UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-39050
OPORTUN FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
State or Other Jurisdiction of
Incorporation or Organization
2 Circle Star Way
San Carlos, CA
Address of Principal Executive Offices
45-3361983
I.R.S. Employer Identification No.
94070
Zip Code
(650) 810-8823
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.0001 par value per share
Trading Symbol(s)
OPRT
Name of each exchange on which registered
Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price of a share of common stock on June 30, 2022 as reported by the
Nasdaq Global Select Market on such date was approximately $103.8 million. Shares of the registrant’s common stock held by each executive officer, director and holder of 5% or more of the
outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the
registrant for any other purpose.
The number of shares of registrant’s common stock outstanding as of March 8, 2023 was 33,419,851.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement for the 2023 Annual Meeting of Stockholders to be filed subsequently are incorporated by reference into Part III of this Form 10-K.
TABLE OF CONTENTS
Forward-Looking Statements
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Exhibit Index
Signatures
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flow
Notes to the Consolidated Financial Statements
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
GLOSSARY
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
2
3
1
13
37
37
37
37
38
38
39
59
61
61
63
64
65
66
67
90
90
91
91
92
94
94
94
94
94
95
95
96
100
Forward-Looking Statements
This Annual Report on Form 10-K, including the documents referenced herein, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning our business, operations and financial
performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not
statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,”
“contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,”
and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-
looking statements contain these words. These forward-looking statements include, but are not limited to, statements about:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our ability to increase the volume of loans we make;
our ability to manage loan non-performance, delinquencies and charge-off rates;
our ability to effectively estimate the fair value of our loans receivable held for investment and our asset-backed notes;
our expectations and management of future growth, including expanding our markets served, member base and product and service offerings, including our digital banking services;
the successful integration of Hello Digit, Inc. ("Digit") with our business;
our ability to successfully adjust our proprietary credit risk models and products in response to changing macroeconomic conditions and fluctuations in the credit market;
our ability to obtain any additional financing or any refinancing of our debt;
our ability to successfully manage our interest rate spread against our cost of capital;
our expectations regarding the sufficiency of our cash to meet our operating and cash expenditures;
our plans for and our ability to successfully maintain our diversified funding strategy, including warehouse facilities, loan sales and securitization transactions;
our ability to realize the expected benefits from the reduction in workforce and other streamlining measures announced in February 2023;
our expectations regarding our costs and seasonality;
our ability to successfully build our brand and protect our reputation from negative publicity;
our ability to expand our digital capabilities for origination and increase the volume of loans originated through our digital channels;
our ability to increase the effectiveness of our marketing efforts;
our ability to grow market share in existing markets or any new markets we may enter;
our ability to continue to expand our demographic focus;
our ability to maintain or expand our relationships with our current partners, including bank partners, and additional partners using our Lending as a Service model;
our ability to provide an attractive and comprehensive user experience through our recently launched mobile application, the Oportun Mobile App, and further our position as a leading
fintech;
our ability to maintain the terms on which we lend to our borrowers;
our ability to manage fraud risk;
our ability to effectively secure and maintain the confidentiality of the information provided and utilized across our systems;
our ability to successfully compete with companies that are currently in, or may in the future enter, the markets in which we operate;
our ability to attract, integrate and retain qualified employees;
the effect of macroeconomic conditions on our business, including the impact of the ongoing COVID-19 pandemic, rising interest rates and recession or slowing growth;
our ability to effectively manage and expand the capabilities of our contact centers, outsourcing relationships and other business operations abroad; and
our ability to successfully adapt to complex and evolving regulatory environments, including managing potential exposure in connection with new and pending investigations,
proceedings and other contingencies.
Forward-looking statements are based on our management’s current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and on our
management’s beliefs and assumptions. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based
upon information available to us as of the date of this Annual
3
Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be
read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information. We anticipate that subsequent events and developments may cause our
views to change. Forward-looking statements do not guarantee future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some
cases beyond our control. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and
elsewhere in this report. We also operate in a rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess
the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any
forward-looking statements. As a result, any or all of our forward-looking statements in this report may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be
inaccurate, the inaccuracy may be material.
These forward-looking statements speak only as of the date of this report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any
reason, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.
Summary of Risk Factors
Investing in our common stock involves risks. See Item 1A. “Risk Factors” in this Annual Report on Form 10-K for a discussion of the following principal risks and other risks that make
an investment in our common stock speculative or risky:
Business, Financial and Operational Risks
•
•
Our results of operations and future prospects depend on our ability to retain existing, and attract new, members.
We are, and intend in the future to continue, developing new financial products and services, and our failure to accurately predict their demand or growth could have an adverse effect
on our business.
The success and growth of our business depends upon our ability to continuously innovate and develop new products and technologies.
If we do not compete effectively in our target markets, our results of operations could be harmed.
We may not be able to effectively manage our growth.
Our business may be adversely affected by disruptions in the credit markets and changes to interest rates on our borrowings.
Our risk management efforts may not be effective, which may expose us to market risks that harm our results of operations.
We rely extensively on models in managing many aspects of our business. If our models contain errors or are otherwise ineffective, our business could be adversely affected .
Our results of operations and financial condition have been and may be adversely affected by economic conditions and other factors that we cannot control.
We have elected the fair value option and we use estimates in determining the fair value of our loans and our asset-backed notes. If our estimates prove incorrect, we may be required to
write down the value of these assets or write up the value of these liabilities, which could adversely affect our results of operations.
Our current level of interest rate spread may decline in the future. Any material reduction in our interest rate spread could adversely affect our results of operations.
If we are unable to collect payment and service the loans we make to members, our net charge-off rates may exceed expected loss rates, and our business and results of operations may
be harmed.
Our quarterly results are likely to fluctuate significantly and may not fully reflect the underlying performance of our business.
The ongoing COVID-19 pandemic has and may continue to adversely impact our business and results of operations.
Negative publicity or public perception of our company or our industry could adversely affect our reputation, business, and results of operations.
Competition for our highly skilled employees is intense, and we may not be able to attract and retain the employees we need to support the growth of our business.
If we lose the services of any of our key management personnel, our business could suffer.
Our success and future growth depend on our branding and marketing efforts.
We may fail to realize all of the anticipated benefits of the Digit acquisition, and the merger or those benefits may take longer to realize than expected.
Any acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures, and other transactions could fail to achieve strategic objectives, disrupt our ongoing
operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations.
Fraudulent activity could negatively impact our business, operating results, brand and reputation and require us to take steps to reduce fraud risk.
Security breaches and incidents may harm our reputation, adversely affect our results of operations, and expose us to liability.
Any significant disruption in our computer systems and critical third-party vendors may impair the availability of our websites, applications, products or services, or otherwise harm our
business.
We may change our corporate strategies or underwriting and servicing practices, which may adversely affect our business.
We are, and intend in the future to continue, expanding into new geographic regions, and our failure to comply with applicable laws or regulations, or accurately predict demand or
growth, related to these geographic regions could have an adverse effect on our business.
We are exposed to geographic concentration risk.
Our proprietary credit risk models rely in part on the use of third-party data to assess and predict the creditworthiness of our members, and if we lose the ability to license or use such
third-party data, or if such third-party data contain inaccuracies, it may harm our results of operations
A deterioration in the financial condition of counterparties, including financial institutions, could expose us to credit losses, limit access to liquidity or disrupt our business.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
4
•
•
•
•
Our vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services that are important
to our operations could have an adverse effect on our business.
Our mission to provide inclusive, affordable financial services that empower our members to build a better future may conflict with the short-term interests of our stockholders.
If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus on the mission that contribute to our business.
Our international operations and offshore service providers involve inherent risks which could result in harm to our business.
Funding and Liquidity Risks
•
•
•
•
We have incurred substantial debt and may issue debt securities or otherwise incur substantial debt in the future, which may adversely affect our financial condition and negatively
impact our operations.
A breach of early payment triggers or covenants or other terms of our agreements with lenders could result in an early amortization, default, and/or acceleration of the related funding
facilities.
Our securitizations and structured and whole loan sales may expose us to certain risks, and we can provide no assurance that we will be able to conduct such transactions in the future,
which may require us to seek more costly financing.
We expect to need to raise additional funds in the future, including through equity, debt, or convertible debt financings, to support business growth and those funds may not be available
on acceptable terms, or at all.
Intellectual Property Risks
•
•
•
•
It may be difficult and costly to protect our intellectual property rights, and we may not be able to ensure their protection.
We have been, and may in the future be, sued by third parties for alleged infringement of their proprietary rights.
Our credit risk models, A.I. capabilities, and internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
Some aspects of our business processes include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our
business.
Industry and Regulatory Risks
•
•
The financial services industry is highly regulated. Changes in regulations or in the way regulations are interpreted and applied to our business could adversely affect our business.
Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses
and reputational harm.
Internet-based and electronic signature-based loan origination processes may give rise to greater risks than paper-based processes.
The CFPB has broad authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new agency could impact our
business.
The collection, storage, use, disclosure, and other processing of personal information is an area of increasing complexity and scrutiny.
Our business is subject to the regulatory framework applicable to registered investment advisers, including regulation by the SEC.
Our bank partnership products may lead to regulatory risk and may increase our regulatory burden.
Anti-money laundering, anti-terrorism financing and economic sanctions laws could have adverse consequences for us.
•
•
•
•
•
•
5
PART I
Item 1. Business
Company Overview
We are a digital banking platform that puts our members’ financial goals within reach. With intelligent borrowing, savings, budgeting, and spending capabilities, we empower members
with the confidence to build a better financial future. By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our
business is well positioned for long-term growth.
Financial Health in America
According to a January 2023 survey by Bankrate, more than half of all Americans do not have enough savings to cover an unplanned expense of $1,000. In 2022, the Financial Health
Network ("FHN") reported that more than two-thirds of U.S. households "struggle with spending, saving, borrowing and planning" according to its Financial Health Pulse™ 2022 U.S. Trends
Report. In addition, our research shows that while 90% of U.S. consumers believe financial health is important, 57% of those consumers do not want to think about money.
Our digital banking platform is designed to address these societal issues with a comprehensive set of financial services that help people, even those who are not well served by mainstream
financial institutions, access credit and automatically budget, save, and invest, without impacting their ability to meet daily spending needs. By applying artificial intelligence ("A.I.") to
automate their financial health, we believe we have a compelling suite of products and services that addresses the very real needs of the vast majority of people living in the U.S.
Serving our Members' Financial Needs
Our members are among the hundreds of millions of hardworking Americans who are not well served by mainstream financial products. We take a holistic approach to serving our
members and view it as our purpose to responsibly meet their current capital needs, help grow our members’ financial profiles, increase their financial awareness and put them on a path to a
financially healthy life. We believe our strong Net Promoter® Score ("NPS"), 81, up from 79 in 2021 for our personal loans demonstrates our success in providing our members with effective
and easy to use solutions. Our members access our products primarily through our website, our mobile application, as well as through our partners.
Credit Products—Since our founding in 2005, we have extended more than $15.5 billion in responsible credit through more than 6.3 million loans and credit cards, and helping over 1.1
million people who came to Oportun without a FICO® score to begin establishing a credit history. According to a study commissioned by us on the credit options available to people with little
or no credit history, the Financial Health Network found that Oportun loans are, on average, 6 times less expensive than other options and up to 24 times less expensive as compared to online-
only installment products. In addition, the study found that our unsecured personal loan product has helped borrowers save more than $2.3 billion in interest and fees. While many of the people
who come to us are not well served by mainstream financial institutions due to limited credit history, we use A.I. and billions of proprietary data points to score 100% of our loan applicants and
offer our members responsibly designed and affordable credit products that are often otherwise unavailable to them, including personal loans and credit cards.
Digital Banking Products—With our acquisition of Digit on December 22, 2021, we believe we now have a strong competitive advantage over other fintechs and neobanks. As a
combined company, we can now offer access to a comprehensive suite of digital banking products, offered either directly or through partners, including savings and investing powered by A.I.
and tailored to each member's goals to make achieving financial health automated. Digit began with a savings product with the intent to apply A.I. to make financial health effortless for
everyone. Following the success of the initial savings product, Digit expanded its products and services to include bank account and investment products, available through partners. Since
2015, our members have saved over $8.9 billion towards their rainy day fund and other savings goals. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations and Note 6, Acquisition, in the accompanying Notes to the Consolidated Financial Statements for further discussion of the Digit acquisition.
Lending as a Service—In addition to reaching members through direct marketing channels, we leverage our proprietary credit scoring and underwriting model to enable us to serve
consumers by partnering with other brands. Our first strategic partner for this Lending as a Service model was DolEx Dollar Express, Inc. (“DolEx”). In this partnership, DolEx markets loans
and enters borrower applications into Oportun’s system, and Oportun underwrites, originates and services the loans. In October 2021, we launched another Lending as a Service partnership
with Barri Financial Group in select locations. In January of 2022, we announced our first all-digital Lending as a Service partnership with Sezzle, a leading provider of Buy Now Pay Later
("BNPL") financing options which launched in the first quarter of 2023. Oportun is now available as a checkout option, through Sezzle, for larger purchases which we believe will allow us to
reach more new members. We believe we will be able to offer Lending as a Service to additional partners, and expand our membership base.
Providing our Members with a Seamless Experience
We recently launched a mobile application that integrates our credit and digital banking products into a seamless user experience (“Oportun Mobile App”) that further positions us as a
leading fintech with one of the most comprehensive offerings. We believe that by offering our members an integrated experience through the Oportun Mobile App, we can boost member
engagement and retention, as well as multi-product adoption.
Our Digital Banking Platform
Consistent with our mission of financial inclusion, we have designed our integrated digital banking platform to provide products and services
6
that are financially responsible and lower cost compared to market alternatives. Our application of A.I., specifically machine learning, is designed to address the shortcomings of the modern
banking system. Since our inception, we have utilized alternative data sets to rapidly build, test and develop our underwriting, pricing, marketing, fraud and servicing models, and with the
acquisition of Digit, we now offer machine learning capabilities that help members identify the right amount of money to put towards savings and investments each day. We believe this gives
us a strong competitive advantage and an unparalleled suite of digital banking products, which allow us to offer a lower cost option to millions of people in the U.S.
Through the development and utilization of our sophisticated underwriting models, we are able to assess credit risk more effectively compared to other companies and traditional scoring
models. We ingest over 9.2 billion data points into our risk model development using traditional (e.g., credit bureau data) and alternative (e.g., transactional information, public records) data.
This helps us to score 100% of the applicants who come to us seeking to borrow money, enabling us to serve more people while minimizing risk. In comparison, incumbent financial
institutions relying on traditional credit bureau-based and in some cases qualitative underwriting and/or legacy systems and processes either decline or inaccurately underwrite loans due to their
inability to properly evaluate applicants' credit.
Our fully centralized and automated digital underwriting platform powers our ability to successfully preapprove borrowers in seconds. As a result, our credit products, including unsecured
personal loans, credit cards, and secured personal loans, are a significant differentiator from other lenders and other digital banking companies. Most fintech platforms are focused on
borrowers with more established credit histories and higher incomes and are not able to match our ability to effectively manage credit risk among people who may face challenges with aspects
of their financial health.
The evolution of our proprietary risk model enables us to underwrite more applicants and make more credit available to new and returning borrowers, while maintaining consistent credit
quality. The continuous development and rapid deployment of our credit models enabled by machine learning creates a virtuous cycle that increases our member base and our alternative data
set, improving our underwriting tools and ability to grow profitably.
