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ITEM 1.01.
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Entry into a Material Definitive Agreement
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On July 17, 2020, LM Capital Solutions,
LLC (“LMCS”), a majority-owned subsidiary of CCUR Holdings, Inc. (the “Company”), entered
into a series of transactions resulting in the recapitalization of LMCS (the “Recapitalization”), with such
transactions including the redemption by LMCS of certain of the Company’s equity interests in LMCS and the granting to LMCS’s
minority member, AZOKKB, LLC (formerly Luxemark Capital LLC) (“AZOKKB”), a right to purchase the Company’s
remaining equity interests in LMCS upon the occurrence of certain conditions, including without limitation the repayment of an
intercompany note from the Company to LMCS; the waiver of LMCS’s obligations to pay contingent consideration to AZOKKB; the
termination of certain warrants to purchase the Company’s capital stock held by certain affiliates of AZOKKB; the assignment
of certain contractual rights of LMCS to AZOKKB; and the amendment of an intercompany note from the Company to LMCS, each of which
are described in further detail below.
Amendment to LMCS Operating Agreement
The Company and AZOKKB entered into an
amendment to the operating agreement of LMCS (the “Amendment”). Under the Amendment, among other things, LMCS
redeemed 5,918.3673 Class A Units from the Company, such that the Company’s percentage ownership interest in LMCS was reduced
from 80% to 51% (the “Redemption”). The Amendment further granted the right to AZOKKB to purchase all of the
remaining Class A Units that the Company holds in LMCS upon the repayment in full of the Master Promissory Note (described below),
for the consideration of one (1) dollar. The Amendment also contains a joint written consent of the board of managers and members
of LMCS authorizing LMCS to make, prior to July 22, 2020, a distribution of the aggregate net cash flow of LMCS for the period
commenced January 1, 2020 and ended May 31, 2020, to be distributed based upon the ownership percentages of LMCS prior to the Redemption.
Waiver and Release under the Asset
Purchase Agreement with AZOKKB
LMCS also entered into a Waiver and Release
Agreement (the “Waiver and Release”) with AZOKKB pursuant to which AZOKKB irrevocably waived rights to certain
contingent consideration under that certain Asset Purchase Agreement by and among LMCS, AZOKKB, Avraham Zeines (“Zeines”),
Oskar Kowalski (“Kowalski”) and Kamil Blaszczak (“Blaszczak”, and together with Zeines and
Kowalski, the “AZOKKB Principals”) dated as of February 13, 2019 (the “Purchase Agreement”).
The Purchase Agreement was disclosed in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on February 11, 2019.
The Waiver and Release contains a waiver
and forfeiture of all rights of the AZOKKB Principals and AZOKKB to any amounts payable by LMCS to the AZOKKB Principals or AZOKKB
pursuant to Section 1.4(d) of the Purchase Agreement, which provides for, among other things, potential earn-out payments payable
to AZOKKB upon the achievement by LMCS of certain performance-based thresholds, and a release of all claims of the AZOKKB Principals
and AZOKKB against LMCS or any of its affiliates (including the Company) relating thereto.
Termination of Common Stock Purchase
Warrants
On July 17, 2020, the Company and each
of the AZOKKB Principals entered into an Omnibus Termination of Common Stock Warrants (“Warrant Termination”)
pursuant to which the Common Stock Purchase Warrants (each a “Warrant”, and collectively the “Warrants”)
issued to each of the AZOKKB Principals in connection with the Purchase Agreement on February 13, 2019 were terminated in full.
Assignment and Assumption Agreement
LMCS and AZOKKB also entered into an Assignment
and Assumption Agreement (the “Assignment and Assumption”), pursuant to which LMCS assigned, and AZOKKB assumed,
certain rights and obligations under three commercial agreements that LMCS is party to relating to the merchant cash advance business
of LMCS. For consideration of a payment of $1,154,080.32 from AZOKKB to LMCS and the assumption of certain liabilities with respect
to the assigned agreements, LMCS assigned to AZOKKB substantially all of LMCS’s right, title and interest in the three commercial
agreements. The Assignment and Assumption also contemplates that the right to receive amounts held by funders in cash under the
commercial agreements as of July 17, 2020 will be retained by LMCS. The Assignment and Assumption contains, among other things,
customary representations, warranties and covenants from both parties.
Amendment to Master Promissory Note
On July 17, 2020, CCUR and LMCS entered
into an Amendment to Note (the “Note Amendment”) amending the terms of a Master Promissory Note (the “Master
Promissory Note”) issued by LMCS to the Company on February 13, 2019. Under the Master Promissory Note, the Company
made $10.35 million in debt financing available to LMCS for working capital purposes, including without limitation providing capital
in support of merchant cash advance transactions. The Note Amendment included, among other things, adding covenants to the terms
of the Master Promissory Note regarding LMCS’s use of its free cash and prohibitions on dividends or distributions by LMCS
with certain limited exceptions. The Note Amendment also included an amendment to events that would result in acceleration of the
Master Promissory Note and affirmative notice to the Company upon the occurrence of certain events.
Relationship between the Parties
AZOKKB and the Company are the two equity
holders of LMCS. In February 2019, LMCS acquired the assets and liabilities related to its current merchant cash advance business
from AZOKKB. The AZOKKB Principals are engaged by LMCS pursuant to consulting arrangements with LMCS and are the equity holders
of AZOKKB. Prior to the Recapitalization, the AZOKKB Principals held Common Stock Purchase Warrants in the Company entitling them
to purchase up to an aggregate of 444,630 shares of Common Stock of the Company.
The foregoing description of the agreements
relating to the Recapitalization is qualified in its entirety by the full text of such agreements, copies of which are attached
as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, hereto and incorporated herein by reference.
