 150% at the time of the
declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase.
For the purposes of determining “asset coverage” as used above, any and all indebtedness of the Company, including any
outstanding borrowings under the Credit Facilities and any successor or additional credit facility, shall be deemed a senior security
of us. For the avoidance of doubt, the definition of asset coverage as defined in the 1940 Act shall apply regardless as to whether
we are otherwise subject to regulation under the 1940 Act. |
| |
· |
If, at any time, we are
not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC,
we agree to furnish to holders of the Notes and the trustee, for the period of time during which the Notes are outstanding, our audited
annual financial statements, within 90 days of our fiscal year end, and unaudited interim financial statements, within 45 days of
our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects,
in accordance with accounting principles generally accepted in the United States. |
| |
· |
We will
use commercially reasonable efforts to maintain a credit rating on the Notes by a rating organization designated from time to time
as being a “nationally recognized statistical rating organizations” within the meaning of Section 3(a)(62) of the
Exchange Act, including but not limited to Egan-Jones Ratings Company and any successor to the credit rating business thereof (“Egan-Jones”
and each such organization, an “NRSRO”) provided that no minimum rating will be required. |
| |
|
|
|
| |
For additional information, see “Description of Notes” for certain other covenants applicable to the Notes. |
| Additional Notes: |
We may create and issue additional
Notes ranking equally and ratably with the Notes offered hereby in all respects, so that such additional Notes will constitute and
form a single series with the previously outstanding Notes and will have the same terms and conditions (except the price to public,
the issue date, and, if applicable, the initial interest payment date) as the previously outstanding Notes; provided that
if any such additional Notes are not fungible with the Notes initially offered hereby for U.S. federal income tax purposes, such
additional Notes will have a different CUSIP number. |
| Defeasance:
|
The Notes are subject to legal and covenant defeasance
by us. See “Description of Notes—Defeasance” for more information. |
| |
|
| Listing: |
We have applied
to list the Notes on the Nasdaq under the symbol “SWKHL.” If the Notes are approved for listing, we expect
trading in the Notes to begin within 30 business days of the original issue date. |
| Form and Denomination:
|
The Notes will be issued
in book-entry form in denominations of $25, or any integral multiples of $25 in excess thereof or in units, each representing
$25. The Notes will be represented by a permanent global certificate deposited with the trustee as custodian for DTC and registered
in the name of a nominee of DTC. Beneficial interests in any of the Notes will be shown on, and transfers will be effected only through,
records maintained by DTC and its direct and indirect participants and any such interest may not be exchanged for certificated securities,
except in limited circumstances. |
| Settlement:
|
Delivery of the Notes will
be made against payment therefor on or about October 3, 2023. |
| Trustee: |
Wilmington Trust, National Association. |
| Governing
Law: |
The indenture and the Notes will be governed by
and construed in accordance with the laws of the State of New York. |
| Risk factors:
|
Investing in the Notes involves
a high degree of risk and purchasers may lose their entire investment. See “Summary of Risk Factors” above, “Risk
Factors—Risks Related to this Offering and to the Notes” below and “Risk
Factors” sections in our most recent Annual Report on Form 10-K for the year ended December 31, 2022, incorporated by reference
herein in their entirety, for a discussion of factors you should carefully consider before deciding to invest in the Notes.
|
RISK FACTORS
Investing
in the Notes involves a high degree of risk. Before investing in the Notes, you should consider carefully the risks and other information
described in, or incorporated by reference into, this prospectus, including the risks and uncertainties discussed in the “Risk
Factors” sections in this prospectus, our most recent Annual Report on Form 10-K for the year ended December 31, 2022 and any subsequent
Quarterly Reports on Form 10-Q, which are incorporated by reference herein in their entirety. Additional risks and uncertainties not
presently known to us, or that we currently see as immaterial, may also harm our business. If any of the risks incorporated by reference
herein occur, our business, financial condition and operating results could be harmed, the trading price of the Notes could decline and
you could lose part or all of your investment.
Risks Related to this Offering
and to the Notes
We may
be able to incur substantially more debt, which could have important consequences to you.
We may be able
to incur substantial additional indebtedness in the future. The terms of the indenture governing the Notes, other than the asset coverage
covenant (as more fully described in the “Description of Notes”), do not prohibit us from doing so. If we incur
any additional indebtedness that ranks equally with the Notes, the holders of that debt will be entitled to share ratably with you in
any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution. This may have the effect of reducing
the amount of proceeds paid to you. Incurrence of additional debt would also further reduce the cash available to invest in operations,
as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face
could intensify.
Our level of indebtedness could have
important consequences to you, because:
| · | it
could affect our ability to satisfy our financial obligations, including those relating to
the Notes; |
| | | |
| · | a
substantial portion of our cash flows from operations would have to be dedicated to interest
and principal payments and may not be available for operations, capital expenditures, expansion,
acquisitions or general corporate or other purposes; |
| | | |
| · | it
may impair our ability to obtain additional debt or equity financing in the future;
|
| | | |
| · | it
may limit our ability to refinance all or a portion of our indebtedness on or before maturity;
|
| | | |
| · | it
may limit our flexibility in planning for, or reacting to, changes in our business and industry;
and |
| | | |
| · | it
may make us more vulnerable to downturns in our business, our industry or the economy in
general. |
Our operations
may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on the Notes, we could be in default
on the Notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding. Conversely, a default
under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle
the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder. In addition, such default
or acceleration may result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof
to bring suit for the enforcement thereof or exercise other remedies provided thereunder. If a judgment is obtained by any such holders,
such holders could seek to collect on such judgment from the assets of the Company. If that should occur, we may not be able to pay all
such debt or to borrow sufficient funds to refinance it. Even if new financing were then available, it may not be on terms that are acceptable
to us.
However, no event
of default under the Notes would result from a default or acceleration of, or suit, other exercise of remedies or collection proceeding
by holders of, our other outstanding debt, if any. As a result, all or substantially all of our assets may be used to satisfy claims
of holders of our other outstanding debt, if any, without the holders of the Notes having any rights to such assets.
The Notes
will be unsecured and therefore will be effectively subordinated to any secured indebtedness that we currently have or that we may incur
in the future.
The Notes
will not be secured by any of our assets. As a result, the Notes will be effectively subordinated to any secured indebtedness that we
have currently outstanding or may incur in the future to the extent of the value of the assets securing such indebtedness. The indenture
governing the Notes, other than the asset coverage covenant (as more fully described in the “Description of Notes”),
will not prohibit us from incurring additional secured (or unsecured) indebtedness in the future. In any liquidation, dissolution, bankruptcy
or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged
to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including
the holders of the Notes.
The
Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The Notes
will be obligations exclusively of the Company and not of any of our subsidiaries nor will the Notes be secured by any of the assets
of our subsidiaries. The Notes will be effectively subordinated to any secured indebtedness of our subsidiaries currently outstanding
or that they may incur in the future to the extent of the value of the assets securing such indebtedness. None of our subsidiaries will
be a guarantor of the Notes, and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
Therefore, in any bankruptcy, liquidation or similar proceeding, all claims of creditors (including trade creditors) of our subsidiaries
will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the
Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our
claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness
or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes will be structurally subordinated to all indebtedness
and other liabilities (including trade payables) of any of our subsidiaries and any subsidiaries that we may in the future acquire or
establish as financing vehicles or otherwise. Except as set forth in “Description of Notes – Covenants” below,
the indenture does not otherwise prohibit us or our subsidiaries from incurring additional indebtedness in the future or granting liens
on our assets or the assets of our subsidiaries to secure any such additional indebtedness. In addition, future debt and security agreements
entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the
transfer by our subsidiaries of assets pledged as collateral.
The indenture governing
the Notes will contain limited protection for holders of the Notes.
The indenture
under which the Notes will be issued will offer limited protection to holders of the Notes. The terms of the indenture and the Notes
will not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions,
circumstances or events that could have an adverse impact on your investment in the Notes. In particular, the terms of the indenture
and the Notes will not place any restrictions on our or our subsidiaries’ ability to:
| · | issue
securities or otherwise incur additional indebtedness or other obligations, including (1)
any indebtedness or other obligations that would be equal in right of payment to the Notes,
(2) any indebtedness or other obligations that would be secured and therefore rank effectively
senior in right of payment to the Notes to the extent of the values of the assets securing
such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries
and which therefore is structurally senior to the Notes and (4) securities, indebtedness,
or obligations issued or incurred by our subsidiaries that would be senior to our equity
interests in our subsidiaries and therefore rank structurally senior to the Notes with respect
to the assets of our subsidiaries, in each case, other than an incurrence of indebtedness
or other obligation that would violate the covenants set forth below under “Description
of Notes – Covenants.” |
| · | pay
dividends on, or purchase or redeem or make any payments in respect of, capital stock or
other securities subordinated in right of payment to the Notes; |
| · | sell
assets (other than certain limited restrictions on our ability to consolidate, merge or sell
all or substantially all of our assets); |
| · | enter
into transactions with affiliates; |
| · | create
liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback
transactions; |
| · | create
restrictions on the payment of dividends or other amounts to us from our subsidiaries. |
In addition,
the indenture will not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going
private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions,
except to the limited extent described in this prospectus supplement under “Description of Notes—Purchase of Notes
Upon a Triggering Event.” Furthermore, the terms of the indenture and the Notes will not protect holders of the Notes in the
event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit
ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth,
revenues, income, cash flow, or liquidity. Also, an event of default or acceleration under our other indebtedness would not necessarily
result in an “Event of Default” under the Notes.
Our ability
to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the indenture and the
Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations
with respect to the Notes or negatively affecting the trading value of the Notes.
Other
debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional
covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for
and trading levels and prices of the Notes.
We may not be able to generate
sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness,
which may not be successful.
Our ability to make scheduled payments
on, or to refinance our obligations under, our debt will depend on our financial and operating performance and that of our subsidiaries,
which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which
may be beyond our control.
We may not maintain a level of cash
flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our
cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures,
sell assets, seek to obtain additional equity capital or restructure our debt. In the future, our cash flow and capital resources may
not be sufficient for payments of interest on, and principal of, our debt, and such alternative measures may not be successful and may
not permit us to meet our scheduled debt service obligations. We may not be able to refinance any of our indebtedness or obtain additional
financing. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required
to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those sales,
or if we do, at an opportune time, the proceeds that we realize may not be adequate to meet debt service obligations when due. Repayment
of our indebtedness, to a certain degree, is also dependent on the generation of cash flows by our subsidiaries (none of which will be
guarantors) and their ability to make such cash available to us, by dividend, loan, debt repayment, or otherwise. Our subsidiaries may
not be able to, or be permitted to, make distributions or other payments to enable us to make payments in respect of our indebtedness.