In addition to the challenge of capital access, millions of people in the U.S. have a difficult time trying to save and manage money. Through our digital banking products, we help our
members reach their financial goals and improve their financial health by automating away the guess-work and stress of money management. We meet our members where they are, connecting
directly to their checking account to analyze spending and income patterns, regardless of whether their bank account is through Digit's partner bank or another bank. We apply algorithms to this
data, along with generalized principles of responsible finance and behavioral psychology, to make personalized money allocation decisions on a daily basis for each of our members.
The algorithms behind our digital banking products intelligently utilize the nuances in transaction data to classify income and expenses with up to 95% accuracy. We classify financial
obligations, credit, bills and paychecks based on historical data to forecast a future financial picture for each member. We employ continuous learning to update these models with the most
recent financial data, so we do not miss new trends in spending habits or income changes (e.g., new employers, subscription services, insurers, side jobs, sales, etc.). With 814 million
algorithmic transfers over the last 8+ years based on billions of data points, we have built an A.I. engine with a long track record of making financial health effortless for our members. This
serves as a major competitive advantage in delivering new types of personalized but scalable financial services. Our technology, member-centric culture and effective use of data and analytics
enable us to efficiently help our members overcome financial challenges.
Our Strategy
We seek to expand our financial services to help a growing number of responsible, hardworking members to borrow, save, bank and invest through our digital banking platform and thus
make financial health effortless for them. Our specific objectives are to (1) grow our members, including by organic acquisition, (2) increase the number of products that our members use and
drive higher engagement of multi-product relationships, and (3) enhance our platform capabilities across all core functions to better serve our members. Our strategy to achieve these objectives
is to (a) invest in our member acquisition channels, especially digital and partner channels, (b) enhance our credit and digital banking products, and (c) provide these complementary product
categories with a unified and integrated mobile-first experience powered by A.I. through our Oportun Mobile App. Our ability to comprehensively address our members' most pressing
financial needs effortlessly and at attractive pricing will lead to increased lifetime value as members take advantage of our multiple product offerings.
Invest in member acquisition channels – To expand our member base, we plan to invest in scaling our marketing capabilities for our credit products and digital banking services. For
example, via brand marketing (including online and broadcast media) and direct marketing (including paid and organic online advertising and social media as well as offers made through our
Oportun Mobile App). In addition, our origination partnerships with WebBank for credit cards and Pathward, N.A. (formerly known as "MetaBank, N.A.) for personal loans allow us to reach
new members across the nation, mainly through our digital marketing capabilities. We have significant opportunity to gain market share as we increase awareness of Oportun’s superior value
proposition to members in markets we entered through these partnerships. In addition to our direct-to-consumer channels, we reach incremental members through our Lending as a Service
product offering. By entering Lending as a Service partnerships with other companies, we create new proprietary channels through which to offer our lending products and financial services
and acquire new members, multiplying our membership growth potential. We plan to add additional Lending as a Service partners in the future, both with retail origination capabilities, similar
to DolEx and Barri Financial, and fully digital platforms such as Sezzle, a leader in the BNPL space. We will also seek to market our digital banking products to former Oportun borrowers
who successfully repaid their loans and intend to market our credit products to former Digit members.
Enhance our credit and digital banking products – We leverage machine learning to rapidly build and test strategies across the member lifecycle, including through targeted digital
marketing, underwriting, pricing, fraud and member servicing. We believe that as we scale our suite of digital banking products and services, we will further improve member loyalty and
increase member lifetime value. We also expect to continue to
7
derive actionable insights to further drive growth of our secured personal loan and credit card products that are still early in their market adoption lifecycle. Additionally, we will continue to
invest significantly in our artificial intelligence capabilities to expand the functionality and efficiency of our products.
Provide a unified and integrated mobile experience – We recently launched our Oportun Mobile App, which brings together all of our products into a seamless user experience. Our
Oportun Mobile App will ensure our members and potential members are made aware of and have access to our full range of products, which furthers our vision to make financial health
effortless for our members. In addition, we believe this single acquisition funnel will increase member conversion and decrease cost of member acquisition. This affords the broadest possible
opportunity to sustain long-term relationships with our members and will enable us to engage with our members more frequently. We plan to invest in increased content and functionality to
further increase our members’ engagement. This will strengthen our relationships with our members and enable us to become their preferred provider of credit and digital banking products. We
believe this will result in higher member lifetime value as members extend their relationships with us and utilize more of our products. We will continue to invest in further enhancements to
serve more of our members’ needs, continue to build lasting and durable relationships with them and improve their financial health.
Our Products
Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to
our members. Our credit products include personal loans, secured personal loans and credit cards. Our digital banking products include, automated savings, as well as a digital bank account and
long-term investing and retirement savings available through partners.
Consumers are able to become members and access our products through our mobile application, the Oportun Mobile App and the Oportun.com website, which are our primary channels
for onboarding and serving members. Our personal loan products are also available over the phone or through our retail and Lending as a Service partner locations. We help potential and
current members become aware of our product offerings through brand marketing (including online and broadcast media and outdoor advertising, including the physical presence of retail
locations in some of the communities we serve) and direct marketing (including SMS/text, email, mail and offers made available through our Oportun Mobile App).
Credit Products
Personal Loans - Personal loans allow our consumers a fast and convenient way to address pressing financial needs (for example an unplanned car repair) as well as planned purchases and
personal growth opportunities (such as a deposit on a home rental). Our competitive differentiation in personal loans comes from our segment focus, our technology, data, and A.I.-driven
approach to delivering personal loans, and the way we tailor our product designs and borrowers experience to meet and exceed the expectations of our target members. This product is currently
the majority of our revenue and profitability, and continues to have significant opportunity for growth, benefiting from category growth as well as growth in our brand awareness outside of our
historical regional operating footprint (leveraging our partnership with Pathward, N.A.).
Our personal loan is a simple-to-understand, affordable, unsecured, fully amortizing installment loan with fixed payments throughout the life of the loan. We charge fixed interest rates on
our loans, which vary based on the amount disbursed and applicable state law, with a cap of 36% annual percentage rate (“APR”) in all cases. As of December 31, 2022, for all active loans in
our portfolio and at time of disbursement, the weighted average term and APR at origination was 38 months and 32.0%, respectively. The average loan size for loans we originated in 2022 was
$4,189. Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $12,000 with terms of 12 to 60 months. Generally, loan payments are structured on a
bi-weekly or semi-monthly basis to coincide with our members' receipt of their income. As part of our underwriting process, we only approve loans that meet our ability-to-pay criteria. As of
December 31, 2022, we originate unsecured personal loans in 12 states through state licenses and in 30 states through our partnership with Pathward, N.A.
Secured Personal Loans - In April 2020, we launched a personal installment loan product secured by an automobile, which we refer to as secured personal loans. This product allows our
borrowers to access larger loan sizes than they can with an unsecured loan, which is critical if the need they are facing exceeds our unsecured lending limits for that member. Our secured
personal loans business has significant growth potential as we expand geographic and channel availability and make more of our members aware of the product. Our competitive
differentiation in secured personal loans comes from leveraging the member base, application flow, and business platform we have already built for unsecured personal loans – we underwrite
borrowers seeking a personal loan for both an unsecured and secured loan, allowing them to choose the offer that fits best for them.
Our secured personal loans range in size from $2,525 to $18,000 with terms ranging from 27 to 63 months. The average loan size for secured personal loans we originated in 2022 was
$8,304. As of December 31, 2022, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 49 months and 28.3%, respectively.
As part of our underwriting process, we evaluate the collateral value of the vehicle, verify income for all applicants and only approve loans that meet our ability-to-pay criteria. Our secured
personal loans are currently offered in California, Texas, Florida, Arizona and New Jersey and we are in the process of considering expansion into other states.
Credit Cards - We launched the Oportun® Visa® Credit Card, issued by WebBank, Member FDIC, in December 2019, and offer credit cards in 45 states as of December 31, 2022. This
product has the advantage of being an “everyday, in your pocket” product, easily usable for small ticket purchases. Credit lines for our credit cards range in size from $300 to $3,000 with an
APR between 24.9% to 29.9%. The average APR of the outstanding credit card receivables was 29.8% as of December 31, 2022. The average credit line for credit cards activated in 2022 was
$834.
8
Digital Banking Products
With the acquisition of Digit on December 22, 2021, a digital financial health platform, we now offer a variety of digital banking products, including personalized and automated savings,
investing and banking products. Members are able to integrate their existing bank accounts into the platform or they can make us their primary banking relationship through our bank partner.
Members set goals for savings or investing through the application or use the application to help manage their debt. Then, our A.I. engine analyzes their income and spending patterns to find
the optimal amount that can safely be applied towards their goals and automatically transfers the necessary funds over time to achieve those goals. One proof point of the success of this A.I.-
driven approach is the 814 million algorithmic transfers completed in the last 8+ years.
We believe that the mainstream banking industry focuses on serving more affluent borrowers and has not built core deposit products to effectively serve the needs of everyday consumers.
Despite the fact that free savings accounts are available at every corner bank, most underserved people in the U.S. have not been successful in their savings goals. We see this market failure as
an opening, and our competitive advantage is to leverage A.I. and mobile to deliver better banking products to everyday consumers, to help them actually succeed with their saving, daily
budget management, and spend management goals. Additionally, our digital banking platform will allow us to have as frequent as daily engagement with our members through the benefit of
our budgeting and money management tools. This will enhance our relationship with our members and allow us to be a preferred provider of other financial services and credit products. The
financial result will be higher revenue as members extend their relationships with us, use more credit products and choose to pay for additional financial services. We will continue to invest in
and evolve our digital banking platform to further improve our ability to serve our members and continue to build lasting and durable relationships with them.
Savings – Our Savings product is designed to understand a member’s cash flows and save a calculated amount on a regular basis to effortlessly achieve savings goals. Digit's savings
product utilizes machine learning to analyze a member’s transaction activity and build forecasts of the member’s future cash flows to make small, frequent savings decisions according to the
member’s financial goals in a personalized manner. According to a January 2023 survey by Bankrate, more than half of all Americans do not have enough savings to cover an unplanned
expense of $1,000. After one year using the automated savings product, our members have been able to increase their liquid savings by approximately 50% on average. Since 2015 Digit has
helped members save over $8.9 billion.
Direct – Our Direct product offers a full checking account, through a bank partner, that intelligently organizes and budgets a member’s money across bills, savings, and spending. The
bank account with a brain™, Direct leverages the same A.I. engine used for our savings product to automatically identify and organize recurring bills and guides spending to ensure members'
savings goals are met, and that members know exactly what they can safely spend. This is on top of what members can expect from a traditional checking account, including a physical and
virtual debit card to use for purchases and ATM withdrawals and checks. Our product allows our busy members to get back to living their lives without stressing about money management.
Investing and Retirement – Our investment and retirement products are a longer-term savings solution via an A.I.-driven portfolio allocation into low-cost investments based upon risk-
tolerance. According to Financial Health Network “Financial Health Pulse: 2022 U.S. Trends Report”, 60% of U.S. consumers are not confident about their long-term financial goals. Our long-
term investment solutions automatically allocate our members' savings into low-cost risk-adjusted portfolios held in brokerage accounts or tax-advantaged IRAs. Since 2020, Digit members
have invested $67 million into long-term goals through low-cost ETF portfolios. The investment accounts, offered through a broker-dealer partner, include a general investing account and a
retirement account for our members’ longer term goals, utilizing smart recommendations to invest savings in risk-adjusted portfolios.
Lending as a Service
Beyond our core direct-to-consumer lending business, we believe that we can leverage our proprietary credit scoring and underwriting model to partner with other consumer brands. Our
first strategic partner for this Lending as a Service model was DolEx. In this partnership, DolEx markets loans and enters borrower applications into Oportun’s system, and Oportun
underwrites, originates and services the loans. In July 2021, we signed Barri Financial Group as a Lending as a Service partner and we launched in several of their locations in October 2021. In
January of 2022, we announced our first all-digital Lending as a Service partnership with Sezzle, a leading provider of BNPL financing options which launched in the first quarter of 2023.
Oportun is now available as a checkout option, through Sezzle, for larger purchases which we believe will allow us to reach more new members. We believe we will be able to offer Lending as
a Service to additional partners and expand our membership base.
9
Our Competition
In consumer finance, we compete with other consumer finance companies, credit card issuers, financial technology companies and financial institutions, as well as other nonbank lenders
serving consumers who do not have access to mainstream credit, including online marketplace lenders, point-of-sale lending, payday lenders, and auto title lenders and pawn shops focused on
underserved borrowers. We may also face competition from companies that have not previously competed in the consumer lending market for borrowers with limited credit history. For
example, we are already seeing that the companies commonly referred to as “challenger banks” offering low-cost digital-only deposit accounts are beginning to offer lending products catered
to underserved borrowers. In addition, it is possible that, in competitive reaction to the challenger banks, traditional banks may introduce new approaches to small-dollar lending. While the
consumer lending market is competitive, we believe that we can serve our target market with products that lead to better outcomes for consumers because they cost significantly less than other
products used to fulfill similar borrowing needs and their responsible design supports consumer financial health. On the contrary, the offerings of payday, auto title and pawn lenders, for
example, are provided at rates that are too expensive relative to the borrowers’ ability to pay, are often structured in a way that forces borrowers to become overextended, and typically lack the
personalized touch that is essential to cultivating the trust of our target member base. Few banks or traditional financial institutions lend to individuals who have limited credit history. Those
individuals that do have a credit score, but have a relatively limited credit history, also typically face constrained access and low approval rates for credit products.
The principal competitive factors in our sector include member approval parameters (often described informally as “credit box”), price, flexibility of loan terms offered, member
convenience and member satisfaction. We believe our technology, responsible construction of our products, A.I.-enabled digital platform and superior member value proposition allow us to
compete favorably on each of these factors. Going forward, however, our competition could include large traditional financial institutions that have more substantial financial resources than we
do, and which can leverage established distribution and infrastructure channels. Additionally, new companies are continuing to enter the financial technology space and could deploy
innovative solutions that compete for our members. See “Risk Factors – If we do not compete effectively in our target markets, our results of operations could be harmed” and “Risk Factors –
Competition for our highly skilled employees is intense, and we may not be able to attract and retain the employees we need to support the growth of our business.”
In digital banking, we compete with traditional banks, both large and small, as well as other fintech companies offering mobile-centric digital banking propositions. Currently most
consumers continue to bank primarily with traditional banks. However, in the last several years, Fintech companies with digital banking propositions have grown their member bases
significantly, especially with underserved consumers. We are already seeing some competitive reactions from traditional banks to this potential disruption. For example a number of larger
banks have in the last year introduced more consumer-centric approaches to overdraft, as well as up-to-two-day-early access to payroll deposits. While the digital banking market is
competitive, we observe that so far most of the competitive tactics have centered on intuitive low-friction mobile experiences, and reduction or elimination in overdraft fees. Our strategy is to
differentiate by harnessing AI to enable members to actually achieve better financing outcomes – to succeed in their savings goals, better manage their monthly budgets, and improve their
financial health.
Seasonality
See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion of Seasonality.
Regulations and Compliance
We are subject to various federal, state and local regulatory regimes related to the financial services that we provide. These laws and regulations, among other things, impose licensing and
qualifications requirements; require various disclosures and consents; mandate or prohibit certain terms and conditions for various financial products; prohibit discrimination based on certain
prohibited bases; prohibit unfair, deceptive or abusive acts or practices; require us to submit to examinations by federal, state and local regulatory regimes; and require us to maintain various
policies, procedures and internal controls.
We are subject to examination, supervision and regulation by each state in which we are licensed and are regulated by the Consumer Financial Protection Bureau (CFPB). In addition to
the CFPB, other state and federal agencies have the ability to regulate aspects of our business. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-
Frank Act” ), as well as many state statutes provide a mechanism for state attorneys general to investigate us. In addition, the Federal Trade Commission (the "FTC") has jurisdiction to
investigate aspects of our business. Federal consumer protection laws that these regulators may enforce include laws related to the use of credit reports and credit reporting accuracy, data
privacy and security, disclosure of applicable loan terms, anti-discrimination laws, laws protecting members of the military, laws governing payments, including recurring ACH payments and
laws regarding electronic signatures and disclosures. Digit Advisors is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is
subject to regulation by the SEC.
We are also subject to inspections, examinations, supervision and regulation by applicable agencies in each state in which we do business. Many states have laws and regulations that are
similar to the federal consumer protection laws referred to above, but the degree and nature of such laws and regulations vary from state to state. State laws also further dictate what state
licenses we need to conduct business and also regulate how we conduct our business activities.
In addition, as a result of our bank partnerships, prudential bank regulators with supervisory authority over our partners have the ability to regulate aspects of our business.
We are subject to the USA PATRIOT Act, Office of Foreign Assets Control, Bank Secrecy Act, Anti-Money Laundering laws, and Know-Your-Customer requirements and certain state
money transmitter laws.
10
The laws and regulations applicable to us are continuing to evolve through legislative and regulatory action and judicial and regulatory interpretation and we monitor these areas closely.
We regularly review our consumer contracts, consumer-facing content, policies, procedures and processes to ensure compliance with applicable laws and regulations. We have built our
systems and processes with controls in place in order to ensure compliance with applicable laws. In addition to ensure proper controls are in place, we have a compliance management system
that leverages the five key control components of governance, compliance program risk assessments, policies, procedures and training, member complaint monitoring and internal compliance
audits.
For more information with respect to the regulatory framework affecting our business, see "Risk Factors – Risks Related to our Industry and Regulation."
Our Technology Infrastructure
Our applications, including our proprietary workflow management system that handles loan and credit card application, document verification, loan disbursement and servicing, as well as
our systems that handle that our automated savings, investing and banking tools are architected to be highly available, resilient, scalable, and secure. Critical services in the cloud are deployed
across multiple availability zones within a region to ensure that we have the necessary scalability and availability to support our service-level objectives. Service design is vetted against current
industry best practices to ensure that as the cloud evolves, we are taking advantage of current feature sets surrounding availability and scalability.
To safeguard the confidentiality, integrity and availability of our data and systems, we maintain a comprehensive program of cybersecurity and privacy policies and procedures,
management oversight, accountability structures, and technology design processes. Senior management regularly provides the Board's audit and risk committee with updates to our program.
This program also includes a cyber incident response plan that provides controls and procedures for timely and accurate reporting of any material cybersecurity incident. To ensure
organization-wide attention to cybersecurity issues, we conduct mandatory employee training on cybersecurity and provide ongoing cybersecurity education and awareness, such as mock
phishing attacks and cybersecurity awareness materials. We continuously monitor our environment in real-time using tools designed to detect security events and engage with third parties to
audit our information security program and to perform regular penetration tests of our web applications and cloud environments. We remain vigilant in staying ahead of new and emerging risks
utilizing our tools and security teams and continue to review and make strategic investments in our information security program to keep our data and systems secure.
Infrastructure is in place and designed to support redundancy across our mission critical systems. Disaster recovery and business continuity plans, and tests have been completed, which
help to ensure our ability to recover in the event of a disaster or other unforeseen event. In the event of database restores, we perform data consistency checks to validate the integrity of the
data recovery process. A comprehensive business impact analysis is performed annually detailing the maximum tolerable downtime for all mission critical functions. Across our infrastructure,
a robust and holistic monitoring-and-alerting practice allows for awareness and detection capabilities ensuring faster incident response and resolution time, limiting the risk of unplanned
events, such as downtime or security threats.
Our Intellectual Property
We protect our intellectual property through a combination of trademarks, trade dress, domain names, copyrights and trade secrets, as well as contractual provisions, confidentiality
procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements and other contractual rights. We currently have no patent applications on
our proprietary risk model, underwriting process or loan approval decision making process because applying for a patent would require us to publicly disclose such information, which we
regard as trade secrets. We may pursue such protection in the future to the extent we believe it will be beneficial.
We have trademark rights in our name, our logo, and other brand indicia, and have trademark registrations for select marks in the United States and many other jurisdictions around the
world. We will pursue additional trademark registrations to the extent we believe it will be beneficial. We also have registered domain names for websites that we use in our business. We may
be subject to third party claims from time to time with respect to our intellectual property. See "Item 3. Legal Proceedings" for more information.
In addition to the protection provided by our intellectual property rights, we enter into confidentiality and intellectual property rights agreements with our employees, consultants,
contractors and business partners. Under such agreements, our employees, consultants and contractors are subject to invention assignment provisions designed to protect our proprietary
information and ensure our ownership in intellectual property developed pursuant to such agreements.
Our People
At Oportun, we are building a community of employees, partners, and members who support each other on the path to new opportunities, because we believe that when we work together,
we can make life better. Our welcoming and inclusive company culture is grounded in our core values - service, excellence, care, innovation, courage, and empowerment – and our people
strategies are committed to fostering a culture which encourages and empowers our employees to live our core values every day.
•
Employee Engagement – We conduct an annual engagement survey as a means of measuring employee engagement and satisfaction, as well as a tool for improving our people
strategies for the year ahead. Approximately 82% of our employees participated in our 2022 employee engagement survey, of which 85% reported that they were satisfied with Oportun
as a place to work and 89% reported that they were proud to work at Oportun. Survey results are evaluated and shared across the organization, including our Board’s compensation and
leadership committee, to identify areas of progress and areas for improvement. Based on feedback received this year, management
11
implemented several initiatives to improve the employee experience through rewards and recognition, increased communication transparency, and streamlining processes and
collaboration tools. We have been recognized as a Greater Bay Area’s Top Workplace for the past four years and in 2022 we were named one of Comparably’s Companies with
Happiest Employees, which is a list derived from top sentiment ratings anonymously provided by employees.
•
•
Diversity and Inclusion – We believe that innovation starts with inclusion. Our focus on diversity and inclusion is reflected throughout our organization, starting at the highest level.
Currently, 70% of our Board identifies as women or members of an underrepresented group and the majority of our leadership team identifies as either women or members of an
underrepresented group. The majority of Oportun employees identify as women or members of an underrepresented group and the majority of Oportun’s leadership team identifies as
either women or members of an underrepresented group. We define the leadership team as Directors, Senior Directors, Vice Presidents and above, inclusive of the Board. We have nine
employee resource groups focused on our Asian, Black, Hispanic/Latinx, LGBTQ+, early career individuals, disability/accessibility, South Asian, veteran, and women communities.
We are committed to fostering a culture of diversity, equity and inclusion; providing comprehensive training and leadership development programs; and continuing to increase diverse
representation at every level of the Company.
Total Rewards - We continue to focus on the total wellness of our people, anchored by the pursuit of our mission, creation of career opportunities and promotion of employee well-
being. We benchmark market practices, and regularly review our compensation against the market to ensure it remains competitive. In addition to salaries, our benefits programs
include annual bonuses, equity awards, a 401(k) plan, healthcare and insurance benefits, flexible spending accounts, paid time off, family leave, paid time off for volunteering,
matching gifts, employee assistance programs, family care resources, and tools to promote mental health and wellness. In 2021, we transitioned to a remote-first policy and we believe
that our remote-first culture gives our employees more flexibility to choose where and how to work, while allowing us to engage with a wider pool of talent. To support our remote-first
culture, we actively encourage personal well-being through initiatives, including wellness days for employees to take time to rest and recharge, engagement programs (speaker events,
employee resource groups, virtual events, etc.), and recognition programs.
We had 3,000 full-time and 235 part-time employees worldwide as of December 31, 2022. This includes 875 corporate employees in the United States, of which 274 employees are
dedicated to technology, risk, analytics, A.I. and data science. On February 9, 2023, we announced that we were reducing our corporate employees by 10% in the United States, India and
Mexico, or approximately 155 employees.
Available Information
Our website address is www.oportun.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant
to Section 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The SEC maintains a website that contains our filings at www.sec.gov.
These reports are also available free of charge through our website, www.investor.oportun.com, as soon as reasonably practicable after we file them with, or furnish them to, the SEC.
We announce material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, our websites (www.oportun.com and
www.digit.co), the investor relations section of our website (investor.oportun.com), as well as social media, including our LinkedIn pages (https://www.linkedin.com/company/oportun/ and
https://www.linkedin.com/company/digit-co/), Twitter accounts (@Oportun and @hellodigit) and Instagram account (@hellodigit). The information on our website is not incorporated by
reference into this report. The website addresses listed above are provided for the information of the reader and are not intended to be active links.
12
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Any of the following risks could have an adverse effect on our business, results of operations and financial condition. The
following risks could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. You should carefully consider these risks, all of the
other information in this report, including our consolidated financial statements, the notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations," and general economic and business risks before making a decision to invest in our common stock. While we believe the risks described below include all material risks
currently known by us, it is possible that these may not be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also
impair our business operations.
Business, Financial and Operational Risks
Our results of operations and future prospects depend on our ability to retain existing, and attract new, members.
We operate in a rapidly changing and highly competitive industry and our results of operations and future prospects depend on, among other things, continued growth of our member base,
our ability to increase the activity of our members, including by using additional products or services we offer, and our ability to attract members in a cost-effective manner. Our member
retention rates may decline or fluctuate due to pricing changes, our expansion into new products and markets, our members' ability to obtain alternative funding sources based on their credit
history with us, and new members we acquire in the future may be less loyal than our current member base.
In particular, it is important that we continue to ensure that our members with loans remain loyal to us and we continue to extend loans to members who have successfully repaid their
previous loans. As of December 31, 2022 and 2021, members with repeat loans comprised 78% and 76%, respectively, of our Owned Principal Balance at End of Period. If our repeat loan rates
decline, we may not realize consistent or improved operating results from our existing member base.
We are, and intend in the future to continue, developing new financial products and services, and our failure to accurately predict their demand or growth could have an adverse effect on
our business.
We are, and intend in the future to continue, developing new financial products and services. We intend to continue investing significant resources in developing new tools, features,
services, products and other offerings. New initiatives are inherently risky, as each involves unproven business strategies and new financial products and services with which we have limited or
no prior development or operating experience.
We can provide no assurance that we will be able to develop, commercially market and achieve acceptance of our new products and services. Our development efforts with respect to
these initiatives could distract management from current operations and could divert capital and other resources from other growth initiatives important to our business. In addition, our
investment of resources to develop new products and services may either be insufficient, result in expenses that are excessive considering revenue originated from these new products and
services, or may not be able to attract new members or retain existing members. We have previously invested resources to develop and launch new products and services and subsequently
decided to discontinue these products and services in order to strategically realign our resources. If we are not able to effectively implement new technology-driven products and services as
quickly as our competitors or be successful in marketing these products and services to our members and strategic partners, demand for our products and services may decrease. In addition, the
borrower profile of members using our new products and services may not be as attractive as existing members with credit products, which may lead to higher levels of delinquencies or
defaults than we have historically experienced. Failure to accurately predict demand or growth with respect to our new products and services could adversely impact our business, and these
new products and services may not become profitable, and even if they are profitable, operating margins of some new products may not be as high as the margins we have experienced
historically or we may not be able to achieve target margins.
The success and growth of our business depends upon our ability to continuously innovate and develop new products and technologies.
The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. Developing and incorporating new
technologies, including A.I., into our products and services may require significant investment, take considerable time, and ultimately may not be successful. We may not be able to effectively
implement new technology-driven products and services as quickly as competitors or be successful in marketing these products and services to our members. Furthermore, our technology may
become obsolete or uncompetitive, and there is no guarantee that we will be able to successfully develop, obtain or use new technologies to adapt our models and systems.
As with many disruptive innovations, new technologies present risks and challenges that could affect their adoption, and therefore our business. A.I. and related technologies are subject to
public debate and heightened regulatory scrutiny. Any negative publicity or negative public perception of A.I. could negatively impact demand for our products and services or hinder our
ability to attract new members and strategic partners. The regulatory framework for A.I. and machine learning technologies is evolving and remains uncertain. It is possible that new laws and
regulations will be adopted, or existing laws and regulations may be interpreted in new ways, that would affect our business, products and services and the way in which we use A.I., including
with respect to fair lending laws. Our success will depend on our ability to develop and incorporate new technologies and adapt to technological changes and evolving industry standards. If we
are unable to do so in a timely or cost-effective manner, our business could be harmed.
13
If we do not compete effectively in our target markets, our results of operations could be harmed.
The industries in which we compete are highly competitive, continuously changing, highly innovative, and increasingly subject to regulatory scrutiny and oversight. Our current and
potential future competition primarily includes other consumer finance companies, credit card issuers, financial technology companies, technology platforms, neobanks, challenger banks, and
financial institutions, as well as payday lenders and pawn shops. We may compete with others in the market who may in the future provide offerings similar or are competitive with ours,
particularly companies who may provide lending, money management and other services though a platform similar to our platform.
Many of our current or potential competitors have significantly more financial, technical, marketing, access to low-cost capital, and other resources than we do and may be able to devote
greater resources to the development, promotion, sale and support of their platforms and distribution channels. As such, many of our competitors can leverage their size, robust networks,
financial wherewithal, brand awareness, pricing power and technological assets to compete with us. In addition, our potential competitors also include, smaller, earlier-stage companies with
more versatile technology platforms, increased operational efficiencies, and greater brand recognition than us. To the extent new entrants gain market share, the use of our products and services
would decline. Our long-term success depends on our ability to compete effectively against existing and potential competitors that seek to provide banking and financial technology products
and services. If we fail to compete effectively against these competitors, our revenues, results of operations, prospects for future growth and overall business will be materially and adversely
affected.
We may not be able to effectively manage the growth of our business.
Although we have experienced rapid growth in our business and operations in recent years, we cannot assure you that our business will continue to grow at our historical growth rates. The
growth and expansion of our business has placed significant demands on our management, operational, risk management, technology, marketing, compliance and finance and accounting
infrastructure, and has resulted in increased expenses, a trend that we expect to continue as our business continues to grow. In addition, we are required to continuously develop and adapt our
systems and infrastructure in response to the increasing sophistication of the consumer financial services market, evolving fraud and information security landscape, and regulatory
developments relating to existing and planned business operations. Overall revenue growth depends on a number of factors, including on our ability to increase the origination volume of our
products and services, attract new and retain existing members, build our brand, achieve the anticipated benefits and synergies from the Digit acquisition, expand and manage our remote-first
workforce, all while managing our business systems, operations and expenses. If we are unable to accomplish these tasks, our future growth may be harmed.
Further, many economic and other factors outside of our control, including general economic and market conditions, pandemics, consumer and commercial credit availability, inflation,
unemployment, and consumer debt levels, may adversely affect our ability to sustain revenue growth consistent with recent history. Since 2022, we have engaged in a series of cost-saving
measures in response to challenging macroeconomic conditions and such decisions to save costs in certain ways may adversely affect our business and future growth.
Our business may be adversely affected by disruptions in the credit markets and changes to interest rates on our borrowings.