Each of our subsidiaries is a distinct legal entity and, under certain circumstances, applicable U.S. and foreign legal and contractual
restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions or other payments
from our subsidiaries, we may be unable to make required payments on our indebtedness.
An increase in market
interest rates could result in a decrease in the value of the Notes.
In general, as market interest rates
rise, notes bearing interest at a fixed rate decline in value. Consequently, if you purchase the Notes, and the market interest rates
subsequently increase, the market value of your Notes may decline. We cannot predict the future level of market interest rates.
An active trading market for
the Notes may not develop, which could limit the market price of the Notes in the secondary market and your ability to sell them.
The Notes
are a new issue of debt securities for which there currently is no trading market. We have applied to list the Notes on
the Nasdaq within 30 business days of the original issue date under the symbol “SWKHL.” There is no assurance that
Nasdaq will approve the listing of the Notes. Even if the listing of the Notes is approved by Nasdaq, an active trading market
may not develop for the Notes and you may have difficulty selling the Notes or may not be able to sell your Notes. If the Notes
are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing
interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance
and prospects and other factors. The underwriters have advised us that they intend to make a market in the Notes pending any listing
of the Notes on the Nasdaq, but they are not obligated to do so. The underwriters may discontinue any market-making in the Notes
at any time at their sole discretion. Accordingly, a liquid trading market may not develop for the Notes, you may not be able
to sell your Notes at a particular time and the price you receive when you sell may not be favorable. To the extent an active
trading market does not develop, the liquidity and trading price for the Notes may be harmed. Therefore, you may be required to
bear the financial risk of an investment in the Notes until maturity of the Notes.
In addition, there may be a limited
number of buyers when you decide to sell your Notes. This may affect the price, if any, offered for your Notes or your ability to sell
your Notes when desired or at all.
We may redeem the Notes
before maturity, and you may be unable to reinvest the proceeds and obtain an equal effective interest rate.
We
may redeem the Notes in whole or in part, at our option (i) on or after September 30, 2025 (the “First Call Date”) and prior
to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or after September 30, 2026
at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and unpaid interest to, but
excluding, the date of redemption. In addition, at any time prior to the First Call Date, we may, at our option, redeem the Notes for
cash, in whole at any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount of Notes redeemed,
plus (ii) a Make-Whole Amount (as defined herein), plus (iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption.
See “Description of Notes—Optional Redemption.” Additionally, upon the occurrence of a Triggering Event (defined
below), holders of the Notes may require us to make an offer to repurchase all or any portion of the Notes for cash at a purchase price
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the purchase date. If a
redemption does occur, you may be unable to reinvest the money you receive in the redemption in a comparable security at an equal or
higher effective interest rate.
We may
issue additional Notes.
Under the terms of the indenture governing
the Notes, we may from time to time without notice to, or the consent of, the holders of the Notes, create and issue additional Notes
which may rank equally with the Notes. If any such additional Notes are not fungible with the Notes initially offered hereby for U.S.
federal income tax purposes, such additional Notes will have a different CUSIP number.
The
ratings for the Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating
agency.
Ratings only reflect the views of
the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion
of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold the Notes. Ratings do not reflect market prices
or suitability of a security for a particular investor and the rating of the Notes may not reflect all risks related to us and our business,
or the structure or market value of the Notes. We may elect to issue other securities for which we may seek to obtain a rating in the
future. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered
or withdrawn, could adversely affect the market for or the market value of the Notes.
We
may not be able to repurchase the Notes upon a Triggering Event because we may not have sufficient funds.
Upon a
Triggering Event, holders of the Notes may require us to make an offer to repurchase all or any portion of the Notes
for cash at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to, but excluding, the purchase date. Our failure to purchase such tendered Notes upon the occurrence of such Triggering Event
would result in an Event of Default under the indenture governing the Notes and may result in a cross-default under the agreements
governing certain of our other indebtedness which may result in the acceleration of such indebtedness requiring us to repay that
indebtedness immediately. If such a Triggering Event were to occur, we may not have sufficient funds to repay any such accelerated
indebtedness. In addition, you may not be able to require us to repurchase the Notes under the change of control provisions in
the indenture in the event of certain important corporate events, such as a leveraged recapitalization (which would increase the
level of our indebtedness, potentially resulting in a downgrade of our credit ratings, thereby negatively affecting the value
of the Notes), reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a “Triggering
Event” under the indenture. Such a transaction may not involve a change in voting power or beneficial ownership or, even
if it does, may not involve a change that constitutes a “Triggering Event” that would trigger our obligation to purchase
the Notes. Therefore, if an event occurs that does not constitute a “Triggering Event,” we will not be required to
make an offer to repurchase all or any portion of the Notes despite the event. See “Description of Notes—Purchase
of Notes upon a Triggering Event.”
We have broad discretion in
the use of the net proceeds of this offering and may not use them effectively.
We intend to use the net proceeds
from this offering for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making
capital expenditures and funding working capital. However, our management will have broad discretion in the application of the net proceeds
from this offering and could spend the proceeds in ways that do not improve our results of operations. The failure by management to apply
these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price
of the Notes to decline.
USE OF PROCEEDS
We estimate that
the net proceeds from this offering will be approximately $28.3 million after discounts, commissions, the Structuring Fee and
estimated expenses related to this offering (or approximately $32.6 million if the underwriters’ option is exercised in
full). We intend to use the net proceeds from this offering for general corporate purposes, including funding future acquisitions and
investments, repaying indebtedness, making capital expenditures and funding working capital.
CAPITALIZATION
The following table sets forth our
capitalization as of June 30, 2023:
| |
· |
on an actual basis; and |
| |
· |
on an adjusted basis to give
effect to this offering as if it occurred on that date (assuming no exercise of the underwriters’ option to purchase additional
Notes), after deducting underwriting discounts and commissions, the Structuring Fee and estimated offering expenses payable by us.
|
You should read the data set forth
below in conjunction with “Use of Proceeds” appearing elsewhere in this prospectus, as well as our unaudited financial
statements and notes thereto incorporated by reference in this prospectus and our “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Form 10-Q for the quarter ended June 30, 2023, filed with the SEC
on August 10, 2023. See “Incorporation of Certain Information by Reference.”
| | |
As
of June 30, 2023 | |
| | |
Actual | | |
Adjusted(1) | |
| (in
thousands) | |
| | |
| |
| Cash
and cash equivalents | |
$ | 6,805 | | |
$ | 35,131 | |
| Current
Liabilities | |
$ | 2,996 | | |
$ | 2,996 | |
| Long-term
liabilities: | |
| | | |
| | |
| Contingent
consideration payable | |
| 11,200 | | |
| 11,200 | |
| Other
non-current liabilities | |
| 2,362 | | |
| 2,362 | |
| $30.0
million Senior Notes, interest at 9.00%, due January 31, 2027(2) | |
| — | | |
| 28,326 | |
| Total
Liabilities | |
$ | 16,558 | | |
$ | 44,884 | |
| | |
| | | |
| | |
| Total
stockholders’ equity | |
$ | 273,884 | | |
$ | 273,884 | |
| |
| | | |
| | |
| Total
Capitalization | |
$ | 290,442 | | |
$ | 318,768 | |
(1) Excludes
up to an additional $4.5 million in aggregate principal amount of Notes issuable upon the exercise of the underwriters’
option to purchase additional Notes.
(2) Excludes
unamortized debt issuance costs of approximately $1.7 million on the Notes.
DESCRIPTION OF OTHER
INDEBTEDNESS
Revolving Credit
Facility
On June 28, 2023, the Company entered into
a new Credit Agreement (the “Credit Agreement”) by and among SWK Funding LLC, the Company’s wholly-owned subsidiary
(together with the Company, the “Borrower”), the lenders party thereto (“Lenders”), and First Horizon Bank as
a Lender and Agent (the “Agent”). The Credit Agreement provides for a revolving credit facility with an initial maximum principal
amount of $45.0 million. The Credit Agreement provides that the Company may request one or more incremental increases in an aggregate
amount not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the termination of the
revolving credit period on June 28, 2026 (the “Commitment Termination Date”). The revolving credit period will be followed
by a one-year amortization period, with the final maturity date of the Credit Agreement occurring on June 28, 2027.
The outstanding
principal balance of the Credit Agreement will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the
Credit Agreement) plus (ii) 3.75 percent at all times prior to the Commitment Termination Date. The outstanding principal balance of
the Revolving Credit Facility will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement)
plus (ii) 4.25 percent at all times on and after the Commitment Termination Date. Under the terms of the Credit Agreement, all accrued
and unpaid interest shall be due and payable, in arrears, on the first business day of each calendar month.
The Credit Agreement
contains customary affirmative and negative covenants, in addition to financial covenants specifying that, as of the end of each calendar
month, (i) the consolidated leverage ratio of Borrower will not exceed 1.00 to 1.00, (ii) the consolidated interest coverage ratio of
Borrower will not be less than 4.00 to 1.00, (iii) the cash collection rate in relation to Borrower’s portfolio of loan assets
will not be less than 4.5%, for such calendar month, (iv) the net charge-off percentage in relation to Borrower’s portfolio of
loan assets will not exceed 3 percent for such calendar month, and (v) the weighted average risk rating in relation to Borrower portfolio
of loan assets will not be less than 3.00. In addition, the Credit Agreement provides that at no time shall the Company permit its consolidated
tangible net worth to be less than $145.0 million, or its Liquidity (as defined in the Credit Agreement) to be less than $5.0 million.
The Credit Agreement also contains events of default customary for such financings, the occurrence of which would permit the Agent and
Lenders to accelerate the aggregate principal amount due thereunder.
The
Credit Agreement refinances the Company’s Loan and Security Agreement dated as of June 29, 2018 (the “Prior Credit Agreement”),
as amended, between the Company and Cadence Bank, N.A. Cadence Bank, as the lender and administrative agent, which was due to expire
on September 30, 2025. The Prior Credit Agreement was terminated by the Company, effective as of June 28, 2023.
As
of June 30, 2023, no amounts were outstanding under either credit facility, and $45.0 million was available for borrowing under the Credit
Agreement.
DESCRIPTION OF NOTES
The Company
will issue $30,000,000 in aggregate principal amount of 9.00% Senior Notes due 2027 (or $34,500,000 aggregate principal amount
of 9.00% Senior Notes due 2027 if the underwriters’ option is exercised in full) (the “Notes”) under an indenture
to be dated as of October 3, 2023 (the “base indenture”) between the Company and Wilmington Trust, National Association
as trustee (the “trustee”), as supplemented by the first supplemental indenture thereto to be dated as of October 3,
2023 (together with the base indenture, the “indenture”). Unless the context requires otherwise, all references to “we,”
“us,” “our” and the “Company” in this “Description of Notes” refer solely to SWK Holdings
Corporation, the issuer of the Notes, and not to any of its subsidiaries. All references to interest in this section include additional
interest, if any, payable as the sole remedy relating to the failure to comply with our reporting obligations pursuant to the provisions
set forth below under “—Events of Default—Remedies if an Event of Default Occurs.”
The following description is only
a summary of certain provisions of the indenture and the Notes. You should read these documents in their entirety because they, and not
this description, define your rights as holders of the Notes. The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the indenture and to the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), and to all of the provisions of the indenture and those terms made a part of the indenture by reference to the
Trust Indenture Act.
General
The Notes:
| |
· |
will be
our general unsecured, senior obligations; |
| |
|
|
| |
· |
will
be initially limited to an aggregate principal amount of $30,000,000 (assuming no exercise of the underwriters’ option
to purchase additional Notes described herein); |
| |
|
|
| |
· |
will
mature on January 31, 2027 unless earlier redeemed or repurchased, and 100% of the aggregate principal amount will be paid
at maturity; |
| |
|
|
| |
· |
will
bear cash interest from October 3, 2023 at an annual rate of 9.00%, payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, beginning on December 31, 2023 and at maturity; |
| |
|
|
| |
· |
will be
redeemable at our option, in whole or in part, at the prices and on the terms described under “—Optional Redemption” below; |
| |
|
|
| |
· |
will
be subject to repurchase by us, at the option of the holders of the Notes, following a Triggering Event, for cash at
a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, as further described
under “—Purchase of Notes Upon a Triggering Event” below; |
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will
be issued in denominations of $25, or any integral multiples of $25 in excess thereof or in units, each representing $25; |
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will not
have a sinking fund; |
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are expected
to be listed on the Nasdaq Global Market (“Nasdaq”) under the symbol “SWKHL”; and |
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will be
represented by one or more registered Notes in global form, but in certain limited circumstances may be represented by Notes in definitive
form. |
Except
as set forth under “—Covenants” below, the indenture will
not otherwise limit the amount of debt (including secured debt) that may be issued by us or our subsidiaries under the indenture or otherwise.
Other than restrictions described under “—Covenants—Merger, Consolidation or Sale of Assets” below, the
indenture will not contain any covenants or other provisions designed to afford holders of the Notes protection in the event of a highly
leveraged transaction involving us or in the event of a decline in our credit rating as the result of a takeover, recapitalization, highly
leveraged transaction or similar restructuring involving us that could adversely affect such holders.
We have
granted the underwriters an option to purchase additional Notes in an aggregate principal amount not to exceed $4,500,000.
We may from time to time, without the consent of the existing holders, issue additional Notes having the same terms and conditions
(except the price to public, the issue date and, if applicable, the initial interest payment date) that may constitute a single
fungible series with the Notes offered by this prospectus; provided that if any such additional Notes are not fungible with the
Notes initially offered hereby for U.S. federal income tax purposes, such additional Notes will have different CUSIP numbers.
For the avoidance of doubt, such additional Notes will still constitute a single series with all other Notes issued under the
indenture for all purposes, including waivers, amendments, redemptions and offers to purchase.
Ranking
The Notes are senior unsecured obligations
of the Company, and, upon our liquidation, dissolution or winding up, will rank (i) senior to the outstanding shares of our common stock,
(ii) senior to any of our future subordinated debt, (iii) pari passu (or equally) with our existing and future unsecured indebtedness,
(iv) effectively subordinated to any existing or future secured indebtedness (including indebtedness that is initially unsecured to which
we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (v) structurally subordinated
to all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables. See “Risk Factors—The
Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness that we currently have or that we
may incur in the future.” The Notes will be obligations solely of the Company and will not be guaranteed by any of our subsidiaries.
As of June 30, 2023, we had no outstanding
indebtedness.
Interest
Interest on
the Notes will accrue at an annual rate equal to 9.00% from and including October 3, 2023 to, but excluding, the maturity
date or earlier payment date or redemption date and will be payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, beginning on December 31, 2023 and at maturity, to the holders of record at the close of business on the immediately
preceding March 15, June 15, September 15 or December 15 (and January 15 immediately preceding the maturity date), as applicable (whether
or not a business day).
The initial
interest period for the Notes will be the period from and including October 3, 2023, to, but excluding, December 31, 2023, and
subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment
date or the stated maturity date, as the case may be. The amount of interest payable for any interest period, including interest payable
for any partial interest period, will be computed on the basis of a 360-day year comprised of twelve 30-day months. If an interest payment
date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will
accrue as a result of such delayed payment.
“Business day” means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day in which banking institutions in New York are authorized or obligated
by law or executive order to close.
Optional Redemption
We may, at our
option, redeem the Notes for cash, in whole at any time or in part from time to time (i) on or after September 30, 2025 (the “First
Call Date”), and prior to September 30, 2026, at a redemption price equal to the sum of 102% of their principal amount, and
(ii) on or after September 30, 2026 at a redemption price equal to the sum of 100% of their principal amount, and, in each
case, plus (in each case noted above) accrued and unpaid interest to, but excluding, the date of redemption.
At any time
prior to the First Call Date, we may, at our option, redeem the Notes for cash, in whole at any time or in part from time to time at
a redemption price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined below), plus
(iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In each case,
notice of redemption shall be given to the holders of the Notes to be redeemed no fewer than 10 days and not more than 60 days
prior to the date fixed for redemption.
If less than
all of the Notes in certificated, non-global form are to be redeemed, the particular Notes to be redeemed will be selected not more than
25 days prior to the redemption date by the trustee from the outstanding certificated Notes not previously called for redemption,
by lot, or in the trustee’s discretion, on a pro-rata basis, provided that the unredeemed portion of the principal amount of any
Notes will be in an authorized denomination (which will not be less than the minimum authorized denomination) for such Notes. The trustee
will promptly notify us in writing of the certificated Notes selected for redemption and, in the case of any certificated Notes selected
for partial redemption, the principal amount thereof to be redeemed. Beneficial interests in any of the global Notes or portions thereof
called for redemption that are registered in the name of DTC or its nominee will be selected by DTC in accordance with DTC’s applicable
procedures.
The trustee shall have
no obligation to calculate any redemption price, or any component thereof, and the trustee shall be entitled to receive and conclusively
rely upon an officer’s certificate delivered by the Company that specifies any redemption price.
Unless we default on the payment of the
redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
We may at any time, and from time to time,
purchase notes at any price or prices in the open market or otherwise.
“Make-Whole
Amount” means, in connection with any optional redemption of any Note, the excess, if any, of (i) the sum of the present values,
as of the date of such redemption, of the remaining scheduled payments of principal (including the redemption price of such Note on the
First Call Date) of, and interest (exclusive of interest accrued to, but excluding, the date of redemption) on, such Note being redeemed,
assuming such Note matured on, and that accrued and unpaid interest on such Note was payable through, the First Call Date, determined
by discounting, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), such principal and interest at the
Reinvestment Rate (as defined below) (determined on the third business day preceding the date of redemption (or in the case of a discharge,
as of the date that redemption funds are deposited with the trustee)) over (ii) the aggregate principal amount of such Notes being redeemed.
“Reinvestment
Rate” means, 0.500%, or 50 basis points, plus the arithmetic mean (rounded to the nearest one-hundredth of one percent) of the
yields displayed for the five most recent Business Days published in the most recent Statistical Release under the caption “Treasury
constant maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity of the Notes
(assuming that the Notes matured on the First Call Date) as of the date of redemption. If no maturity exactly corresponds to such remaining
life to maturity, yields for the two published maturities most closely corresponding to such remaining life to maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding in each of such relevant periods to the nearest month. For the purpose of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of determination of the Reinvestment Rate shall be used.
“Statistical
Release” means the statistical release designated “H.15” or any comparable online data source or publication which
is made available by the Federal Reserve System and which establishes yields on actively traded U.S. government securities adjusted to
constant maturities, or, if such Statistical Release is not published at the time of any determination under the indenture, then such
other reasonably comparable index which shall be designated by us.
Purchase of Notes
Upon a Triggering Event
If a Triggering
Event occurs with respect to the Notes, holders of such Notes will have the right to require us to purchase all or any part of their
Notes pursuant to the offer described below (the “Triggering Offer”) on the terms set forth in the indenture. In the Triggering
Offer, we will be required to offer payment in cash equal to 100% of the aggregate principal amount of the Notes purchased plus accrued
and unpaid interest, if any, to but excluding the date of purchase (the “Triggering Payment”). Within 30 days following any
Triggering Event, unless we have exercised our right to redeem all of the Notes as described under “- Optional Redemption,”
with respect to the Notes, we will be required to mail, or with respect to Notes issued in global form, transmit in accordance with DTC’s
standard procedures therefor, a notice to the holders of such Notes describing the transaction or transactions that constitute the Triggering
Event and offering to purchase such Notes on the date specified in the notice, which date will be no earlier than 15 days and no later
than 60 days from the date such notice is mailed or transmitted)
(the “Triggering Payment Date”), pursuant to the procedures required by the indenture and described in such notice. The notice
will, if mailed or transmitted prior to the date of (i) the consummation of the Change of Control or (ii) the occurrence of a Delisting
Event, as applicable, state that the offer to purchase is conditioned on the Triggering Event occurring on or prior to the Triggering
Payment Date. We must comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the purchase of the Notes as a result of a Triggering
Event. To the extent that the provisions of any securities laws or regulations conflict with the Triggering Event provisions of the indenture,
we will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations
under the Triggering Event provisions or the delisting provisions of the indenture by virtue of such conflicts. On the Triggering Payment
Date, we will be required, to the extent lawful, to:
| · | accept for payment all Notes
or portions of Notes properly tendered and not withdrawn pursuant to the Triggering Offer; |
| · | deposit, to the extent not
previously deposited for such purpose, with the paying agent an amount equal to the Triggering Payment in respect of all Notes or portions
of Notes tendered; and |
| · | deliver or cause to be delivered
to the Trustee the Notes properly accepted together with an officer’s certificate stating the aggregate principal amount of Notes
or portions of Notes being purchased by us. |
The paying agent
will promptly mail, or with respect to Notes issued in global form, transmit in accordance with DTC’s standard procedures therefor,
to each holder of Notes properly tendered the purchase price for the Notes, and the trustee will promptly authenticate and mail (or cause
to be transferred by book-entry) to each holder a new Note equal in principal amount to any unpurchased portion of any Notes surrendered.