We depend on securitization transactions, warehouse facilities and other forms of debt financing, as well as whole loan and structured loan sales, in order to finance the principal amount
of most of the loans we make to our members. See more information about our outstanding debt in Note 9, Borrowings to the Notes to the Consolidated Financial Statements included
elsewhere in this report. However, there is no assurance that these sources of capital will continue to be available in the future on terms favorable to us or at all. The availability of debt
financing and other sources of capital depends on many factors, some of which are outside of our control. Conditions in the credit markets may continue to experience disruption or
deterioration, including as a result of rising interest rates, which could make it difficult for us to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with
similar terms. The debt capital available to us in the future, if available at all, may bear a higher interest rate and may be available only on terms and conditions less favorable than those of our
existing debt and such debt may need to be incurred in a rising interest rate environment. Events of default or breaches of financial, performance or other covenants, as a result of the
underperformance of certain pools of loans underpinning our securitizations or other debt facilities, could reduce or terminate our access to funding from institutional investors. Such events
could also result in default rates at a higher interest rate and therefore increase our cost of capital. In addition, our ability to access future capital may be impaired because our interests in our
financed pools of loans are “first loss” interests and so these interests will only be realized to the extent all amounts owed to investors or lenders and service providers under our securitizations
and debt facilities are paid in full. In the event of a sudden or unexpected shortage or restriction on the availability of funds, we cannot be sure that we will be able to maintain the necessary
levels of funding to retain current levels of originations without incurring higher funding costs, a reduction in the term of funding instruments or increasing the rate of whole loan sales, or be
able to access funding at all. If we are unable to arrange financing on favorable terms, our business may be adversely affected and we may not be able to grow our business as planned and we
may have to curtail new originations and reduce credit lines to cardholders.
In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit LIBOR rates after 2021.
At the end of 2021, the ICE Benchmark Administration, the administrator for LIBOR, ceased publishing one-week and two-month U.S. dollar LIBOR and will cease publishing all remaining
U.S. dollar LIBOR tenors in mid-2023. Other regulators have suggested reforming or replacing other benchmark rates. These may be replaced by SOFR or other benchmark rates over the next
several years. Uncertainty as to the nature of such phase out and selection of an alternative reference rate, together with disruption in the financial markets, could increase in the cost of our
credit facilities that are currently tied to LIBOR. Our management continues to monitor the status and discussions regarding LIBOR. Changes in interest rates on our variable rate debt could
adversely affect our interest expense, results of operations, and cash flows.
14
We have elected the fair value option and we use estimates in determining the fair value of our loans and our asset-backed notes. If our estimates prove incorrect, we may be required to
write down the value of these assets or write up the value of these liabilities, which could adversely affect our results of operations.
Our ability to measure and report our financial position and results of operations is influenced by the need to estimate the impact or outcome of future events on the basis of information
available at the time of the issuance of the financial statements. We use estimates, assumptions, and judgments when certain financial assets and liabilities are measured and reported at fair
value. Fair values and the information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices and/or other observable inputs provided by
independent third-party sources, when available. During periods of market disruption, including periods of significantly rising or high interest rates, rapidly widening credit spreads or
illiquidity, it may be difficult to value certain assets if trading becomes less frequent or market data becomes less observable. In such cases, certain asset valuations may require significant
judgment, and may include inputs and assumptions that require greater estimation, including credit quality, liquidity, interest rates, and other relevant inputs. If actual results differ from our
judgments and assumptions, then it may have an adverse impact on the results of operations and cash flows. Management has processes in place to monitor these judgments and assumptions,
including review by our internal valuation committee, but these processes may not ensure that our judgments and assumptions are correct.
We use estimates and assumptions in determining the fair value of our loans receivable held for investment and asset-backed notes. Our Loans Receivable at Fair Value represented 87%
of our total assets and our asset-backed notes represented 78% of our total liabilities as of December 31, 2022. The fair value of our loans receivable held for investment are determined using
Level 3 inputs and the fair value of our asset-backed notes are determined using Level 2 inputs. Changes to these inputs could significantly impact our fair value measurements. Valuations are
highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies. In addition, a variety of factors
such as changes in the interest rate environment and the credit markets, changes in average life, higher than anticipated delinquency and default levels or financial market illiquidity, may
ultimately affect the fair values of our loans receivable and asset-backed notes. Material differences in these ultimate values from those determined based on management’s estimates and
assumptions may require us to adjust the value of certain assets and liabilities, including in a manner that is not comparable to others in our industry, which could adversely affect our results of
operations.
Our current level of interest rate spread may decline in the future. Any material reduction in our interest rate spread could adversely affect our results of operations.
We earn over 90% of our revenue from interest payments on the loans we make to our members. Financial institutions and other funding sources provide us with the capital to fund a
substantial portion of the principal amount of our loans to members and charge us interest on funds that we borrow. In the event that the spread between the interest rate at which we lend to our
members and the rate at which we borrow from our lenders decreases, our Net Revenue will decrease. We have capped the APR for newly originated loans at 36% since August 2020. Interest
rates have recently risen and may continue to rise, which increases our interest expense and cost of funds and may result in lower operating margins. The interest rates we charge to our
members and pay to our lenders could each be affected by a variety of factors, including our ability to access capital markets, the volume of loans we make to our members, product mix,
competition and regulatory limitations.
Market interest rate changes may adversely affect our business forecasts and expectations and are highly sensitive to many macroeconomic factors beyond our control, such as inflation,
recession, the state of the credit markets, global economic disruptions, unemployment and the fiscal and monetary policies of the federal government and its agencies. Factors outside our
control, including interest rate changes and widening credit spreads, may require us to make adjustments to the fair value of our loans receivable held for investment or our asset-backed notes,
which may in turn adversely affect our results of operations or lead to volatility in our Net Revenue. For example, rising interest rates decrease the fair value of our loans receivable held for
investment, which decreases Net Revenue, but also decreases the fair value of our asset-backed notes, which increases Net Revenue. Because the duration and fair value of our loans and asset-
backed notes are different, the respective changes in fair value may not fully offset each other resulting in a negative impact on Net Revenue and increasing the volatility of our results of
operations. Any reduction in our interest rate spread could have an adverse effect on our business, results of operations, cash flows, and financial condition. We do not currently hedge our
interest rate exposure associated with our debt financing or fair market valuation of our loans.
Our risk management efforts may not be effective, which may expose us to market risks that harm our results of operations.
We could incur substantial losses and our business operations could be disrupted if we are unable to effectively identify, monitor and mitigate financial risks, such as credit risk, interest
rate risk, prepayment risk and liquidity risk, as well as operational risks. Our risk management policies, procedures and models may not be sufficient to identify all of the risks we are exposed
to, mitigate the risks we have identified or identify additional risks that arise in the future.
As our loan mix changes and as our product offerings evolve, our risk management strategies may not always adapt to such changes. Some of our methods of managing risk are based
upon our use of observed historical market behavior and management’s judgment. Other of our methods for managing risk depend on the evaluation of information regarding markets,
members or other matters that are publicly available or otherwise accessible to us. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those
techniques and the judgments that accompany their application cannot anticipate every economic and financial outcome or the timing of such outcomes. If our risk management efforts are
ineffective, we could suffer losses that could harm our business, financial condition, and results of operations.
15
We rely extensively on models in managing many aspects of our business. If our models contain errors or are otherwise ineffective, our business could be adversely affected.
Our ability to attract members and to build trust in our credit products is significantly dependent on our ability to effectively evaluate a member’s creditworthiness and likelihood of
default. In deciding whether to extend credit to prospective members, we rely heavily on our proprietary credit risk models, which are statistical models built using third-party alternative data,
credit bureau data, application data and our credit experience gained through monitoring the performance of our members over time. These models are built using forms of A.I., such as
machine learning. If our credit risk models fail to adequately predict the creditworthiness of our members or their ability to repay their loans due to programming or other errors, or if any
portion of the information pertaining to the potential member is incorrect, incomplete or becomes stale (whether by fraud, negligence or otherwise), and our systems do not detect such errors,
inaccuracies or incompleteness, or any of the other components of our credit decision process described herein fails, we may experience higher than forecasted loan losses. Also, if we are
unable to access certain third-party data used in our credit risk models, or access to such data is limited, our ability to accurately evaluate potential members may be compromised. Credit and
other information that we receive from third parties about a member may also be inaccurate or may not accurately reflect the member’s creditworthiness, which may adversely affect our loan
pricing and approval process, resulting in mispriced loans, incorrect approvals or denials of loans. In addition, this information may not always be complete, up-to-date or properly evaluated.
As a result, these methods may not predict future risk exposures, which could be significantly greater than the historical measures or available information indicate.
Our reliance on our credit risk models and other models in other aspects of our business, including valuation, pricing, collections management, marketing targeting models, fraud
prevention, liquidity and capital planning, direct mail and telesales, and savings and investing algorithms may prove in practice to be less predictive than we expect for a variety of reasons,
including as a result of errors in constructing, interpreting or using the models or the use of inaccurate assumptions (including failures to update assumptions appropriately in a timely manner).
We rely on our credit risk models and other models to develop and manage new products and services, including our digital banking platform, with which we have limited development or
operating experience, as well as new geographies. Our assumptions may be inaccurate, and our models may not be as predictive as expected for many reasons, in particular because they often
involve matters that are inherently difficult to predict and beyond our control, such as macroeconomic conditions, credit market volatility and interest rate environment, and human behavior,
and they often involve complex interactions between a number of dependent and independent variables and factors. In particular, even if the general accuracy of our valuation models is
validated, valuations are highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of the models. The errors or inaccuracies
in our models may be material and could lead us to make wrong or sub-optimal decisions in managing our business.
Additionally, if we make errors in the development, validation or implementation of any of the models or tools we use to underwrite the loans that we then securitize or sell to investors,
those investors may experience higher delinquencies and losses. We may also be subject to liability to those investors if we misrepresented the characteristics of the loans sold because of those
errors. Moreover, future performance of our members’ loans could differ from past experience because of macroeconomic factors, policy actions by regulators, lending by other institutions or
reliability of data used in the underwriting process. To the extent that past experience has influenced the development of our underwriting procedures and proves to be inconsistent with future
events, delinquency rates and losses on loans could increase. Errors in our models or tools and an inability to effectively forecast loss rates could also inhibit our ability to sell loans to investors
or draw down on borrowings under our warehouse and other debt facilities, which could limit new origination growth and harm our financial performance. Additionally, the use of A.I. is
relatively new and the regulatory framework is evolving and remains uncertain. Any negative regulatory or public scrutiny based upon this could adversely affect our business and reputation.
Our results of operations and financial condition have been and may be adversely affected by economic conditions and other factors that we cannot control.
Key macroeconomic conditions historically have affected our business, results of operations and financial condition and are likely to affect them in the future. Poor economic conditions
reduce the demand and usage of our credit products and adversely affect the ability and willingness of members to pay amounts owed to us, increasing delinquencies, bankruptcies, and charge-
offs and negatively impacting the fair value of our loans. They may also impact our ability to make accurate credit assessments or lending decisions. Many of these factors are outside our
control and include: general economic conditions or outlook, unemployment levels, housing markets, immigration patterns and policies, energy costs, inflation, government shutdowns, delays
in tax refunds, volatility or disruption in the capital markets, and changes in interest rates, as well as events such as natural disasters, acts of war, terrorism, pandemics or adverse health
developments, social unrest, and catastrophes. The United States has recently experienced historically high levels of inflation, which may increase our expenses and adversely impact our
borrowers' ability to make payments on their loans. Additionally, the United States is experiencing an acute workforce shortage, which, in turn has created a hyper-competitive wage
environment that may further increase employee compensation. From March 2022 through December 2022, the Federal Reserve raised the target range for the federal funds rate on seven
separate occasions and signaled that it anticipates additional increases in the target range will be appropriate to lower inflation. Further adverse changes in inflation and interest rates could
negatively impact consumer and business confidence, and adversely affect the economy as well as our business and results of operations. There can be no assurance that our forecasts of
economic conditions, our assessments and monitoring of credit risk, and our efforts to mitigate credit risk through risk-based pricing, appropriate loan underwriting, management of loan
delinquencies and charge-off rates are, or will be, sufficient to prevent an adverse impact to our business and financial results.
As our business grows and we increase our product and service offerings, we intend to continue to expend significant funds, and we may not be able to generate sufficient revenue to offset
our higher operating expenses. We recorded a net loss of $77.7 million for the year ended December 31, 2022, primarily due to the goodwill impairment, increased operating expenses,
increased interest expense and a net decrease in fair value. Our business was adversely impacted by the COVID-19 pandemic and we recorded a net loss of $45.1 million for the year ended
December 31, 2020. We also experienced net losses prior to 2017.
16
On February 9, 2023, we announced that we were taking a series of measures to streamline our operations, including reducing the size of the corporate staff by 10%. These cost reduction
efforts may adversely affect us in unforeseen ways, including interfering with our ability to achieve our business objectives; challenging our ability to effectively manage all aspects of our
business operations; causing concerns from current and potential employees, vendors, partners and other third parties with whom we do business; and increasing the likelihood of turnover of
other key employees, all of which may have an adverse impact on our business. Our plans may also change as we continue to refocus on reducing operating costs and streamlining operations.
These actions may take more time than we currently estimate and we may not be able to achieve the cost-efficiencies sought.
Our members with credit products may be particularly negatively impacted by worsening economic conditions that place financial stress on these members resulting in loan defaults or
charge-offs. In addition, major medical expenses, divorce, death, or other issues that affect our members could affect our members’ willingness or ability to make payments on their loans. Our
business is currently heavily concentrated on consumer lending and, as a result, we are more susceptible to fluctuations and risks particular to U.S. consumer credit than a company with a more
diversified lending portfolio. If our members default under a loan receivable held directly by us, we will experience loss of principal and anticipated interest payments. Our servicing costs may
also increase without a corresponding increase in our interest on loans.
Decreases in consumer demand for automobiles and declining values of vehicles securing outstanding secured personal loans would weaken collateral coverage for secured personal loans
and increase the amount of loss in the event of default. Significant increases in the inventory of used vehicles may also depress the prices at which repossessed vehicles may be sold or delay
the timing of these sales. Consequently, if a vehicle securing a secured personal loan is repossessed while the used car auction market is depressed, the sale proceeds for such vehicle may be
lower than expected, resulting in higher than expected losses.
If we are unable to collect payment and service the loans we make to members, our net charge-off rates may exceed expected loss rates, and our business and results of operations may be
harmed.
Our unsecured personal loans and credit card receivables, which comprise a significant portion of our overall portfolio, are not secured by any collateral, not guaranteed or insured by any
third party and not backed by any governmental authority in any way. We are therefore limited in our ability to collect on these loans if a member is unwilling or unable to repay them for any
reason.
Our ability to adequately service our loans is dependent on our ability to grow and appropriately train our customer service and collections staff, our ability to expand our servicing
capabilities as the number of our loans increase, our ability to contact our members when they default, and our ability to leverage technologies to service and collect amounts owed with respect
to loans. Additionally, our customer service and collections staff are dependent upon maintaining adequate information technology, telephony, and internet connectivity such that they can
complete their job functions. Since the onset of the pandemic, the majority of our contact center staff has worked remotely and we will continue to operate the contact centers in this manner. If
our contact center operations become constrained for any reason, the effectiveness of our collection activities may be reduced.