We will
not be required to make an offer to repurchase any Notes upon a Triggering Event if (1) a third party makes such an offer
in the manner, at the times and otherwise in compliance with the requirements for an offer made by us, and such third party purchases
all Notes of the applicable series properly tendered and not withdrawn under its offer; or (2) we have given written notice of
a full redemption of all of the Notes to the holders thereof as provided under “— Optional Redemption,”
if applicable, above, unless we fail to pay the redemption price on the redemption date.
For purposes of the
foregoing discussion of a purchase at the option of holders, the following definitions are applicable:
“Change
of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of
the properties and assets of the Company and its subsidiaries taken as a whole to any “person” or “group” (as
those terms are used in Section 13(d)(3) of the Exchange Act) other than us or one of our subsidiaries; (2) the approval by the holders
of our common stock of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance
with the provisions of the indenture); (3) the consummation of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange
Act), other than Carlson Capital, L.P. and/or any of its affiliates, becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the then outstanding number of shares of our
voting stock; or (4) the Company consolidates or merges with or into any entity, pursuant to a transaction in which any of the outstanding
voting stock of the Company or such other entity is converted into or exchanged for cash, securities or other property (except when voting
stock of the Company constitutes, or is converted into, or exchanged for, at least a majority of the voting stock of the surviving person).
“Delisting
Event” means, with respect to the Notes, (i) after being listed and commencing trading on an exchange, the Notes are no
longer listed on Nasdaq, the New York Stock Exchange (“NYSE”), the NYSE American LLC (“NYSE AMER”), or listed
or quoted on an exchange or quotation system that is a successor to Nasdaq, the NYSE or NYSE AMER, (ii) we are not subject to the reporting
requirements of the Exchange Act, but the Notes are still outstanding, or (iii) as of the 31st business day following the
settlement of the Notes, the Notes are not listed and trading on an exchange.
“Triggering
Event” means, with respect to the Notes, the occurrence of either a Change of Control or a Delisting Event.
The definition
of “Change of Control” includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance
or other disposition of “all or substantially all” of the properties and assets of us and our subsidiaries taken as a whole.
Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to purchase its Notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than all of the properties and assets of us and our subsidiaries
taken as a whole to another person or group may be uncertain.
Events of Default
Holders of our Notes will have rights
if an Event of Default occurs in respect of the Notes and is not cured, as described later in this subsection. The term “Event
of Default” in respect of the Notes means any of the following:
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we do not
pay interest on any Note when due, and such default is not cured within 30 days; |
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we do not
pay the principal of the Notes when due and payable; |
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we do not
make a Triggering Payment on the Triggering Payment Date; |
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we
breach any covenant or warranty in the indenture with respect to the Notes and such breach continues for 60 days after we receive
a written notice of such breach from the trustee or we and the trustee receive a written notice of such breach from the holders
of at least 25% of the principal amount of the outstanding Notes; |
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certain
specified events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed for a period of 90 days; and |
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if,
on the last business day of each of 24 consecutive calendar months, any class of senior securities representing any of our indebtedness
shall have an asset coverage (as such term is used in the 1940 Act and, for the avoidance of doubt, including our consolidated
assets and liabilities) of less than 100%. |
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We are required
to notify the trustee within 10 business days after we become aware of the occurrence of any default under the indenture known
to us. The trustee is then required within 90 calendar days of the trustee’s receipt of notice of any default to give to the registered
holders of the Notes notice of all uncured or unwaived defaults known to it. The trustee may withhold notice to the holders of the Notes
of any default, except in the payment of principal or interest, if the trustee in good faith determines the withholding of notice to
be in the interest of the holders of the Notes.
Each year, we will furnish to the
trustee an officer’s certificate of one of our officers certifying that, to their knowledge, we are in compliance with the indenture
and the Notes, or else specifying any default, its status and what actions we are taking or propose to take with respect thereto.
Remedies if an Event of Default
Occurs
If an Event of Default has occurred and
is continuing, the trustee or the holders of not less than 25% of the outstanding principal amount of the Notes may declare the entire
principal amount of the Notes, together with accrued and unpaid interest, if any, to be due and payable immediately by a notice in writing
to us and, if notice is given by the holders of the Notes, the trustee. This is called an “acceleration of maturity.” If
the Event of Default occurs in relation to our filing for bankruptcy or certain other events of bankruptcy, insolvency or reorganization
occur, the principal amount of the Notes, together with accrued and unpaid interest, if any, will automatically, and without any declaration
or other action on the part of the trustee or the holders, become immediately due and payable.
At any time after a declaration of
acceleration of the Notes has been made by the trustee or the holders of the Notes and before any judgment or decree for payment of money
due has been obtained by the trustee, the holders of a majority of the outstanding principal of the Notes, by written notice to us and
the trustee, may rescind and annul such declaration and its consequences if (i) such rescission would not conflict with any judgment
or decree of a court of competent jurisdiction, (ii) we have paid or deposited with the trustee all amounts due and owed with respect
to the Notes (other than principal that has become due solely by reason of such acceleration) and certain other amounts, and (iii) any
other Events of Default have been cured or waived.
At our election, the sole remedy
with respect to an Event of Default due to our failure to comply with certain reporting requirements under the Trust Indenture Act or
under “—Covenants—Reporting” below, for the first 180 calendar days after the occurrence of such Event
of Default, consists exclusively of the right to receive additional interest on the Notes at an annual rate equal to (1) 0.25% for the
first 90 calendar days after such default and (2) 0.50% for calendar days 91 through 180 after such default. On the 181st day after such
Event of Default, if such violation is not cured or waived, the trustee or the holders of not less than 25% of the outstanding principal
amount of the Notes may declare the principal, together with accrued and unpaid interest, if any, on the Notes to be due and payable
immediately. If we choose to pay such additional interest, we must notify the trustee and the holders of the Notes by an officer’s
certificate of our election at any time on or before the close of business on the first business day following the Event of Default and
we shall deliver to the trustee an officer’s certificate (upon which the trustee may rely conclusively) to that effect stating
(i) the amount of such additional interest that is payable and (ii) the date on which such additional interest is payable. Unless and
until a responsible officer of the trustee receives such a certificate stating that additional interest is due, the trustee may assume
without inquiry that no such additional interest is payable. The trustee shall not at any time be under any duty or responsibility to
verify or determine whether any additional interest is payable, or with respect to the nature, extent or calculation of any taxes or
the amount of any additional interest owed, or with respect to the method employed in such calculation of any additional interest.
Before a holder of the Notes is allowed
to bypass the trustee and bring a lawsuit or other formal legal action or take other steps to enforce such holder’s rights relating
to the Notes, the following must occur:
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such holder
must give the trustee written notice that the Event of Default has occurred and remains uncured; |
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the holders
of at least 25% of the outstanding principal of the Notes must have made a written request to the trustee to institute proceedings
in respect of such Event of Default in its own name as trustee; |
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such holder
or holders must have offered to the trustee indemnity or security satisfactory to the trustee against the costs, expenses and liabilities
to be incurred in compliance with such request; |
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the trustee
for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and |
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no direction
inconsistent with such written request has been given to the trustee during such 60-day period by holders of a majority of the outstanding
principal of the Notes. |
These limitations
do not apply to a suit instituted by a holder if we default in the payment of the Triggering Payment, principal, premium, if any,
or interest on, the Notes.
No delay or omission in exercising
any right or remedy will be treated as a waiver of that right, remedy or Event of Default.
If
an Event of Default occurs and continues, the trustee is under no obligation to exercise any of its rights or powers under the indenture
at the request or direction of any of the holders, unless such holders have offered the trustee security or indemnity satisfactory to
the trustee.
The holders of a majority in principal
amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the Notes, provided that:
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the direction so given by
the holder is not in conflict with any law or the indenture, nor does it subject the trustee to a risk of personal liability in respect
of which the trustee has not received indemnification satisfactory to it in its sole discretion against all losses, liabilities and
expenses caused by taking or not taking such action; and |
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the trustee may take any
other action deemed proper by the trustee which is not inconsistent with such direction. |
Book-entry and other indirect
holders of the Notes in global form should consult their banks or brokers for information on how to give notice or direction to or make
a request of the trustee and how to declare or cancel an acceleration of maturity.
Waiver of Defaults
The holders
of not less than a majority of the outstanding principal amount of the Notes may on behalf of the holders of all Notes waive any past
default with respect to the Notes other than (i) a default in the payment of the Triggering Payment, principal, premium, if any, or
interest on, the Notes, (ii) a default in the payment of principal, premium, if any, or interest on the Notes when such payments
are due and payable (other than by acceleration as described above), or (iii) in respect of a provision that cannot, per the terms
of the indenture, be modified or amended without the consent of each holder of Notes.
Covenants
In addition to standard covenants
relating to payment of principal and interest, maintaining an office where payments may be made or securities can be surrendered for
payment, payment of taxes by us and related matters, the following covenants will apply to the Notes.
Reporting
We have agreed
to provide to holders of the Notes and the trustee (if at any time when Notes are outstanding we are not subject to the reporting requirements
of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC), our audited annual consolidated financial statements,
within 90 days of our fiscal year end, and unaudited interim condensed consolidated financial statements, within 45 days of our fiscal
quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance
with applicable accounting principles generally accepted in the United States.
The posting or delivery of any such
information, documents and reports to the trustee is for informational purposes only and the trustee’s receipt of such shall not
constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of the covenants under the indenture (as to which the trustee is entitled
to rely exclusively on an officer’s certificate). The trustee shall have no duty to review or analyze reports, information and
documents delivered to it. Additionally, the trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise,
the Company’s compliance with the covenants or with respect to any reports or other documents filed with any protected online data
system or participate on any conference calls.
Asset Coverage
Compliance
We agree that
for the period of time during which the Notes are outstanding, we will not as determined on a consolidated basis (i) make additional
borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage (as
defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities), with respect to
our senior debt securities, for any class of senior securities representing any of our indebtedness, equals at least 150% after such
borrowings, and (ii) declare any cash dividend or distribution upon any class of our capital stock, or purchase any such capital stock
if our asset coverage (as defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities)
for any class of senior securities representing any of our indebtedness, were below 150% at the time of the declaration of the dividend
or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase. For the purposes of determining
“asset coverage” as used in the immediately preceding sentence, any and all indebtedness of the Company as determined
on a consolidated basis, including any outstanding borrowings under the Credit Facilities and any successor or additional credit
facility, shall be deemed a senior security of us.
Maintain
a Credit Rating
We will agree
in the indenture to use our commercially reasonable efforts at our own expense to maintain a rating of the Notes by at least
one NRSRO at all times while the Notes are outstanding provided; that no minimum rating will be required.
Merger, Consolidation or
Sale of Assets
The indenture will provide that we
will not merge or consolidate with or into any other person (other than a merger of a wholly owned subsidiary into us), or sell, transfer,
lease, convey or otherwise dispose of all or substantially all our property in any one transaction or series of related transactions
unless:
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we are the
surviving entity or the entity (if other than us) formed by such merger or consolidation or to which such sale, transfer, lease,
conveyance or disposition is made will be a corporation or limited liability
company organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; |
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the surviving
entity (if other than us) expressly assumes, by supplemental indenture in form reasonably satisfactory to the trustee, executed and
delivered to the trustee by such surviving entity, the due and punctual payment of the principal of, and premium, if any, and interest
on, all the Notes outstanding, and the due and punctual performance and observance of all the covenants and conditions of the indenture
to be performed by us; |
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immediately
after giving effect to such transaction or series of related transactions, no default or Event of Default has occurred and is continuing;
and |
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in the case
of a merger where the surviving entity is other than us, we or such surviving entity will deliver, or cause to be delivered, to the
trustee, an officer’s certificate and an opinion of counsel, each stating that such transaction and the supplemental indenture,
if any, in respect thereto, comply with this covenant and that all conditions precedent in the indenture relating to such transaction
have been complied with; provided that in giving an opinion of counsel, counsel may rely on an officer’s certificate as to
any matters of fact, including as to the satisfaction of the preceding bullet. |
The surviving entity (if other than
us) will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Notes and the indenture,
and the Company will automatically and unconditionally be released and discharged from its obligations under the Notes and the indenture.
Modification or Waiver
There are three types of changes we
can make to the indenture and the Notes:
Changes Not Requiring Approval
We can make certain changes to the
indenture and the Notes without the specific approval of the holders of the Notes. This type is limited to clarifications and certain
other changes that would not adversely affect holders of the Notes in any material respect and include changes:
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to
evidence the succession of another entity, and the assumption by the successor entity of our covenants, agreements
and obligations under the indenture and the Notes; |
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to add to
our covenants such new covenants, restrictions, conditions or provisions for the protection of the holders of the Notes, and to make
the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or
provisions an Event of Default; |
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to modify,
eliminate or add to any of the provisions of the indenture to such extent as necessary to effect the qualification of the indenture
under the Trust Indenture Act, and to add to the indenture such other provisions as may be expressly permitted by the Trust Indenture
Act, excluding however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act; |
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to cure
any ambiguity or to correct or supplement any provision contained in the indenture or in any supplemental indenture which may be
defective or inconsistent with other provisions; |
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to secure
the Notes or add guarantees of our obligations under the indenture and the Notes; |
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to evidence
and provide for the acceptance and appointment of a successor trustee and to add or change any provisions of the indenture as necessary
to provide for or facilitate the administration of the trust by more than one trustee; and |
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to make
provisions in regard to matters or questions arising under the indenture, so long as such other provisions do not materially affect
the interest of any holder of the Notes. |
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Changes Requiring Approval
of Each Holder
We cannot make certain changes to
the Notes without the specific approval of each holder of the Notes. The following is a list of those types of changes:
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changing
the stated maturity of the principal of, or any installment of interest on, any Note; |
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reducing
the principal amount or rate of interest of any Note; |
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amend
or change the calculation of the Triggering Payment or the right of a holder of the Notes to receive such Triggering Payment; |
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changing
the place of payment where, or the coin or currency in which, any Note or any interest is payable; |
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impairing
the right to institute suit for the enforcement of any payment on or after the date on which it is due and payable; |
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· |
reducing
the percentage in principal amount of holders of the Notes whose consent is needed to modify or amend the indenture; and |
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· |
reducing
the percentage in principal amount of holders of the Notes whose consent is needed to waive compliance with certain provisions of
the indenture or to waive certain defaults. |
Changes Requiring Majority
Approval
Any other change to the indenture
and the Notes would require the approval by holders of not less than a majority in aggregate principal amount of the outstanding Notes.
Consent from holders to any change
to the indenture or the Notes must be given in writing. The consent of the holders of the Notes is not necessary under the indenture
to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.
Further Details Concerning
Voting
The amount of Notes deemed to be outstanding
for the purpose of voting will include all Notes authenticated and delivered under the indenture as of the date of determination except:
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Notes cancelled
by the trustee or delivered to the trustee for cancellation; |
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Notes
for which we have deposited with the trustee or paying agent in trust money for their payment or redemption and, if money has been
set aside for the redemption of the Notes, notice of such redemption has been duly given to the holders of the Notes pursuant
to the indenture to the satisfaction of the trustee; |
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· |
Notes held
by the Company, its subsidiaries or any other entity which is an obligor under the Notes, unless such Notes have been pledged in
good faith and the pledgee is not the Company, an affiliate of the Company or an obligor under the Notes; |
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Notes which
have undergone full defeasance, as described below; and |
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· |
Notes which
have been paid or exchanged for other Notes due to such Notes loss, destruction or mutilation, with the exception of any such Notes
held by protected purchasers who have presented proof to the trustee that such Notes are valid obligations of the Company. |
We will generally be entitled to
set any day as a record date for the purpose of determining the holders of the Notes that are entitled to vote or take other action under
the indenture, and the trustee will generally be entitled to set any day as a record date for the purpose of determining the holders
of the Notes that are entitled to join in the giving or making of any notice of default, any declaration of acceleration of maturity
of the Notes, any request to institute proceedings or the reversal of such declaration. If we or the trustee set a record date for a
vote or other action to be taken by the holders of the Notes, that vote or action can only be taken by persons who are holders of the
Notes on the record date and, unless otherwise specified, such vote or action must take place on or prior to the 180th day after the
record date. We may change the record date at our option, and we will provide written notice to the trustee and to each holder of the
Notes of any such change of record date.
Discharge
The indenture will provide that we
can be discharged from our obligations with respect to the Notes, except for specified obligations, including:
| · | obligations to register the
transfer or exchange of the Notes; |
| · | obligations to replace stolen,
lost or mutilated Notes; |
| · | obligations to maintain paying
agencies; |
| · | obligations to hold monies
for payment in trust; and |
| · | the
rights, protections, immunities and indemnities of the trustee and the Company’s obligations
in respect thereof, |
if (i) (x)
all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment
money has been deposited in trust and thereafter repaid to the Company or discharged from such trust, have been delivered to the trustee
for cancellation, or (y) all Notes that have not theretofore been delivered to the trustee for cancellation (1) have become due and payable,
(2) will become due and payable at their stated maturity within one year, or (3) are subject to redemption within one year (and we have
entered into arrangements reasonably satisfactory to the trustee for the giving of notice of redemption to the holders), and we have
paid or deposited with the trustee money or U.S. government obligations, or a combination thereof,
sufficient (to the extent of any U.S. government obligations, in the opinion of a nationally recognized firm of independent public accountants,
investment bank or appraisal firm, to generate enough cash to make interest, principal and any other applicable payments on the Notes
on the applicable due date) to pay all the principal of, any premium and interest on, the Notes to the date of deposit (in the case
of Notes that have become due and payable) or to the stated maturity or redemption date, as the case may be, and delivered
irrevocable instructions to the trustee to apply the deposited cash and/or U.S. government obligations toward the payment of the
Notes at the maturity or on the redemption date, as the case may be; (ii) we have paid or caused to be paid all other sums
payable under the indenture; and (iii) we deliver an officer’s certificate and opinion of counsel to the trustee
stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied
with.
“U.S.
government obligations” means securities that are (1) direct obligations of the United States for the payment of which
its full faith and credit is pledged, or (2) obligations of a person controlled or supervised by and acting as an agency or instrumentality
of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States,
which in either case, are not callable or redeemable by the issuer thereof and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. government obligations or a specific
payment of principal of or interest on any such U.S. government obligations held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. government obligations
or the specific payment of principal of or interest on the U.S. government obligations evidenced by such depository receipt.
Defeasance
The following defeasance provisions
will be applicable to the Notes.
Covenant Defeasance
Under the
indenture, we have the option to take the actions described below and be released from some of the restrictive covenants under the
indenture under which the Notes were issued. This is called “covenant
defeasance.” The consequences to the holders of the Notes would be that, while they would no longer benefit from certain
covenants under the indenture, and while the Notes could not be accelerated for any reason, the holders of the Notes nonetheless
would be guaranteed to receive the principal and interest owed to them. In order to achieve covenant defeasance, the following must
occur:
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· |
we must
irrevocably deposit or cause to be deposited with the trustee as trust funds for the benefit of all holders of the Notes cash, U.S.
government obligations or a combination of cash and U.S. government obligations sufficient, without reinvestment, in the opinion
of a nationally recognized firm of independent public accountants, investment bank or appraisal firm, to generate enough cash to
make interest, principal and any other applicable payments on the Notes on their various due dates; |
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· |
we must
deliver to the trustee an opinion of counsel stating that under U.S. federal income tax law, we may make the above deposit and covenant
defeasance without causing beneficial owners of the Notes to be taxed on the Notes differently
than if those actions were not taken; |
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we must
deliver to the trustee an officer’s certificate stating that the Notes, if then listed on any securities exchange, will not
be delisted as a result of the deposit; |
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no default
or Event of Default with respect to the Notes has occurred and is continuing, and no defaults or Events of Defaults related to bankruptcy,
insolvency or organization occurs during the 90 days following the deposit; |
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· |
the covenant
defeasance must not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act; |
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the covenant
defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any other material agreements
or instruments to which we are a party; |
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· |
the covenant
defeasance must not result in the trust arising from the deposit constituting an investment company within the meaning of the 1940
Act, unless such trust will be registered under the Investment Company Act or exempt from registration thereunder; and |
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· |
we must
deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent with
respect to the covenant defeasance have been complied with. |
Full Defeasance
Under the indenture,
we have the option to take the actions described below and be discharged from our obligations under the Notes (except for specified
surviving obligations). This is called “full defeasance.” If there is a change in U.S. federal income tax law, we can
legally release ourselves from all payment and other obligations on the Notes if we take the following actions below:
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· |
we must
irrevocably deposit or cause to be deposited with the trustee as trust funds for the benefit of all holders of the Notes cash, U.S.
government obligations or a combination of cash and U.S. government obligations
sufficient, without reinvestment, in the opinion of a nationally recognized firm, of independent public accountants, investment bank
or appraisal firm, to generate enough cash to make interest, principal and any other applicable payments on the Notes on their various
due dates; |
|
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· |
we
must deliver to the trustee an opinion of counsel confirming that there has been a change to the current U.S. federal income tax
law or the Internal Revenue Service (the “IRS”) has published a ruling or
we have received a ruling from the IRS, and based on that change or ruling, we are permitted to make the above
deposit without causing beneficial owners of the Notes to be taxed on the Notes any
differently than if we did not make the deposit; |
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· |
we must
deliver to the trustee an officer’s certificate stating that the Notes, if then listed on any securities exchange, will not
be delisted as a result of the deposit; |
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no default
or Event of Default with respect to the Notes has occurred and is continuing and no defaults or Events of Defaults related to bankruptcy,
insolvency or organization occurs during the 90 days following the deposit; |
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the full
defeasance must not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act; |
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the full
defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any other material agreements
or instruments to which we are a party; |
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· |
the full
defeasance must not result in the trust arising from the deposit constituting an investment company within the meaning of the Investment
Company Act unless such trust will be registered under the Investment Company Act or exempt from registration thereunder; and |
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we must
deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent with
respect to the full defeasance have been complied with. |
In the event that the trustee is
unable to apply the funds held in trust to the payment of obligations under the Notes by reason of a court order or governmental injunction
or prohibition, then those of our obligations discharged under the full defeasance or covenant defeasance will be revived and reinstated
as though no deposit of funds had occurred, until such time as the trustee is permitted to apply all funds held in trust under the procedure
described above to the payment of obligations under the Notes. However, if we make any payment of principal or interest on the Notes
to the holders, we will have the right to receive such payments from the trust in the place of the holders.