In November 2021 we voluntarily implemented certain provisions of the call limitations set forth in Regulation F, the CFPB’s Debt Collection Rule that took effect at that time, which is
not applicable to creditors such as us who are collecting their own debts. If we did not correctly estimate the impact of a reduced calling strategy, the effectiveness of our efforts to collect on
defaulted loans may be impacted. Additionally, in August 2020, we changed our small claims filing practices, including dismissing all pending small claims court filings and suspending all
new legal collection actions. We temporarily suspended our legal collections process, which may be resumed in the future. If we are unable to employ alternative means of engaging severely
delinquent members and collecting on defaulted loans, the effectiveness of our efforts to collect on defaulted loans may be impacted. Because our net charge-off rate depends on the
collectability of the loans, if we experience an unexpected significant increase in the number of members who fail to repay their loans or an increase in the principal amount of the loans that
are not repaid, our revenue and results of operations could be adversely affected. Furthermore, personal unsecured loans and credit card debt are generally dischargeable in bankruptcy. If we
experience an unexpected, significant increase in the number of members who successfully discharge their debt in a bankruptcy action, our results of operations could be adversely affected.
We incorporate our estimate of lifetime loan losses in our measurement of fair value for our loans receivable held for investment. While this evaluation process uses historical and other
objective information, the classification of loans and the forecasts and establishment of loan losses and fair value are also dependent on our subjective assessment based upon our experience
and judgment. Given the unprecedented nature of the COVID-19 pandemic and its impact on the economy, the amount of subjective assessment and judgment applied to develop our forecasts
has increased materially, since no directly corresponding historical data set exists. Our methodology for establishing our fair value is based on the guidance in Accounting Standards
Codification, 820 and 825, and, in part, on our historic loss experience. If member behavior changes as a result of economic conditions and if we are unable to predict how economic conditions
and other factors impacting collectability may affect our estimate of lifetime loan losses, the fair value may be reduced for our Loans Receivable at Fair Value, which will decrease Net
Revenue. Our calculations of fair value are estimates, and if these estimates are inaccurate, our results of operations could be adversely affected. Neither state regulators nor federal regulators
regulate our calculations of fair value, and unlike traditional banks, we are not subject to periodic review by bank regulatory agencies of our loss estimates or our calculations of fair value. In
addition, because our debt financings include delinquency triggers as predictors of losses, increased delinquencies or losses may reduce or terminate our access to debt financing.
Our quarterly results are likely to fluctuate significantly and may not fully reflect the underlying performance of our business.
Our quarterly results of operations are likely to vary significantly in the future and period-to-period comparisons of our results of operations may not be meaningful, due to factors such as
our election of the fair value option and the evolving and uncertain duration of the COVID-19 pandemic. Accordingly, the results for any one quarter are not necessarily an indication of future
performance. Our quarterly financial results may fluctuate due
17
to a variety of factors, some of which are outside of our control and, as a result, may not fully reflect the underlying performance of our business. Factors that may cause fluctuations in our
quarterly financial results include:
•
•
•
•
•
•
•
•
•
•
•
•
loan volumes, product and loan mix and the channels through which our loans are originated;
the number and extent of prepayments of loans;
the effectiveness of our direct marketing and other marketing channels;
the effectiveness of our proprietary credit risk models;
the timing and success of new products and origination channels;
the amount and timing of operating expenses and capital expenditures, including those related to member acquisition, development of new products and services, and maintenance and
expansion of our business, operations and infrastructure;
net charge-off rates;
adjustments to the fair value of assets and liabilities on our balance sheet;
our involvement in litigation or regulatory enforcement efforts (or the threat thereof) or those that impact our industry generally;
changes in laws and regulations that impact our business;
our borrowing costs and access to the capital markets; and
general economic, industry, and market conditions, including economic slowdowns, recessions, rising interest and inflation rates, and tightening of credit markets.
In addition, we experience significant seasonality in demand for our loans, which is generally lower in the first quarter. The seasonal slowdown is primarily attributable to high loan
demand around the holidays in the fourth quarter and the general increase in our members’ available cash flows in the first quarter, including cash received from tax refunds, which temporarily
reduces their borrowing needs. While our growth has obscured this seasonality from our overall financial results, we expect our results of operations to continue to be affected by such
seasonality in the future.
The ongoing COVID-19 pandemic has and may continue to adversely impact our business and results of operations.
The COVID-19 pandemic and health and safety measures taken by governments and private industry in response to the pandemic have significantly impacted worldwide economic
activity and consumer behavior and continue to create economic uncertainty. Worker shortages, supply chain issues, inflationary pressures, vaccine and testing requirements, the emergence of
new variants and the reinstatement and subsequent lifting of restrictions and health and safety related measures in response to the emergence of new variants have occurred in the past and may
occur in the future. In 2020 through 2022, we offered payment relief options to members impacted by COVID-19, including hardship programs, reduced payment plans, late fee waivers and
other borrower accommodations. In the future, we may offer additional payment relief options and may cease offering some options when the federal state of emergency ends.
We are unable to predict the future path or impact of any global or regional COVID-19 resurgences, including existing or future variants, or other public health crises. An extended period
of disruption as a result of a health epidemic or pandemic, including COVID-19, may negatively impact us, as well as our members, vendors, and partners.
Negative publicity or public perception of our company or our industry could adversely affect our reputation, business, and results of operations.
Negative publicity about our industry or our company, including the terms of the consumer loans, effectiveness of the proprietary credit risk model, privacy and security practices,
originations, marketing, servicing and collections, use of A.I, and other business practices or initiatives, litigation, regulatory compliance and the experience of members, even if inaccurate,
could adversely affect our reputation and the confidence in our brands and business model or lead to changes in our business practices. We regularly engage with media outlets and consumer
advocates and have previously, and in the future, may respond to inquiries by modifying our business practices or policies to better align with our mission. Despite our responsiveness to the
inquiries, certain media outlets and consumer advocates chose to and have continued to highlight the very past practices that we had already modified. The proliferation of social media may
increase the likelihood that negative public opinion will impact our reputation and business. Our reputation is very important to attracting new members and retaining existing members. While
we believe that we have a good reputation and that we provide members with a superior experience, there can be no assurance that we will continue to maintain a good relationship with
members.
In addition, negative perception may result in our being subject to more restrictive laws and regulations and potential investigations, enforcement actions and lawsuits. If there are changes
in the laws affecting any of our products, or our marketing and servicing, or if we become subject to such investigations, enforcement actions and lawsuits, our financial condition and results of
operations would be adversely affected. Entry into new products, as well as into the banking business or new origination channels, such as bank partnerships and other partnerships could lead
to negative publicity or draw additional scrutiny.
Harm to our reputation can also arise from many other sources, including employee or former employee misconduct, misconduct by outsourced service providers or other counterparties,
failure by us or our partners to meet minimum standards of service and quality, and inadequate protection of member information and compliance failures and claims. Our reputation may also
be harmed if we fail to maintain our certification as a Community Development Financial Institution (CDFI).
Competition for our highly skilled employees is intense, and we may not be able to attract and retain the employees we need to support the growth of our business.
Competition for highly skilled personnel, particularly engineering and data analytics personnel, is extremely intense across the country and is likely to continue to increase, as more
companies are offering remote or hybrid working arrangements. We have experienced and expect to continue to face difficulty identifying and hiring qualified personnel in many areas,
especially as we pursue our growth strategy. We may not be able to hire or
18
retain such personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for experienced employees have
greater resources than we have and may be able to offer more attractive terms of employment. In particular, employee candidates, specifically in high-technology industries, often consider the
value of any equity they may receive in connection with their employment, so significant volatility or a further decline in the price of our stock may adversely affect our recruitment strategies.
Additionally, changes to U.S. immigration policies, as well as restrictions on global travel due to public health crises requiring quarantines or other precautions to limit exposure to infectious
diseases, may limit our ability to hire and/or retain talent. In February 2023, we announced a 10% reduction in our corporate workforce. This reduction could make it more difficult to attract,
retain and hire new talent. Our failure to attract and retain suitably qualified individuals could have an adverse effect on our ability to operate our business and achieve our corporate strategies.
In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees,
we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to serve our members could be adversely affected.
If we lose the services of any of our key management personnel, our business could suffer.
Our future success significantly depends on the continued service and performance of our key management personnel. Competition for these employees is intense and we may not be able
to replace, attract and retain key personnel. We do not maintain key-man insurance for every member of our senior management team. The loss of the service of our senior management team or
key team members, and the process to replace any of them, or the inability to attract additional qualified personnel as needed, all of which would involve significant time and expense, could
harm our business.
Our success and future growth depend on our branding and marketing efforts.
If our marketing efforts are not successful or if we are unsuccessful in developing our brand marketing campaigns, our ability to attract and retain members, attract new strategic partners
and grow our business may be negatively impacted. In the future, we intend to continue to dedicate significant resources to our marketing efforts, particularly as we develop our brand. If any of
our current marketing channels becomes less effective, if we are unable to continue to use any of these channels, if the cost of using these channels significantly increases or if we are not
successful in generating new channels, we may not be able to attract new members in a cost-effective manner or increase the activity of our existing members, including by using additional
products or services we offer. If we are unable to recover our marketing costs through increases in the size, value or overall number of credit products we originate, or other product selection
and utilization, it could have a material adverse effect on our business, financial condition, results of operations, and prospects.
We may fail to realize all of the anticipated benefits of the Digit acquisition, and the merger or those benefits may take longer to realize than expected.
We believe that there are significant benefits and synergies that may be realized through combining the platform, product and service offerings of Oportun and Digit. As we continue to
integrate the businesses and seek to realize anticipated benefits and synergies, we will continue to be required to devote significant attention and resources to successfully align our business
practices and operations, which may disrupt both companies' businesses. The full benefits of the acquisition, including anticipated growth opportunities, may not be realized as expected or may
not be achieved within the anticipated time frame, or at all. Failure to achieve the anticipated benefits of the acquisition could adversely affect our results of operations or cash flows, cause
dilution to our earnings per share, decrease or delay any accretive effect of the acquisition and negatively impact the price of our common stock.
Any acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures, and other transactions could fail to achieve strategic objectives, disrupt our ongoing
operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations.
Our success will depend, in part, on our ability to grow our business. In some circumstances, we may determine to do so through the acquisition of complementary businesses and
technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully
complete identified acquisitions. We have previously acquired, and in the future, may acquire, complementary assets or businesses. The risks we face in connection with acquisitions include:
•
•
•
•
•
•
•
•
•
diversion of management time and focus from operating our business to addressing acquisition integration challenges;
utilization of our financial resources for acquisitions or investments that may fail to realize the anticipated benefits;
inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;
coordination of technology, product development and sales and marketing functions and integration of administrative systems;
transition of the acquired company’s members to our systems;
retention of employees from the acquired company;
regulatory risks, including maintaining good standing with existing regulatory bodies or receiving any necessary approvals, as well as being subject to new regulators with oversight
over an acquired business;
acquisitions could result in dilutive issuances of equity securities or the incurrence of debt;
cultural challenges associated with integrating employees from the acquired company into our organization;
19
•
•
•
•
•
the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;
potential write-offs of loans or intangibles or other assets acquired in such transactions that may have an adverse effect on our results of operations in a given period;
liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, security weaknesses
and incidents, tax liabilities and other known and unknown liabilities;
assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property or increase our risk for liability; and
litigation, claims or other liabilities in connection with the acquired company.
Our failure to address these risks or other problems encountered in connection with our future acquisitions and investments could cause us to fail to realize the anticipated benefits of these
acquisitions or investments, cause us to incur unanticipated liabilities and harm our business generally.
Fraudulent activity could negatively impact our business, brand and reputation and require us to continue to take steps to reduce fraud risk.
Third parties have, and we expect that they will likely continue to attempt to commit fraud by, among other things, fraudulently obtaining credit products or creating fictitious accounts
using stolen identities or personal information and making transactions with stolen financial instruments, Third parties may also seek to engage in abusive schemes or fraud attacks that are
often difficult to detect and may be deployed at a scale that would otherwise not be possible in physical transactions. Risks associated with each of these include theft of funds and other
monetary loss, the effects of which could be compounded if not detected quickly. Fraudulent activity may not be detected until well after it occurs and the severity and potential impact may not
be fully known for a substantial period of time after it has been discovered. Measures to detect and reduce the risk of fraud and abusive behavior are complex, require continuous monitoring
and enhancements, and may not be effective in detecting and preventing fraud, particularly new and continually evolving forms of fraud or in connection with new or expanded product
offerings. If these measures do not succeed, our business could be materially adversely impacted.
Despite our efforts, the possibility of fraudulent or other malicious activities and human error or malfeasance cannot be eliminated entirely and will evolve as new and emerging
technology is deployed, including the increasing use of personal mobile and computing devices that are outside of our network and control environments. Additionally, increasing our product
and service offerings may introduce opportunities for fraudulent activity that we have not previously experienced. Numerous and evolving fraud schemes and misuse of our products and
services could subject us to significant costs and liabilities, require us to change our business practices, cause us to incur significant remediation costs, lead to loss of member confidence in, or
decreased use of, our products and services, damage our reputation and brands, divert the attention of management from the business, result in litigation (including class action litigation), and
lead to increased regulatory scrutiny and possibly regulatory investigations and intervention, any of which could have a material adverse impact on our business.
Security breaches and incidents may harm our reputation, adversely affect our results of operations, and expose us to liability.
Our reputation and ability to attract, retain and serve our members is dependent upon the reliable performance and security of our technology infrastructure and those of third parties that
we utilize in our operations. These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, terrorist
attacks, rogue employees, power loss, telecommunications failures, and cybersecurity risks. We have been and continue to be the subject of actual or attempted unauthorized access,
mishandling or misuse of information, computer viruses or malware, and cyber-attacks that could obtain confidential information, destroy data, disrupt or degrade service, threaten the integrity
and availability of our systems, distributed denial of service attacks, social engineering, security breaches and incidents, and other infiltration, exfiltration or other similar events. The automated
nature of our business may make us attractive targets for hacking and potentially vulnerable to computer malware, physical or electronic break-ins and similar disruptions. Further, our adoption
of remote working arrangements for our corporate and many of our contact center employees may result in increased consumer or employee privacy, IT security, and fraud concerns arising
from the increased electronic transfer and other online activity. Techniques used in cybersecurity attacks to obtain unauthorized access, disable or sabotage information technology systems
change frequently, as data breaches and other cybersecurity events have become increasingly commonplace, including as a result of the intensification of state-sponsored cybersecurity attacks
during periods of geopolitical conflict, such as the ongoing conflict in Ukraine. We have seen, and will continue to see, industry-wide vulnerabilities, which could affect our or other parties’
systems.
We also face indirect technology, cybersecurity and operational risks relating to the members and other third parties with whom we do business or upon whom we rely on to facilitate or
enable our business activities, including vendors, payment processors, and other parties who have access to confidential information due to our agreements with them. The use of bank
partnerships could leave us exposed to additional information security risks arising from the interaction between our and any partners' information technology infrastructure, and the sharing
between us of member information. We cannot guarantee that our or our systems and networks, or those of any third parties with whom we do business, have not been breached or that they do
not contain exploitable defects or bugs that could result in a breach of or disruption to any of our systems and networks. Potential vulnerabilities can be exploited from inadvertent or intentional
actions of our employees, contractors, third-party vendors, business partners, or by malicious third parties.
Any failure or perceived failure by us, or the third parties with whom we do business, to comply with our privacy, confidentiality, or data security-related legal or other obligations to third
parties, or any security breaches impacting us, our third-party providers or partners, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public
statements against us by advocacy groups or others. In addition, a data security incident could cause third parties, to lose trust in us or subject us to claims by third parties that we have
breached our
20
privacy- and confidentiality-related obligations. Any belief by members or others that a security breach or other incident has affected us, even if a security breach or other incident has not
affected us or any of our third-party providers or partners, could have any or all of the foregoing impacts on us, including harm to our reputation. Even the perception of inadequate security
may harm our reputation and negatively impact our ability to attract and retain members.