Counsel may rely on an officer’s
certificate as to any matters of fact in giving an opinion of counsel in connection with the full defeasance or covenant defeasance provisions.
Listing
We have applied to list the Notes
on the Nasdaq under the symbol “SWKHL.” If the application is approved, we expect trading in the Notes on the Nasdaq to begin
within 30 business days of the date of the original issue date. The Notes are expected to trade “flat,” meaning that purchasers
will not pay and sellers will not receive any accrued and unpaid interest on the Notes that is not included in the trading price thereof.
Governing Law
The indenture and the Notes will be
governed by and construed in accordance with the laws of the State of New York.
Global Notes; Book-Entry Issuance
The Notes will be issued in the form
of one or more global certificates, or “Global Notes,” registered in the name of The Depository Trust Company, or “DTC,”
or its nominee. DTC has informed us that its nominee will be Cede & Co. Accordingly, we expect Cede & Co. to be the initial registered
holder of the Notes. No person that acquires a beneficial interest in the Notes will be entitled to receive a certificate representing
that person’s interest in the Notes except as described herein. Unless and until definitive securities are issued under the limited
circumstances described below, all references to actions by holders of the Notes will refer to actions taken by DTC upon instructions
from its participants, and all references to payments and notices to holders will refer to payments and notices to DTC or Cede &
Co., as the registered holder of these securities.
DTC has informed us that it is a
limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York
Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues,
and money market instruments from over 100 countries that DTC’s participants, or “Direct Participants,” deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates
the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository
Trust & Clearing Corporation, or “DTCC.”
DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is
owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants” and, together with Direct Participants,
“Participants”). DTC has an S&P rating of AA+ and a Moody’s rating of Aaa. The DTC Rules applicable to its participants
are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of the Notes under the
DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC’s records. The ownership
interest of each actual purchaser of each Note, or the “Beneficial Owner,” is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,
however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests
in the Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except as described herein.
To facilitate subsequent transfers,
all Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or
such other name as may be requested by an authorized representative of DTC. The deposit of the Notes with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts the
Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications
by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Redemption notices will be sent to DTC.
If less than all of the Notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct
Participant in the Notes to be redeemed.
Neither DTC nor Cede & Co. (nor
any other DTC nominee) will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC’s
applicable procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited
on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds,
distributions and interest payments on the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from us or the applicable trustee or depositary on the payment date in accordance with their respective holdings shown
on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with the Notes held for the accounts of customers in bearer form or registered in “street name,” and will
be the responsibility of such Participant and not of DTC nor its nominee, the applicable trustee or depositary, or us, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and interest
payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of
us or the applicable trustee or depositary. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct Participants and Indirect Participants.
The information in this section concerning
DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for
the accuracy thereof.
None of the Company, the trustee,
any depositary, or any agent of any of them will have any responsibility or liability for any aspect of DTC’s or any participant’s
records relating to, or for payments made on account of, beneficial interests in a Global Note, or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
Termination of a Global Note
If a Global Note is terminated for
any reason, interest in it will be exchanged for certificates in non-book-entry form as certificated securities. After such exchange,
the choice of whether to hold the certificated Notes directly or in street name will be up to the investor. Investors must consult their
own banks or brokers to find out how to have their interests in a Global Note transferred on termination to their own names, so that
they will be holders of the Notes. See “—Form, Exchange and Transfer of Certificated Registered Securities.”
Payment and Paying Agents
We will pay interest to the person
listed in the register maintained by the registrar as the owner of the Notes at the close of business on the record date for the applicable
interest payment date, even if that person no longer owns the Note on the interest payment date. Because we pay all the interest for
an interest period to the holders on the record date, holders buying and selling the Notes must work out between themselves the appropriate
purchase price. The most common manner is to adjust the sales price of the Notes to prorate interest fairly between buyer and seller
based on their respective ownership periods within the particular interest period.
Payments on Global Notes
We will make
payments on the Notes so long as they are represented by Global Notes in accordance with the applicable policies of the depositary in
effect from time to time. Under those policies, payments will be made directly to the depositary, or its nominee, and not to any
indirect holders who own beneficial interest in the Global Notes. An indirect holder’s right to those payments will be governed
by the rules and practices of the depositary and its participants.
Payments on Certificated
Securities
In the event
the Notes become represented by certificated, non-global Notes, we will make payments on the Notes as follows. We will pay interest
that is due on an interest payment date by check mailed on the interest payment date to the holder of the Note at his or her address
shown on the register maintained by the registrar as of the close of business on the record date. We will make all payments of principal
by check or wire transfer at the office of the trustee in the contiguous United States and/or at other offices that may be specified
in the indenture or a notice to holders against surrender of the Note.
Payment When Offices Are
Closed
If any payment is due on the Notes
on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business
day in this situation will be treated under the indenture as if they were made on the original due date. Such payment will not result
in a default under the Notes or the indenture, and no interest will accrue on the payment amount from the original due date to the next
day that is a business day.
Book-entry and other indirect
holders should consult their banks or brokers for information on how they will receive payments on the Notes.
Form, Exchange and Transfer
of Certificated Registered Securities
Notes in physical,
certificated form will be issued and delivered in exchange for beneficial interests in a Global Note to each person that DTC identifies
as an owner of a beneficial interest in such Global Note only if:
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· |
DTC notifies
us at any time that it is unwilling or unable to continue as depositary for the Global Notes; |
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· |
DTC
ceases to be registered as a clearing agency under the Exchange Act, and we have not appointed a successor depositary within 90
days of that notice or becoming aware that DTC is no longer so registered; or |
| |
· |
an Event
of Default with respect to such Global Notes has occurred and is continuing. |
Holders may
exchange their certificated securities for Notes of smaller denominations or combined into fewer Notes of larger denominations, as long
as the total principal amount is not changed and as long as the denomination is equal to or greater than $25 and any integral multiples
of $25 in excess thereof or in units, each representing $25.
Holders may exchange or transfer
their certificated securities at the office of the transfer agent. We have appointed the trustee to act as our transfer agent for registering
the Notes in the name of holders transferring Notes. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts.
Holders will not be required to pay
a service charge for any registration of transfer or exchange of their certificated securities, but they may be required to pay any tax
or other governmental charge associated with the registration of transfer or exchange. The transfer or exchange will be made only if
our transfer agent is satisfied with the holder’s proof of legal ownership.
If we redeem any of the Notes, we
may block the transfer or exchange of those Notes selected for redemption during the period beginning 15 days before the day we deliver
the notice of redemption and ending on the day of such delivery, in order to determine or fix the list of holders. We may also refuse
to register transfers or exchanges of any certificated Notes selected for redemption, except that we will continue to permit transfers
and exchanges of the unredeemed portion of any Note that will be partially redeemed.
About the Trustee
Wilmington Trust, National Association
will be the trustee under the indenture and will be the paying agent, transfer agent and registrar for the Notes. The trustee may resign
or be removed with respect to the Notes provided that a successor trustee is appointed.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
For additional information concerning Certain
Relationships and Related Party Transactions, see our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March
31, 2023. See “Incorporation of Certain Information by Reference.”
MATERIAL U.S. FEDERAL
TAX CONSIDERATIONS
General
The following is a summary of the
material U.S. federal income tax consequences of the ownership and disposition of the Notes. This summary applies only to Notes held
as capital assets (generally, assets held for investment) by those initial holders who purchase Notes at their “issue price,”
which will equal the first price at which a substantial amount of the Notes is sold for money to the public (not including bond houses,
brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). This summary is
based on the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), administrative pronouncements, judicial
decisions and applicable U.S. Treasury regulations, changes to any of which subsequent to the date of this prospectus may affect the
U.S. federal income tax consequences described herein. This summary does not describe all of the U.S. federal income tax consequences
that may be relevant to holders in light of their particular circumstances or to holders subject to special rules, such as certain financial
institutions, tax-exempt organizations, insurance companies, dealers in securities or foreign currencies, traders in securities that
have elected the mark-to-market method of accounting, certain former citizens or long-term residents of the United States, persons holding
Notes as part of a straddle, hedge or other integrated transaction, U.S. Holders (as defined below) whose functional currency is not
the U.S. dollar, partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes, or persons
subject to the alternative minimum tax.
If an entity or arrangement treated
as a partnership for U.S. federal income tax purposes holds Notes, the U.S. federal income tax treatment of a partner generally will
depend upon the status of the partner and the activities of the partnership. Partnerships and partners of partnerships considering an
investment in Notes are urged to consult their tax advisers as to the particular U.S. federal income tax consequences to them of holding
and disposing of the Notes. Further, this summary does not address the U.S. federal estate and gift tax, the Medicare tax on net investment
income or the state, local and non-U.S. tax consequences of holding and disposing of the Notes.