We incur significant costs to detect and prevent security breaches and other security-related incidents, and we expect our costs will increase as we work to continuously improve our
systems and processes to prevent future breaches and incidents. Any event that leads, or is believed to have led, to unauthorized access, to, or use, access, loss, corruption, disclosure or other
processing of our data could disrupt our business; harm our reputation; compel us to comply with applicable federal and/or state breach notification laws and foreign law equivalents; subject us
to litigation, regulatory investigation and oversight, or mandatory corrective action; require us to verify the correctness of database contents; or otherwise subject us to liability under laws and
contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs for us to address the incident and in an effort to prevent
further breaches or incidents, and result in significant legal and financial exposure and/or reputational harm. These mandatory disclosures regarding a security breach are costly to implement
and often lead to widespread negative publicity.
We cannot ensure that any limitations of liability provisions in any agreements with third parties would be enforceable or adequate or would otherwise protect us from any liabilities or
damages with respect to any particular cybersecurity claim. We maintain errors, omissions, and cyber liability insurance policies covering certain security and privacy damages. However, we
cannot be certain that our coverage will continue to be available on economically reasonable terms or will be available in sufficient amounts to cover one or more large claims, or that the
insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in
our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our business and financial condition.
Our retail locations also process physical member loan documentation that contain confidential information about our members, including financial and personally identifiable
information. We retain physical records in various storage locations outside of our retail locations. The loss or theft of, or other unauthorized access to or use of, member information and data
from our retail locations or other storage locations could subject us to additional regulatory scrutiny, possible civil litigation and possible financial liability and losses.
Any significant disruption in our computer systems and critical third-party vendors may impair the availability of our websites, applications, products or services, or otherwise harm our
business.
Our ability to deliver products and services, and otherwise operate our business and comply with applicable laws, depends on the efficient and uninterrupted operation of our computer
systems and third-party data centers, as well as third-party providers. Our computer systems, including those provided by third-party providers and partners, may encounter service
interruptions at any time due to system or software failure, natural disasters, severe weather conditions, health epidemics or pandemics, terrorist attacks, cyber-attacks, computer viruses,
physical or electronic break-ins, technical errors, insider threats, power outages or other events. Any of these occurrences may interrupt the availability, or reduce or adversely affect the
functionality of our websites, applications, products or services, including our ability to service our loans, process loan applications, and provide digital banking services to our members. Our
disaster recovery plan has not been tested under actual disaster conditions, and we may not have sufficient capacity to recover all data and services in the event of an outage. Additionally, our
reliance on third-party providers may mean that we are not able to resolve operational problems internally or on a timely basis, as our operations will depend upon such third-party providers
communicating appropriately and responding swiftly to their own service disruptions.
The implementation of technology changes and upgrades to maintain current and integrate new systems may cause service interruptions, transaction processing errors or system
conversion delays and may cause us to fail to comply with applicable laws, all of which could have a material adverse effect on our business. We expect that new technologies and business
processes applicable to the financial services industry will continue to emerge and that these new technologies and business processes may be better than those we currently use. There is no
assurance that we will be able to successfully adopt new technology as critical systems and applications become obsolete and better ones become available. A failure to maintain and/or
improve current technology and business processes, address capacity constraints, upgrade our systems and continually develop our technology and infrastructure, could disrupt our operations
or cause our products and services to be less competitive.
In addition, the software that we have developed to use in our daily operations is highly complex and may contain undetected technical errors that could cause our computer systems to
fail. For example, each loan that we make involves our proprietary automated underwriting process and depends on the efficient and uninterrupted operation of our computer systems. Any
failure of our computer systems involving our automated underwriting process and any technical or other software errors pertaining to this automated underwriting process could compromise
our ability to accurately evaluate potential members, which could result in significant claims and liability and negative publicity. Additionally, in the event of damage or interruption, our
insurance policies may not adequately compensate us for any of our losses.
We may change our corporate strategies or underwriting and servicing practices, which may adversely affect our business.
As our business grows and evolves, we have, and may in the future, change certain aspects of our corporate strategies or any of our underwriting guidelines without notice to our
stockholders. Any changes in strategy or our underwriting or servicing practices could impact our business in any number of ways, including impacting our member mix, product and service
offerings, risk profile of our loan portfolio, and operational and regulatory compliance requirements. We may also decide to modify our strategy with respect to whole loan sales, including
increasing or decreasing the number of loans sold. We continue to evaluate our business strategies and underwriting and servicing practices and will continue to make changes
21
to adapt to changing economic conditions, regulatory requirements and industry practices. Additionally, a change in our underwriting and servicing practices may reduce our credit spread and
may increase our exposure to interest rate risk, default risk and liquidity risk.
We are, and intend in the future to continue, expanding into new geographic regions, and our failure to comply with applicable laws or regulations, or accurately predict demand or
growth, related to these geographic regions could have an adverse effect on our business.
We intend to continue expanding into new geographic regions, including through strategic partnerships or a national bank charter. In addition, each of the new states where we do not
currently operate may have different laws and regulations that apply to our products and services. As such, we expect to be subject to significant additional legal and regulatory requirements,
including various federal and state consumer lending laws. We have limited experience in managing risks and the compliance requirements attendant to these additional legal and regulatory
requirements in new geographies or related to strategic partnerships. The costs of compliance and any failure by us to comply with such regulatory requirements in new geographies could harm
our business. If our partners decide to or are no longer able to provide their services, we could incur temporary disruptions in our loan transactions or we may be unable to do business in
certain states or certain locations.
We are exposed to geographic concentration risk.
The geographic concentration of our loan originations may expose us to an increased risk of loss due to risks associated with certain regions. Certain regions of the United States from time
to time will experience weaker economic conditions and higher unemployment and, consequently, will experience higher rates of delinquency and loss than on similar loans nationally. In
addition, natural, man-made disasters or health epidemics or pandemics in specific geographic regions may result in higher rates of delinquency and loss in those areas. A significant portion of
our outstanding receivables originated in certain states, and within the states where we operate, originations are generally more concentrated in and around metropolitan areas and other
population centers. Therefore, economic conditions, natural, man-made disasters, health epidemics or pandemics, public policies that have the effect of drawing financial-services companies
into contentious political or social issues, or other factors affecting these states or areas in particular could adversely impact the delinquency and default experience of the receivables and
could adversely affect our business. Further, the concentration of our outstanding receivables in one or more states would have a disproportionate effect on us if governmental authorities in any
of those states take action against us or take action affecting how we conduct our business.
As of December 31, 2022, 45%, 26%, 9%, 5% and 4% of our Owned Principal Balance at End of Period related to members from California, Texas, Florida, Illinois and New Jersey,
respectively. If any of the events noted in these risk factors were to occur in or have a disproportionate impact in regions where we operate or plan to commence operations, it may negatively
affect our business in many ways, including increased delinquencies and loan losses or a decrease in future originations.
Our proprietary credit risk models rely in part on the use of third-party data to assess and predict the creditworthiness of our members, and if we lose the ability to license or use such
third-party data, or if such third-party data contain inaccuracies, it may harm our results of operations.
We rely on our proprietary credit risk models, which are statistical models built using third-party alternative data, credit bureau data, application data and our credit experience gained
through monitoring the payment performance of our members over time. If we are unable to access certain third-party data used in our credit risk models, or our access to such data is limited,
our ability to accurately evaluate potential members will be compromised, and we may be unable to effectively predict probable credit losses inherent in our loan portfolio, which would
negatively impact our results of operations. Third-party data sources, including credit bureau data and other alternative data sources, are aggregated by our risk engine to be used in our credit
risk models to score applicants, make credit decisions, and in our verification processes to confirm member-reported information. If the information that we receive from third parties about a
member is inaccurate or does not accurately reflect the member’s creditworthiness, this may cause us to provide loans to higher risk members than we intended through our underwriting
process and/or inaccurately price the loans we make. We use numerous third-party data sources and multiple credit factors within our proprietary credit risk models, which helps mitigate, but
does not eliminate, the risk of an inaccurate individual report. In addition, there are risks that the costs of our access to third-party data may increase or our terms with such third-party data
providers could worsen. In recent years, well-publicized allegations involving the misuse or inappropriate sharing of personal information have led to expanded governmental scrutiny of
practices relating to the safeguarding of personal information and the use or sharing of personal data by companies in the U.S. and other countries. That scrutiny has in some cases resulted in,
and could in the future lead to, the adoption of stricter laws and regulations relating to the use and sharing of personal information. These types of laws and regulations could prohibit or
significantly restrict our third-party data sources from sharing information, or could restrict our use of personal data when developing our proprietary credit risk models, or for fraud prevention
purposes. These restrictions could also inhibit our development or marketing of certain products or services, or increase the costs of offering them to members or reduce the effectiveness of
credit models at predicting credit outcomes or preventing fraud.
We follow procedures to verify a member’s identity and address which are designed to minimize fraud. These procedures may include visual inspection of applicant identification
documents to ensure authenticity, review of paystubs or bank statements for proof of income and employment, and review of analysis of information from credit bureaus, fraud detection
databases and other alternative data sources for verification of identity, employment, income and other debt obligations. If any of the information that is considered in the loan review process
is inaccurate, whether intentional or not, and such inaccuracy is not detected prior to loan funding, the loan may have a greater risk of default than expected. If any of our procedures are not
followed, or if these procedures fail, fraud may occur. Additionally, there is a risk that following the date of the loan application, a member may have defaulted on, or become delinquent in the
payment of, a pre-existing debt obligation, taken on additional debt, lost his or her job or other sources of income or experienced other adverse financial events. Fraudulent activity or
significant increases in fraudulent activity could also lead to regulatory intervention, negatively impact our results of operations, brand and reputation and require us to take additional steps to
reduce fraud risk, which could increase our costs.
22
A deterioration in the financial condition of counterparties, including financial institutions, could expose us to credit losses, limit access to liquidity or disrupt our business.
We have entered into, and may in the future enter into, financing and derivative transactions with counterparties in the financial services industry, including brokers and dealers,
commercial banks, investment banks, hedge funds, and other financial institutions. Furthermore, the operations of U.S. and global financial services institutions are interconnected, and a
decline in the financial condition of one or more financial services institutions, or the perceived lack of creditworthiness of such financial institutions, may expose us to credit losses or defaults,
limit access to liquidity or otherwise disrupt our business. As such, our financing and derivative transactions expose us to the risk of counterparty default, which can be exacerbated during
periods of market illiquidity.
Our vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services that are important to
our operations could have an adverse effect on our business.
We have vendors that, among other things, provide us with key services, including financial, technology and other services to support our loan origination, servicing and other activities.
Our expansion into new channels, products or markets may introduce additional third-party service providers, strategic partners and other third parties on which we may become reliant. For
example, in connection with the secured personal loan product, we work with third parties that provide information and/or services in connection with valuation, title management and title
processing, repossessions, and remarketing. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by our partner banks' federal
bank regulators (the Federal Reserve Board, the Office of Comptroller of the Currency and the Federal Deposit Insurance Corporation) and our consumer financial services regulators,
including state regulators and the CFPB, which could increase the scope of management involvement and decreasing the benefit that we receive from using third-party vendors. We could be
adversely impacted to the extent our vendors and partners fail to comply with the legal requirements applicable to the particular products or services being offered. Moreover, if our bank
partners or their regulators conclude that we have not met the heightened standards for oversight of our third-party vendors, we could be subject to enforcement actions, civil monetary
penalties, supervisory orders to cease and desist or other remedial actions.
In some cases, third-party vendors are the sole source, or one of a limited number of sources, of the services they provide to us. Most of our vendor agreements are terminable on little or
no notice, and if our current vendors were to stop or were unable to continue providing services to us on acceptable terms, we may be unable to procure alternatives from other vendors in a
timely and efficient manner on acceptable terms or at all. If any third-party vendor fails to provide the services we require, due to factors outside our control, we could be subject to regulatory
enforcement actions, suffer economic and reputational harm and incur significant costs to resolve any such disruptions in service.
Our mission to provide inclusive, affordable financial services that empower our members to build a better future may conflict with the short-term interests of our stockholders.
Our mission is to provide inclusive, affordable financial services that empower our members to build a better future. We have made and will continue to make decisions that we believe
will benefit our members and therefore provide long-term benefits for our business, even if our decision negatively impacts our short-term results of operations. For example, we constrain the
maximum rates we charge in order to further our goal of making our loans affordable for our target members. Our decisions may negatively impact our short-term financial results or not
provide the long-term benefits that we expect and may adversely impact our business operations, results of operations, and financial condition.
If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus on the mission that contribute to our business.
We believe that a critical component of our success is our corporate culture and our deep commitment to our mission. We believe this mission-based culture fosters innovation, encourages
teamwork and cultivates creativity. Our mission defines our business philosophy as well as the emphasis that we place on our members, our people and our culture and is consistently
reinforced to and by our employees. As we continue to grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may
find it difficult to maintain these valuable aspects of our corporate culture and our long-term mission. Operating as a remote-first company may make it difficult for us to preserve our corporate
culture and could negatively impact on workforce morale and productivity. Any failure to preserve our culture could negatively impact our future success, including our ability to attract and
retain employees, encourage innovation and teamwork, and effectively focus on and pursue our mission and corporate objectives.
We are dependent on hiring an adequate number of hourly bilingual employees to run our business and are subject to government regulations concerning these and our other employees,
including minimum wage laws.
Our workforce is comprised primarily of bilingual employees who work on an hourly basis. In certain areas where we operate, there is significant competition for hourly bilingual
employees and the lack of availability of an adequate number of hourly bilingual employees could adversely affect our operations. In addition, we are subject to applicable rules and regulations
relating to our relationship with our employees, including minimum wage and break requirements, health benefits, unemployment and sales taxes, overtime and working conditions and
immigration status. We are from time to time subject to employment-related claims, including wage and hour claims. Further, legislated increases in minimum wage, as well as increases in
additional labor cost components, such as employee benefit costs, workers’ compensation insurance rates, and compliance costs and fines, would increase our labor costs.
23
Misconduct by our employees could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny and reputational harm.
Our reputation is critical to maintaining and developing relationships with our existing and potential members and third parties with whom we do business. There is a risk that our
employees could be accused of or engage in misconduct that adversely affects our business, including fraud, redirection, misappropriation of member funds, improper execution of loan
transactions, embezzlement and theft, disclosure of personal and business information and the failure to follow protocol when interacting with members that could lead us to suffer direct losses
from the activity as well as serious reputational harm. Employee misconduct could also lead to regulatory sanctions and prompt regulators to allege or to determine based upon such misconduct
that we have not established adequate supervisory systems and procedures to inform employees of applicable rules or to detect and deter violations of such rules. Misconduct by our employees,
or even unsubstantiated allegations of misconduct, could harm our reputation and our business.
Our international operations and offshore service providers involve inherent risks which could result in harm to our business.
As of December 31, 2022, we had 1,553 employees related to three contact centers in Mexico. These employees provide certain English/Spanish bilingual support related to member-
facing contact center activities, administrative and technology support of the contact centers and back-office support services. We have also engaged outsourcing partners in the United States
that provide offshore member-facing contact center activities in Colombia, Jamaica and the Philippines, and may in the future include additional locations in other countries. In addition, our
technology development center in India is staffed through outsourcing partners and our own employees. We have engaged vendors that utilize employees or contractors based outside of the
United States. As of December 31, 2022, our outsourcing partners have provided us, on an exclusive basis, the equivalent of 807 full-time equivalents in Colombia, Jamaica, Philippines and
India. These international activities are subject to inherent risks that are beyond our control, including:
•
•
•
•
•
•
•
•
•
•
•
risks related to government regulation or required compliance with local laws;
local licensing and reporting obligations;
difficulties in developing, staffing and simultaneously managing a number of varying foreign operations as a result of distance, language and cultural differences;
different, uncertain, overlapping or more stringent local laws and regulations;
political and economic instability, tensions, security risks and changes in international diplomatic and trade relations;
state or federal regulations that restrict offshoring of business operational functions or require offshore partners to obtain additional licenses, registrations or permits to perform services
on our behalf;
natural disasters, public health issues, epidemics or pandemics, acts of war, and terrorism, and other events outside our control;
compliance with applicable U.S. laws and foreign laws related to consumer protection, intellectual property, privacy, data security, corruption, money laundering, and export/trade
control;
misconduct by our outsourcing partners and their employees or even unsubstantiated allegations of misconduct;
risks due to lack of direct involvement in hiring and retaining personnel; and
potentially adverse tax developments and consequences.
Violations of the complex foreign and U.S. laws, rules and regulations that apply to our international operations and offshore activities of our service providers may result in reputational
harm, heightened regulatory scrutiny, fines, criminal actions or sanctions against us, our directors or our employees, as well as restrictions on the conduct of our business.
If we discover a material weakness in our internal control over financial reporting that we are unable to remedy or otherwise fail to maintain effective internal control over financial
reporting or disclosure controls and procedures, our ability to report our financial results on a timely and accurate basis and the market price of our common stock may be adversely
affected.
We have developed our disclosure controls, internal control over financial reporting and other procedures to ensure information required to be disclosed by us in the reports that we will
file with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required
to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. To maintain and improve the effectiveness of our
disclosure controls and procedures and internal control over financial reporting, we have expended and anticipate we will continue to expend significant resources, including accounting-related
costs and significant management oversight. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis,
could increase our operating costs and could materially impair our ability to operate our business. Our current controls and any new controls that we develop may become inadequate because
of changes in conditions in our business. If our internal controls are perceived as inadequate or we are unable to produce timely or accurate financial statements, investors may lose confidence
in our operating results and our stock price could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
Section 404 of the Sarbanes-Oxley Act requires our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on
the effectiveness of our internal control over financial reporting. We are also required to have our independent registered public accounting firm attest to, and issue an opinion on, the
effectiveness of our internal control over financial reporting. If we are unable to assert that our internal control over financial reporting is effective, or if, when required, our independent
registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and
completeness of our financial reports, which could subject us to sanctions or investigations by the SEC or other regulatory
24
authorities, adversely affect our ability to access the credit markets and sell additional equity and commit additional financial and management resources to remediate deficiencies.
Because we receive a significant amount of cash in our retail locations through member loan repayments, we may be subject to theft and cash shortages due to employee errors.
Since our business requires us to receive a significant amount of cash in each of our retail locations, we are subject to the risk of theft (including by or facilitated by employees) and cash
shortages due to employee errors. We have experienced theft and attempted theft in the past. Although we have implemented various procedures and programs to reduce these risks, maintain
insurance coverage for theft and provide security measures for our facilities, we cannot make assurances that theft and employee error will not occur.
Our business is subject to the risks of natural disasters, public health crises and other catastrophic events, and to interruption by man-made problems.
A significant natural disaster, such as an earthquake, fire, hurricanes, flood or other catastrophic event (many of which are becoming more acute and frequent as a result of climate
change), or interruptions by strikes, crime, terrorism, social unrest, cyber-attacks, pandemics or other public health crises, power outages, geopolitical unrest or other man-made problems,
could have an adverse effect on our business, results of operations and financial condition. For example, a significant natural disaster in Northern California or any other location in which we
have offices or facilities or employees working remotely, could adversely affect our business operations, financial condition and prospects, and our insurance coverage may be insufficient to
compensate us for losses that may occur.
Our IT systems are backed up regularly to highly available, alternate data centers in a different region, and we have conducted disaster recovery testing of our mission critical systems.
Despite any precautions we may take, however, the occurrence of a natural disaster or other unanticipated problems at our data centers could result in lengthy interruptions in our services. In
addition, acts of war, terrorism, and other geopolitical unrest could cause disruptions in our business and lead to interruptions, delays or loss of critical data.
In addition, a large number of members make payments and apply for loans at our retail locations. If one or more of our retail locations becomes unavailable for any reason or other public
health crisis, localized weather events, or natural or man-made disasters, our ability to conduct business and collect payments from members on a timely basis may be adversely affected, which
could result in lower loan originations, higher delinquencies and increased losses. For example, during parts of the COVID-19 pandemic, we temporarily closed a few of our retail locations
due to public health orders or other concerns, which we believe resulted in lower Aggregate Originations. While all of our retail locations are currently open, it is possible that we will have to
temporarily close retail locations as necessary due to public health orders or other concerns relating to any public health crisis. The closure of retail locations could further adversely affect our
loan originations, member experience, results of operations and financial condition.
The aforementioned risks may be further increased if our business continuity plans prove to be inadequate and there can be no assurance that both personnel and non-mission critical
applications can be fully operational after a declared disaster within a defined recovery time. If our personnel, systems, or primary data center facilities are impacted, we may suffer
interruptions and delays in our business operations. In addition, if these events impact our members or their ability to timely repay their loans, our business could be negatively affected.
In addition, the impacts of climate change on the global economy and our industry are rapidly evolving. We may be subject to increased regulations, reporting requirements, standards or
expectations regarding the environmental impacts of our business. While we seek to mitigate our business risks associated with climate change, there are inherent climate-related risks wherever
business is conducted. Any of our primary locations may be vulnerable to the adverse effects of climate change. For example, our Bay Area headquarters have experienced and may continue to
experience, climate-related events and at an increasing frequency, including floods, drought, water scarcity, heat waves, wildfires and resultant air quality impacts and power shutoffs associated
with the wildfires. Changing market dynamics, global policy developments and increasing frequency and impact of extreme weather events on critical infrastructure in the United States and
elsewhere have the potential to disrupt our business, the business of our critical vendors, partners and members, and may cause us to experience higher attrition, losses and additional costs to
maintain or resume operations. In addition, current and emerging legal and regulatory requirements with respect to climate change (e.g., carbon pricing) and other aspects of ESG (e.g.,
disclosure requirements) may result in increased compliance requirements on our business, which may increase our operating costs and disrupt our business.
We may not maintain sufficient business interruption or property insurance to compensate us for potentially significant losses, including potential harm to our business that may result
from interruptions in our ability to provide our financial products and services.
Unfavorable outcomes in legal proceedings may harm our business and results of operations.
We have been, and may in the future become, subject to litigation, claims, investigations, legal and administrative cases and proceedings, whether civil or criminal, or lawsuits by
governmental agencies or private parties. If the results of any pending or future legal proceedings are unfavorable to us or if we are unable to successfully defend against third-party lawsuits,
we may be required to pay monetary damages or fulfill our indemnification obligations or we may be subject to fines, penalties, injunctions or other censure. Even if we adequately address the
issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address
these issues.
25
Funding and Liquidity Risks
We amended our Corporate Financing, as a result of which certain tranches of additional loans are available on an uncommitted basis, and our business could be adversely affected if we
were unable to access such additional capital.
On March 10, 2023 (the “Second Amendment Closing Date”), Oportun Financial Corporation (the “Company”) entered into an Amendment No. 2 to Credit Agreement (the ”Second
Amendment”), by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain affiliates of Neuberger Berman Specialty Finance as lenders, and
Wilmington Trust, National Association, as administrative agent and collateral agent (the “Agent”), which amended the Credit Agreement, dated as of September 14, 2022 (as amended,
supplemented or otherwise modified, including by the Second Amendment, the “Amended Credit Agreement”), by and among the Company, the lenders from time to time party thereto and the
Agent.
On the Second Amendment Closing Date, the Company borrowed $20.8 million of incremental term loans (the “Incremental Tranche A-1 Loans”) and intends to borrow an additional
$4.2 million of incremental term loans (the “Incremental Tranche A-2 Loans”) on or about March 27, 2023, which amount has been committed by the applicable lenders. Under the Amended
Credit Agreement, the Company may borrow up to an aggregate additional amount of $50.0 million on an uncommitted basis, in two $25.0 million tranches (the “Incremental Tranche B
Loans” and the “Incremental Tranche C Loans”) expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.
The loans (the “Loans”) and other obligations under the Amended Credit Agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the Loans,
including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions.
On the Second Amendment Closing Date, pursuant to the Second Amendment, the Company issued warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 Loans
to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $0.01 per share. In addition, (a) in connection with the funding of the Incremental Tranche A-2 Loans, the
Company will issue Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock, (b) in connection with the funding of
the Incremental Tranche B Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche B Loans to purchase 1,048,363 shares of the Company’s common stock,
and (c) in connection with the funding of the Incremental Tranche C Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363
shares of the Company’s common stock, in each case, at an exercise price of $0.01 per share. The Company also entered into a Registration Rights Agreement with the applicable lenders on
the Second Amendment Closing Date (the “Registration Rights Agreement”), which stipulates that the Company will file a registration statement with the Securities and Exchange Commission
with respect to the shares underlying the Warrants.
Given the uncommitted nature of the Incremental Tranche B and Incremental Tranche C Loans, there can be no assurance that the Company will be able to access such additional capital.
If we do not have sufficient capital, we may have to take additional actions to decrease expenses, curtail the origination of loans, and our ability to continue to support our growth and to
respond to challenges could be impaired.
In addition, if we do not have sufficient capital, we may need to engage in equity, debt or convertible debt financings to secure additional funds. If we raise additional funds by issuing
equity securities or securities convertible into equity securities, those securities may have rights, preferences or privileges senior to the rights of our common stock and our stockholders may
experience dilution. Debt financing, if available, may have a high cost of funds and may involve covenants restricting our operations or our ability to incur additional debt. Lenders may also
require warrants to boost their return, the issuance of which would be dilutive to our stockholders. Any debt or additional equity financing that we raise may contain terms that are not
favorable to us or our stockholders and could also negatively impact our stock price. A number of factors, including market volatility or depressed valuations, trading prices in the equity
markets, our financial condition and capital market conditions will impact our ability to obtain equity or debt financing. We may not be able to engage in any of these activities or engage in
these activities on desirable terms, which could have an adverse effect on our business, results of operation and financial condition.
We have incurred substantial debt and may issue debt securities or otherwise incur substantial debt in the future, which may adversely affect our financial condition and negatively
impact our operations.
We have a substantial amount of indebtedness, which requires significant interest payments. From time to time, we may seek to obtain additional capital. We depend on securitization
transactions, warehouse facilities and other forms of debt financing, as well as whole loan and structured loan sales, in order to finance the growth of our business and the origination of most of
the loans we make to our members. Our outstanding borrowings or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and
impair our liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to adopt one or more alternatives to refinance our debt, dispose of
assets or obtain necessary funds, including obtaining additional equity capital which could be on terms that may be onerous or highly dilutive.
We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.
Our substantial level of indebtedness and the current constraints on our liquidity could have important consequences, including the following:
•
we must use a substantial portion of our cash flow from operations to pay interest and principal on our debt, which reduces or will reduce funds available to us for other purposes such
as working capital, capital expenditures, other general corporate purposes, execution of growth strategies, and potential acquisitions;
26
•
•
•
•
•
•
our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
•
•
• mandatory repurchase obligations for any loans conveyed or sold into a debt financing or under a whole loan purchase facility if the representations and warranties we made with
default and foreclosure on our and our subsidiaries’ assets if asset performance and our operating revenue are insufficient to repay debt obligations;
respect to those loans were not correct when made;
acceleration of obligations to repay the indebtedness (or other outstanding indebtedness to the extent of cross default triggers), even if we make all principal and interest payments when
due, if we breach any covenants that require the maintenance of certain financial ratios with respect to us or the loan portfolio securing our indebtedness or the maintenance of certain
reserves or tangible net worth and do not obtain a waiver for such breach or renegotiate such covenant;
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
inability to obtain necessary additional financing if changes in the characteristics of our loans or our collection and other loan servicing activities change and cease to meet conditions
precedent for continued or additional availability under our debt financings;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
place us at a disadvantage compared to our competitors that have less debt;
defaults based on loan portfolio performance or default in our collection and loan servicing obligations could result in our being replaced by a third-party or back-up servicer and
notification to our members to redirect payments;
downgrades or revisions of agency ratings for our debt financing;
•
• monitoring, administration and reporting costs and expenses, including legal, accounting and other monitoring reporting costs and expenses, required under our debt financings; and
• we may be more vulnerable to economic downturn and adverse developments in our business, including potential economic recession, inflation, and other factors outside
our control.
Our ability to meet our expenses, to remain in compliance with our covenants under our debt instruments and to make future principal and interest payments in respect of our debt depends
on, among other factors, our operating performance, competitive developments and financial market conditions, all of which are significantly affected by financial, business, economic and
other factors. We are not able to control many of these factors. Given current industry and economic conditions, our cash flow may not be sufficient to allow us to pay principal and interest on
our debt and meet our other obligations.
To the extent our relationship with lenders is negatively affected by disputes that may arise from time to time, it may be more difficult to seek covenant relief, if needed, or to raise
additional funds in the future.
A breach of early payment triggers or covenants or other terms of our agreements with lenders could result in an early amortization, default, and/or acceleration of the related funding
facilities.
The primary funding sources available to support the maintenance and growth of our business include, among others, asset-backed securitizations, revolving debt facilities (including the
Secured Financing), Corporate Financing, and structured and whole loan sales. If we are unable to comply with various conditions precedent to availability under these facilities (including the
eligibility of our loans), covenants and other specified requirements set forth in our agreements with our lenders, this could result in the early amortization, default and/or acceleration of our
existing facilities. Such covenants and requirements include financial covenants, portfolio performance covenants and other events. The Corporate Financing contains financial covenants
requiring a minimum liquidity maintenance covenant, minimum asset coverage ratio, together with other customary affirmative and negative covenants, and events of default. The obligations
are secured by assets of the Company and its subsidiaries. Compliance with these covenants may limit our ability to take actions that might be to our advantage or to the advantage of our
stockholders.
Our securitizations contain collateral performance threshold triggers related to the three-month average annualized gross charge-off or net charge-off rate which, if exceeded, would lead
to early amortization. To support our collateral requirements under our financing agreements, we use a random selection process to take loans off our warehouse line to pledge to our
securitizations. An inability to originate enough loans to meet the collateral requirements in our financing arrangements, could result in the early amortization, default and/or acceleration of our
existing facilities. Moreover, we currently act as servicer with respect to the unsecured consumer loans held by our subsidiaries. If we default in our servicing obligations or fail to meet certain
financial covenants, an early amortization event or event of default could occur, and/or we could be replaced by our back-up servicer or another successor servicer. If the back-up servicer or
successor servicer is not adequate, the collection and processing of repayments may be impaired.
During an early amortization period or if an event of default exists, principal and interest collections from the loans in our asset-backed facilities would be applied to repay principal under
such facilities and principal collections would no longer be available on a revolving basis to fund purchases of newly originated loans. If an event of default exists under our revolving debt or
loan sale facilities, the applicable lenders or purchasers’ commitments to extend further credit or purchase additional loans under the related facility would terminate. If collections were
insufficient to repay
27
the amounts due under our securitizations and our revolving debt facilities, the applicable lenders, trustees and noteholders could seek remedies, including against the collateral pledged under
such facilities. Any of these events would negatively impact our liquidity, including our ability to originate new loans, and require us to rely on alternative funding sources. If we were unable
to arrange new or alternative methods of financing on favorable terms, we might have to curtail the origination of loans, and we may be replaced by our back-up servicer or another successor
servicer.