Certain
Contingent Payments
In
certain circumstances, we may redeem the Notes in exchange for payments by us in excess of stated interest or principal or at times earlier
than the final maturity. See “Description of Notes—Optional Redemption” and “Description of
Notes—Purchase of Notes upon a Triggering Event” above. The possibility of such redemptions may implicate special rules
under Treasury regulations governing “contingent payment debt instruments.” According to those Treasury regulations, the
possibility that we will be required to make such a contingent payment on the Notes will not affect the amount of income a holder recognizes
in advance of the payment if there is only a remote chance as of the date the Notes are issued that such payment will be made. We believe
and intend to take the position that the contingencies on the Notes will not cause the “contingent payment debt instrument”
rules of the Treasury regulations to apply to the Notes. Our position that the “contingent payment debt instrument” rules
of the Treasury regulations will not apply to the Notes is binding on a holder unless such holder discloses its contrary position to
the IRS in the manner required by applicable Treasury regulations. Our position is not, however, binding on the IRS, and if the
IRS were to challenge this position successfully, a holder might be required to, among other things, accrue interest income based on
a projected payment schedule and comparable yield, which may be in excess of stated interest, and treat as ordinary income rather than
capital gain any income realized on the taxable disposition of a Note. In the event a contingency on the Notes occurs, it could affect
the amount, timing and character of the income or loss recognized by a holder. Prospective holders should consult their tax advisers
regarding the tax consequences if the Notes were treated as contingent payment debt instruments. The remainder of this discussion assumes
that the Notes will not be considered contingent payment debt instruments.
THIS SUMMARY IS FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS WITH RESPECT TO THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NOTES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION
OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Tax Consequences to U.S. Holders
As used herein, the term “U.S.
Holder” means, for U.S. federal income tax purposes, a beneficial owner of a Note that is: (i) an individual citizen or resident
of the United States; (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized
in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source; or (iv) a trust if (1) a United States court can exercise primary supervision
over the administration of the trust and one or more “United States persons” within the meaning of Section 7701(a)(30) of
the Code can control all substantial decisions of the trust, or (2) the trust was in existence on August 20, 1996, and has elected to
continue to be treated as a United States person.
Payments of Interest
Stated interest paid on a Note generally
will be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. Holder’s
regular method of accounting for U.S. federal income tax purposes. It is expected, and the rest of this discussion assumes, the Notes
are sold in this offering at par, or at a de minimis discount from par, such that the Notes will be issued without original issue
discount for U.S. federal income tax purposes. For this purpose, a discount from par is considered de minimis if it is less than 0.25%
of the stated redemption price at maturity of the Notes (generally, their principal amount) multiplied by the number of complete years
to maturity from their original issue date.
Sale, Exchange, Retirement or Other
Taxable Disposition of the Notes
Upon the sale, exchange, retirement
or other taxable disposition of a Note, a U.S. Holder will recognize taxable gain or loss equal to the difference, if any, between the
amount realized on the sale, exchange, retirement or other taxable disposition and the U.S. Holder’s tax basis in the Note at that
time. For these purposes, the amount realized generally will include the sum of the cash and the fair market value of any property received
in exchange for the Note. However, the amount realized does not include any amount attributable to accrued but unpaid interest, which
will be treated as ordinary interest income, as described above in “—Payments of Interest,” to the extent not
previously included in income by the U.S. Holder. A U.S. Holder’s tax basis in a Note generally will equal the cost of the Note
to the U.S. Holder. Gain or loss realized on the sale, exchange, retirement or other taxable disposition of a Note generally will be
capital gain or loss and will be long-term capital gain or loss if at the time of the sale, exchange, retirement or other taxable disposition
the Note has been held for more than one year. Under current law, long-term capital gains of certain non-corporate holders generally
are taxed at preferential rates. The deductibility of capital losses is subject to limitations.
Backup Withholding and Information
Reporting
Information returns generally will
be filed with the IRS in connection with payments on the Notes and the proceeds from a sale or other disposition of the Notes. A U.S.
Holder generally will be subject to backup withholding on these payments if the U.S. Holder fails to provide its taxpayer identification
number to the paying agent and comply with certain certification procedures or otherwise establish an exemption from backup withholding.
Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as
a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund of any excess
amounts withheld, provided that the required information is timely furnished to the IRS.
Tax Consequences to Non-U.S.
Holders
As used herein, the term “Non-U.S.
Holder” means, for U.S. federal income tax purposes, a beneficial owner of a Note that is an individual, corporation, estate or
trust that is not a U.S. Holder (as defined above).
Payments of Interest
Subject to the discussions below under
“—Backup Withholding and Information Reporting” and “—FATCA Withholding,” payments
of interest on the Notes by the Company or any applicable withholding agent to any Non-U.S. Holder generally will not be subject to U.S.
federal income tax or withholding tax, provided that: (a) the Non-U.S. Holder does not own, actually or constructively, 10% or more of
the total combined voting power of all classes
of stock of the Company that are entitled to vote; (b) the Non-U.S. Holder is not a controlled
foreign corporation related, directly or indirectly, to the Company through stock ownership; (c) the
Non-U.S. Holder is not a bank receiving interest described in section 881(c)(3)(A) of the Code; and (d) the Non-U.S. Holder either
(x) certifies on IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form), under penalties of perjury, that it is not a United
States person or (y) holds the Notes through certain foreign intermediaries and satisfies the certification requirements of the applicable
U.S. Treasury regulations.
Subject to the discussion below under
“—United States Trade or Business,” a Non-U.S. Holder that does not qualify for exemption from withholding as
described above generally will be subject to U.S. federal withholding tax at a rate of 30% on payments of interest on the Notes. A Non-U.S.
Holder may be entitled to the benefits of an income tax treaty under which interest on the Notes is subject to an exemption from, or
reduced rate of, U.S. federal withholding tax, provided such holder provides to the applicable withholding agent a properly executed
IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form) claiming the exemption or reduction and complies with any other applicable
procedures.
A Non-U.S.
Holder is urged to consult its tax adviser regarding the availability of the above exemptions and the procedure for obtaining such
exemptions, if available. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge or
reason to know that the statements on the form are false.
Sale, Exchange, Retirement or Other
Taxable Disposition of the Notes
Subject to the discussion below under
“—Backup Withholding and Information Reporting” and “—FATCA Withholding,” a Non-U.S.
Holder of a Note generally will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale, exchange,
retirement or other taxable disposition of the Note, unless:
| |
(i) |
the gain is effectively connected
with the conduct by the Non-U.S. Holder of a trade or business in the United States, subject to an applicable income tax treaty providing
otherwise; or |
| |
(ii) |
the Non-U.S. Holder is an
individual who is present in the United States for 183 or more days in the taxable year of the disposition and certain other requirements
are met. |
If you are a Non-U.S. Holder described
in (i) above, you generally will be subject to tax as described below in “—United States Trade or Business.”
If you are a Non-U.S. Holder described in (ii) above, you generally will be subject to a flat 30% (or lower applicable treaty rate) U.S.
federal income tax on the gain derived from the sale, exchange, retirement or other taxable disposition of a Note, which may be offset
by certain U.S. source capital losses.
United States Trade or Business
If a Non-U.S. Holder of a Note is
engaged in a trade or business in the United States, and if income or gain on the Note is effectively connected with the conduct of this
trade or business, the Non-U.S. Holder, although exempt from the withholding tax on interest discussed above, generally will be taxed
on such income or gain in the same manner as a U.S. Holder (see “—Tax Consequences to U.S. Holders” above),
subject to an applicable income tax treaty providing otherwise. Such a Non-U.S. Holder will be required to provide to the applicable
withholding agent a properly executed IRS Form W-8ECI in order to claim an exemption from withholding tax on interest. In addition to
regular U.S. federal income tax, Non-U.S. Holders that are corporations may be subject to a U.S. branch profits tax on their effectively
connected earnings and profits, subject to adjustments, at a 30% rate (or lower applicable treaty rate, if any). Non-U.S. Holders engaged
in a trade or business in the United States should consult their tax advisers with respect to other U.S. tax consequences of the ownership
and disposition of Notes.
Backup Withholding and Information
Reporting
Information returns generally will
be filed with the IRS in connection with payments of interest on the Notes. Copies of the information returns reporting such interest
payments and any withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under
the provisions of an applicable income tax treaty or other agreement. Unless the Non-U.S. Holder complies with certification procedures
to establish that it is not a United States person, information returns may be filed with the IRS in connection with the proceeds
from
a sale or other disposition of the Notes, and the Non-U.S. Holder may be subject to U.S. backup withholding on payments on the Notes
or on the proceeds from a sale or other disposition of the Notes. Compliance with the certification procedures required as to non-U.S.
status in order to claim the exemption from withholding tax on interest described above will satisfy the certification requirements necessary
to avoid backup withholding as well. Backup withholding is not an additional tax. The amount of any backup withholding from a payment
to a Non-U.S. Holder will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability and may entitle
the Non-U.S. Holder to a refund of any excess amounts withheld, provided that the required information is timely furnished to the IRS.
FATCA Withholding
Sections
1471 through 1474 of the Code, the U.S. Treasury regulations promulgated thereunder, and IRS administrative guidance, which are commonly
referred to as the “Foreign Account Tax Compliance Act” (“FATCA”) generally impose withholding at a rate
of 30% in certain circumstances on interest payable on the Notes held by or through certain financial institutions (including investment
funds), unless such institution (a) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information
with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons or by certain non-U.S.
entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (b) if required under an intergovernmental
agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will
exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign
country may modify these requirements. Accordingly, the entity through which the Notes are held will affect the determination of whether
such withholding is required. Similarly, interest payable on the Notes held by an investor that is a non-financial non-U.S. entity
that does not qualify under certain exemptions generally will be subject to withholding at a rate of 30%, unless such entity either
(a) certifies that such entity does not have any “substantial United States owners” or (b) provides certain information regarding
the entity’s “substantial United States owners,” which we will in turn provide to the U.S. Department of the Treasury.
Withholding
under FATCA would also have applied to payments of gross proceeds from dispositions of Notes after December 31, 2018. However, proposed
U.S. Treasury regulations would eliminate FATCA withholding on gross proceeds from a disposition of Notes. In the preamble to such proposed
regulations, the U.S. Treasury Department stated that taxpayers generally may rely on these proposed U.S. Treasury regulations until
final U.S. Treasury regulations are issued. A Non-U.S. Holder should consult its tax adviser regarding the possible implications
of FATCA on an investment in the Notes.
UNDERWRITING
B. Riley is acting
as book-running manager and representative of each of the underwriters named below. Subject to the terms and conditions set forth in
an underwriting agreement among us and the underwriters dated September 28, 2023 (the “Underwriting Agreement”), we
have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the
principal amount of Notes set forth opposite its name below.
| Underwriter | |
Principal
Amount
of Notes | |
| B. Riley
Securities, Inc. | |
$ | 24,240,000 | |
| Ladenburg Thalmann
& Co. Inc. | |
| 1,200,000 | |
| William Blair &
Company, L.L.C. | |
| 2,325,000 | |
| InspereX LLC | |
| 2,175,000 | |
| Maxim
Group LLC | |
| 60,000 | |
| Total | |
$ | 30,000,000 | |
Subject to the terms and conditions
set forth in the Underwriting Agreement, the underwriters have agreed, severally and not jointly, to purchase all of the Notes sold under
the Underwriting Agreement. These conditions include, among others, the continued accuracy of representations and warranties made by
us in the Underwriting Agreement, delivery of legal opinions and the absence of any material changes in our assets, business or prospects
after the date of this prospectus.
We have granted
to the underwriters the option to purchase up to an additional $4,500,000 of Notes at the public offering price, less the underwriting
discounts (the “Option”). If any Notes are purchased pursuant to the Option, the underwriters will, severally but not jointly,
purchase the Notes in approximately the same proportions as set forth in the above table. A purchaser who acquires any Notes forming
part of the underwriters’ Option acquires such Notes under this prospectus, regardless of whether the position is ultimately filled
through the exercise of the Option or secondary market purchases.
We have agreed to indemnify the underwriters
against certain liabilities, including, among other things, liabilities under the Securities Act or to contribute to payments the underwriters
may be required to make in respect of those liabilities.
We expect to
deliver the Notes against payment for such Notes on or about October 3, 2023, which will be the second business day following
the trade date of the Notes.
Discounts and Expenses
B. Riley has
advised us that the underwriters propose initially to offer the Notes to the public at the public offering price and to dealers at that
price less a concession not in excess of $0.50 per Note. After the underwriters have made a reasonable effort to sell all of the
Notes at the offering price, such offering price may be decreased and may be further changed from time to time to an amount not greater
than the offering price set forth herein, and the compensation realized by the underwriters will effectively be decreased by the amount
that the price paid by purchasers for the Notes is less than the original offering price. Any such reduction will not affect the net
proceeds received by us. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in
whole or in part.
The following table shows the per
Note price to the public and price to the dealers and total underwriting discount that we are to pay to the underwriters in connection
with this offering assuming no exercise of the Option and assuming a full exercise of the option.
| | |
No Exercise of Option | |
Full Exercise of Option |
| | |
Price to the Public | |
Price to the Dealers(1) | |
Underwriting Discount(2) | |
Net Proceeds(3) | |
Price to the Public | |
Price to the Dealers(1) | |
Underwriting Discount(2) | |
Net Proceeds(3) |
| Per
Note | | |
$ | 25.00 | | |
$ | 24.50 | | |
$ | 0.7875 | | |
$ | 24.2125 | | |
$ | 25.00 | | |
$ | 24.50 | | |
$ | 0.7875 | | |
$ | 24.2125 | |
| Total | | |
$ | 30,000,000 | | |
$ | 29,400,000 | | |
$ | 945,000 | | |
$ | 29,055,000 | | |
$ | 34,500,000 | | |
$ | 33,810,000 | | |
$ | 1,086,750 | | |
$ | 33,413,250 | |
| |
(1) |
The public offering price
less a weighted average concession of $0.7875 per Note. |
| |
(2) |
Pursuant to the terms of
the Underwriting Agreement, the underwriters will receive a discount equal to $0.7875 per Note. |
| |
(3) |
After deducting the underwriting
discount but before deducting the Structuring Fee and expenses of the offering. |
We have agreed
to reimburse the underwriters for their reasonable out-of-pocket expenses, including attorneys’ fees, up to $125,000. In addition
to the underwriting discounts, we have agreed to pay to B. Riley a structuring fee (the “Structuring Fee”) equal to 1% of
the gross offering proceeds, which Structuring Fee is to be paid in cash at the closing of this offering, and any additional closing
in connection with the exercise of the Option. We estimate that the total expenses of this offering, including registration, filing and
listing fees, printing fees, legal and accounting expenses and underwriter reimbursements, but excluding underwriting discounts, commissions
and the Structuring Fee, will be approximately $428,533.
Stock Exchange Listing
We have
applied to list the Notes on the Nasdaq. If the application is approved, trading of the Notes on the Nasdaq is expected to
begin within 30 business days after the date of initial delivery of the Notes. We have been advised by the underwriters that they
presently intend to make a market in the Notes after completion of the offering pending any listing of the Notes on the Nasdaq.
However, the underwriters will have no obligation to make a market in the Notes and may cease market-making activities at any
time without any notice, in their sole discretion. Accordingly, an active trading market on the Nasdaq for the Notes may not develop
or, even if one develops, may not last, in which case the liquidity and market price of the Notes could be adversely affected,
the difference between bid and asked prices could be substantial and your ability to transfer the Notes at the time and price
desired will be limited.
Price Stabilization, Short Positions
Until the distribution of the Notes
is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our Notes. However, the representative
may engage in transactions that have the effect of stabilizing the price of the Notes, such as purchases and other activities that peg,
fix or maintain that price.
In connection with this offering,
the underwriters may bid for or purchase and sell our Notes in the open market. These transactions may include short sales and purchases
on the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of
our Notes than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater
than the Underwriters’ option to purchase additional Notes in this offering. The underwriters may close out any covered short position
by either exercising their option to purchase additional Notes or purchasing Notes in the open market. In determining the source of Notes
to close out the covered short position, the underwriters will consider, among other things, the price of Notes available for purchase
in the open market as compared to the price at which they may purchase additional Notes pursuant to the option granted to them. “Naked”
short sales are sales in excess of the option to purchase additional Notes. The underwriters must close out any naked short position
by purchasing Notes in the open market. A naked short position is more likely to be created if the underwriters are concerned that there
may be downward pressure on the price of our Notes in the open market after pricing that could adversely affect investors who purchase
in this offering.
Similar to other purchase transactions,
the underwriters’ purchases to cover the syndicate short sales and other activities may have the effect of raising or maintaining
the market price of the Notes or preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes
may be higher than the price that might
otherwise exist in the open market. If these
activities are commenced, they may be discontinued at any time. The underwriters may conduct these transactions on the Nasdaq, in the
over-the-counter market or otherwise.
The underwriters also may impose a
penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by
it because the representative has repurchased Notes sold by or for the account of such underwriter in stabilizing or short covering transactions.
Neither we nor any of the underwriters
make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on
the price of our Notes. In addition, neither we nor any of the underwriters make any representation that the representative will engage
in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Electronic Offer, Sale and Distribution
of Notes
This prospectus in electronic format
may be made available on websites maintained by one or more of the underwriters, and the underwriters may distribute the prospectus electronically.
Other than this prospectus in electronic
format, the information on any underwriter’s or any selling group member’s website and any information contained in any other
website maintained by an underwriter or any selling group member is not part of this prospectus or the registration statement of which
this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or any selling group member in its capacity
as underwriter or selling group member and should not be relied upon by investors.
Additional
Relationships
The underwriters and their respective
affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and
investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and
other financial and non-financial activities and services. Certain of the underwriters and
their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities
with relationships with us, for which they received or will receive customary fees and expenses.
In the ordinary
course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may
purchase, sell or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit
default swaps and other financial instruments for their own account and for the accounts of their customers, and any investment and trading
activities may involve or relate to assets, securities or instruments of ours (directly, as collateral securing other obligations or
otherwise) or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate
independent investment recommendations, market color or trading ideas or publish or express independent research views in respect of
our assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long or short positions
in our assets, securities and instruments.
LEGAL MATTERS
Goodwin Procter LLP will pass upon
certain legal matters for us in connection with the offering of the Notes. The underwriters are being represented in connection with
the offering by Duane Morris LLP.
EXPERTS
The consolidated
financial statements of SWK Holdings Corporation as of December 31, 2022 and 2021 and for each of the two years in the period ended December
31, 2022, incorporated in its Registration Statement on Form S-1 by reference to its Annual Report on Form 10-K for the year ended
December 31, 2022, have been so incorporated in reliance on the report of BPM LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which constitutes
a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which
is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information
with respect to us and our Notes, we refer you to the registration statement, including the exhibits filed as a part of the registration
statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily
complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or
document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in
all respects by the filed exhibit.
We are subject to the informational
requirements of the Exchange Act, and, in accordance with the Exchange Act, file reports, proxy and information statements and other
information with the SEC. The SEC maintains a website that contains reports, proxy statements and other information about issuers, like
us, that file electronically with the SEC. The address of that website is www.sec.gov. We also anticipate making these documents publicly
available, free of charge, on our website as soon as reasonably practicable after filing such documents with the SEC. Information on,
or accessible through, our website is not part of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate
by reference” certain of the information that we file with it after the date of the filing of the registration statement of which
this prospectus forms a part, which means that we can disclose important information to you by referring you to the documents containing
that information. The information incorporated by reference is considered to be part of this prospectus, and later information that we
file with the SEC will automatically update and supersede this information.
The documents listed below and any future
filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any information furnished pursuant
to Item 2.02 or Item 7.01 on any Current Report on Form 8-K and exhibits filed on such form that are related to such items unless such
Form 8-K expressly provides to the contrary), including all such documents we may file with the SEC after the date on which the registration
statement that includes this prospectus was initially filed with the SEC and prior to the effectiveness of the registration statement
and all such documents we may file with the SEC after the effectiveness of the registration statement, are incorporated by reference
in this prospectus until the termination of the offering under this registration statement:
| |
· |
Our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023 (File No. 001-39184); |
| |
|
|
| |
· |
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on
May 10, 2023 (File No. 001-39184);
|
| |
· |
Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on
August 10, 2023 (File No. 001-39184);
|
| |
· |
Our
Current Reports on Form 8-K, filed with the SEC on January
3, 2023, March
15, 2023, May
16, 2023, June
14, 2023, and June
30, 2023; and
|
| |
· |
Our
Definitive Proxy Statement filed with the SEC on May 1, 2023, pursuant to Section 14 of the Exchange Act. |
We will provide a copy of these filings
(including certain exhibits that are specifically incorporated by reference therein) to each person, including any beneficial owner,
to whom a prospectus is delivered. You may request a copy of any or all of these filings at no cost, by writing or calling us at:
SWK Holdings
Corporation
5956 Sherry Lane, Suite
650
Dallas, TX 75225
Copies of certain information filed
by us with the SEC, including our Annual Report and Quarterly Reports, are also available on our website at www.swkhold.com. Information
contained on our website or that can be access through our website is not incorporated by reference herein.
You should read the information relating
to us in this prospectus together with the information in the documents incorporated by reference. Nothing contained herein shall be
deemed to incorporate information furnished, but not filed, with the SEC.
SWK Holdings
Corporation
$30,000,000
9.00%
Senior Notes due 2027
PROSPECTUS
Joint Book-Running Managers
| B.
Riley Securities |
Ladenburg Thalmann |
William
Blair |
Co-Managers
September 28, 2023
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