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial ratios. Failure to comply with any of the
covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would
permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient
funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might
significantly impair our ability to obtain other financing. For more information on covenants, requirements and events, see Note 9, Borrowings of the Notes to the Consolidated Financial
Statements included elsewhere in this report.
Our securitizations and structured and whole loan sales may expose us to certain risks, and we can provide no assurance that we will be able to conduct such transactions in the future,
which may require us to seek more costly financing.
We have securitized, and may in the future securitize, certain of our loans to generate cash to originate new loans or pay our outstanding indebtedness. In each such transaction and in
connection with our warehouse facilities, we sell and convey a pool of loans to a special purpose entity ("SPE"). Concurrently, each SPE issues notes or certificates pursuant to the terms of an
indenture. The securities issued by the SPE are secured by the pool of loans owned by the SPE. In exchange for the sale of a portion of the pool of loans to the SPE, we receive cash, which are
the proceeds from the sale of the securities. We also contribute a portion of the pool of loans in consideration for the equity interests in the SPE. Subject to certain conditions in the indenture
governing the notes issued by the SPE (or the agreement governing the SPE’s revolving loan), the SPE is permitted to purchase additional loans from us or distribute to us residual amounts
received by it from the loan pool, which residual amounts are the cash amounts remaining after all amounts payable to service providers and the noteholders have been satisfied. We also have
the ability to swap pools of loans with the SPE. Our equity interest in the SPE is a residual interest in that it entitles us as the equity owner of the SPE to residual cash flows, if any, from the
loans and to any assets remaining in the SPE once the notes are satisfied and paid in full (or in the case of a revolving loan, paid in full and all commitments terminated). As a result of
challenging credit and liquidity conditions, the value of the subordinated securities we retain in our securitizations might be reduced or, in some cases, eliminated.
The securitization market is subject to changing market conditions, and we may not be able to access this market when we would otherwise deem appropriate. Further, other matters, such
as (i) accounting standards applicable to securitization transactions and (ii) capital and leverage requirements applicable to banks and other regulated financial institutions holding asset-backed
securities, could result in decreased investor demand for securities issued through our securitization transactions, or increased competition from other institutions that undertake securitization
transactions. In addition, compliance with certain regulatory requirements may affect the type of securitizations that we are able to complete.
Asset-backed securities and the securitization markets were heavily affected by the Dodd-Frank Act and have also been a focus of increased regulation by the SEC. For example, the
Dodd-Frank Act mandates the implementation of rules requiring securitizers or originators to retain an economic interest in a portion of the credit risk for any asset that they securitize or
originate. Furthermore, sponsors are prohibited from diluting the required risk retention by dividing the economic interest among multiple parties or hedging or transferring the credit risk the
sponsor is required to maintain. Rules relating to securitizations rated by nationally-recognized statistical rating agencies require that the findings of any third-party due diligence service
providers be made publicly available at least five business days prior to the first sale of securities, which has led and will continue to lead us to incur additional costs in connection with each
securitization. In addition, some of the regulations to be implemented under the Dodd-Frank Act relating to securitization have not yet been finalized. Any new rules or changes to the Dodd-
Frank Act (or the current rules thereunder) could adversely affect our ability and our cost to access the asset-backed securities market.
If it is not possible or economical for us to securitize our loans in the future, we would need to seek alternative financing to support our operations and to meet our existing debt
obligations, which may not be available on commercially reasonable terms, or at all. If the cost of such alternative financing were to be higher than our securitizations, we would likely reduce
the fair value of our loans receivable held for investment, which would negatively impact our results of operations.
The gain on sale generated by any of our structured or whole loan sales and servicing fees earned on sold loans represents a significant source of our earnings. Demand for our loans at the
current premiums may be impacted by factors outside our control, including availability of loan pools, demand by investors for loan assets and attractiveness of returns offered by competing
investment alternatives offered by other loan originators with more attractive characteristics than our loan pools and loan purchaser interest. In March 2022, we participated in a securitization
through which we issued amortizing asset-backed notes secured by a pool of its unsecured and secured personal installment loans and may do additional structured loan sales in the future. See
Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report. If we are unable to sell additional loans or obtain other
financing, our revenue and liquidity may be negatively impacted and we may not be able to grow our business as planned and we may have to further curtail our originations.
Our results of operations are affected by our ability to sell our loans for a premium over their net book value. Potential loan purchasers might reduce the premiums they are willing to pay,
or even require a discount to principal balance, for the loans that they purchase during periods of economic slowdown or recession to compensate for any increased risks. A reduction in the
sale price of the loans we sell under any future whole loan sale program would likely result in a reduction in the fair value of our Loans Receivable at Fair Value, which would negatively
impact our results of operations. Any sustained decline in demand for our loans or increase in delinquencies, defaults or foreclosures may reduce the price we receive on future loan sales
below our loan origination cost.
28
We may need to raise additional funds in the future, including through equity, debt, or convertible debt financings, to support business growth and those funds may not be available on
acceptable terms, or at all.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new financial
products and services, enhance our risk management model, improve our operating infrastructure, or acquire complementary businesses and technologies. Additionally, increases in our cost of
funds and charge-offs may reduce our margins and require us to raise more capital to support our existing business and execute our corporate strategies. Accordingly, we may need to engage in
equity, debt or convertible debt financings to secure additional funds. If we raise additional funds by issuing equity securities or securities convertible into equity securities, those securities
may have rights, preferences or privileges senior to the rights of our common stock and our stockholders may experience dilution. Any large equity or equity-linked offering could also
negatively impact our stock price. A number of factors, including market volatility or depressed valuations, trading prices in the equity markets, our financial condition and capital market
conditions will impact our ability to obtain equity or debt financing.
Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Lenders may also require warrants to boost their return, the issuance of
which would be dilutive to our stockholders. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.
If we do not have sufficient capital, we may be unable to pursue certain opportunities and our ability to continue to support our growth and to respond to challenges could be impaired.
Intellectual Property Risks
It may be difficult and costly to protect our intellectual property rights, and we may not be able to ensure their protection.
Our ability to offer our products and services to our members depends, in part, upon our proprietary technology. We may be unable to protect our proprietary technology effectively which
would adversely affect our ability to compete with them. We rely on a combination of copyright, trade secret, trademark laws and other rights, as well as confidentiality procedures and
contractual provisions to protect our proprietary technology, processes and other intellectual property and do not have patent protection. However, the steps we take to protect our intellectual
property rights may be inadequate. For example, a third party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. The pursuit of a
claim against a third party for infringement of our intellectual property could be costly, and there can be no guarantee that any such efforts would be successful. Our failure to secure, protect
and enforce our intellectual property rights could adversely affect our brand and business.
We have been, and may in the future be, sued by third parties for alleged infringement of their proprietary rights.
Our proprietary technology, including our credit risk models and A.I. algorithms, may infringe upon claims of third-party intellectual property, and we may face intellectual property
challenges from such other parties. The expansion of our suite of financial products and services may create additional trademark risk. We may not be successful in defending against any such
challenges or in obtaining licenses to avoid or resolve any intellectual property disputes. If we are unsuccessful, such claim or litigation could result in a requirement that we pay significant
damages or licensing fees, which would negatively impact our financial performance. We may also be obligated to indemnify parties or pay substantial legal settlement costs, including royalty
payments, and to modify applications or refund fees. Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could be costly and time consuming, and may
divert the attention of our management and key personnel from our business operations.
Moreover, it has become common in recent years for individuals and groups to purchase intellectual property assets for the sole purpose of making claims of infringement and attempting
to extract settlements from companies such as ours. Even in instances where we believe that claims and allegations of intellectual property infringement against us are without merit, defending
against such claims is time consuming and expensive and could result in the diversion of time and attention of our management and employees. In addition, although in some cases a third party
may have agreed to indemnify us for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. In other cases, our insurance may not cover potential
claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
Our credit risk models, A.I. capabilities, and internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
Our credit risk models, A.I. capabilities, and internal systems rely on internally developed software that is highly technical and complex. In addition, our models, A.I. capabilities, and
internal systems depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which we rely has contained, and may now or in the
future contain, undetected errors, bugs or other defects. Some errors may only be discovered after the code has been released for external or internal use. Errors, bugs or other defects within
the software on which we rely may result in a negative experience for our members, result in errors or compromise our ability to protect member data or our intellectual property. Specifically,
any defect in our credit risk models could result in the approval of unacceptably risky loans. Such defects could also result in reputational harm, loss of members, loss of revenue, adjustments
to the fair value of our loans receivable held for investment or our asset-backed notes, challenges in raising capital, or liability for damages.
29
Some aspects of our business processes include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our
business.
We incorporate open source software into processes supporting our business. Such open source software may include software covered by licenses like the GNU General Public License
and the Apache License. The terms of various open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that limits our
use of the software, inhibits certain aspects of our systems and negatively affects our business operations.
Some open source licenses contain requirements that we make source code available at no cost for modifications or derivative works we create based upon the type of open source
software we use. We may face claims from third parties claiming ownership of, or demanding the release or license of, such modifications or derivative works (which could include our
proprietary source code or credit risk models) or otherwise seeking to enforce the terms of the applicable open source license. If portions of our proprietary credit risk models are determined to
be subject to an open source license, or if the license terms for the open source software that we incorporate change, we could be required to publicly release the affected portions of our source
code, re-engineer all or a portion of our model or change our business activities, any of which could negatively affect our business and our intellectual property rights.
In addition to risks related to license requirements, the use of open source software can lead to greater risks than the use of third-party commercial software, as open source licensors
generally do not provide warranties or controls on the origin of the software. Use of open source software may also present additional security risks because the public availability of such
software may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on open source software.
Industry and Regulatory Risks
The financial services industry is highly regulated. Changes in regulations or in the way regulations are interpreted and applied to our business could adversely affect our business.
We are subject to various federal, state and local regulatory regimes related to the financial services that we provide. The principal policy objectives of these regulatory regimes are to
provide meaningful disclosures to consumers, to protect against unfair, deceptive and abusive acts or practices and to prevent discrimination. Laws and regulations, among other things, impose
licensing and qualifications requirements; require various disclosures and consents; mandate or prohibit certain terms and conditions for various financial products; prohibit discrimination
based on certain prohibited bases; prohibit unfair, deceptive or abusive acts or practices; require us to submit to examinations by federal and state regulatory regimes; and require us to maintain
various policies, procedures and internal controls.
Federal and state agencies have broad enforcement powers over us, including powers to periodically examine and continuously monitor our operations and to investigate our business
practices and broad discretion to deem particular practices unfair, deceptive, abusive or otherwise not in accordance with the law. State attorneys general have a variety of legal mechanisms at
their disposal to enforce state and federal consumer financial laws. For example, Section 1042 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act")
grants state attorneys general the ability to enforce the Dodd-Frank Act and regulations promulgated under the Dodd-Frank Act’s authority and to secure remedies against entities within their
jurisdiction. State attorneys general also have a variety of legal mechanisms at their disposal to enforce state and federal consumer financial laws have enforcement authority under state law
with respect to unfair or deceptive practices. Generally, under these statutes, state attorneys general may conduct investigations, bring actions, and recover civil penalties or obtain injunctive
relief against entities engaging in unfair, deceptive, or fraudulent acts. Attorneys general may also coordinate among themselves or with other regulators to enter into coordinated actions or
settlements. Finally, several consumer financial laws like the Truth in Lending Act and Fair Credit Reporting Act grant enforcement or litigation authority to state attorneys general.
Changes in laws or regulations, or the regulatory application or interpretation of the laws and regulations applicable to us, could adversely affect our ability to operate in the manner in
which we currently conduct business, and may also make it more difficult or costly for us to originate additional loans, or for us to collect payments on our loans to members or otherwise
operate our business by subjecting us, our service providers, or strategic partners, to additional licensing, registration and other regulatory requirements in the future.
Failure to comply with applicable laws and regulations could result in additional compliance requirements, limitations on our ability to collect or retain all or part of the principal of or
interest on loans, fines or penalties, an inability to continue operations, modification in business practices, regulatory actions, loss of required licenses or registrations, potential impairment,
voiding, or voidability of loans, rescission of contracts, civil and criminal liability and damage to our reputation. It could also result in a default or early amortization event under certain of our
debt facilities and reduce or terminate availability of debt financing to us to fund originations. To the extent it is determined that any loan we make was not originated in accordance with all
applicable laws as we are required to represent under our securitization and other debt facilities and in loan sales to investors, we could be obligated to repurchase for cashor swap for qualifying
assets, any such loan determined not to have been originated in compliance with legal requirements. We may not have adequate liquidity and resources to make such cash repurchases or swap
for qualifying assets.
Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses and
reputational harm.
30
In the ordinary course of business, we have been named as a defendant in various legal actions, including class actions and other litigation. Generally, this litigation arises from the claims
of violation of do-not-call, credit reporting, collection, and bankruptcy laws. The complexity of the laws related to secured personal loans regarding vehicle titling, lien placement and
repossession may enhance the risk of consumer litigation. Further, the origination of loans through bank partnerships may increase the risk of litigation or regulatory scrutiny including based
on the "true lender" theory that seeks to recharacterize a lending transaction. State legislation requiring licensure and state restrictions including fee and rate limits on bank partner loans may
also reduce profitability and/or increase regulatory and litigation risk. Additionally, platforms offering banking services and products through partners have also been challenged by federal and
state regulators on a variety of claims.
Regulatory bodies may enact new laws or promulgate new regulations or view matters or interpret laws and regulations differently than they have in the past, or commence investigations
or inquiries into our business practices. For example, in April 2022, the CFPB announced that it intends to examine nonbank financial companies that pose risks to consumers, and in
November 2022, the Treasury Department issued a report encouraging the CFPB to increase its supervisory activity with respect to larger nonbank lenders. If the CFPB decides to subject us to
its supervisory process, it could significantly increase the level of regulatory scrutiny of our business practices. In addition, the Biden Administration recently announced a government-wide
effort to eliminate “junk fees” which could subject our business practices to even further scrutiny. The CFPB’s action on junk fees thus far has largely focused on fees associated with deposit
products, such as “surprise” overdraft fees and not-sufficient-funds fees, that are not within scope of our products or services. However, what constitutes a “junk fee” remains undefined. The
CFPB has called out other fees, such as pay-to-pay fees charged by debt collectors, and is actively soliciting consumer input on fee practices associated with other consumer financial products
or services, signaling that the “junk fee” initiative is likely to continue to broaden in scope. In February 2023, the CFPB published a proposed rule, which is currently subject to public
comment, amending Regulation Z to mandate significant decreases to credit card late fees and eliminate annual inflation adjustments for late fee safe harbor amounts. All such legal and
regulatory actions are inherently unpredictable and, regardless of the merits of the claims, legal and regulatory actions are often expensive, time-consuming, disruptive to our operations and
resources, and distracting to management. In addition, certain of those actions include claims for indeterminate amounts of damages. Our involvement in any such matter also could cause
significant harm to our reputation and divert management attention from the operation of our business, even if the matters are ultimately determined in our favor. If resolved against us, legal
actions could result in excessive verdicts and judgments, injunctive relief, equitable relief, and other adverse consequences that may affect our financial condition and how we operate our
business. We have in the past chosen to settle (and may in the future choose to settle) certain matters in order to avoid the time and expense of litigating them. Although none of the settlements
has been material to our business, there is no assurance that, in the future, such settlements will not have a material adverse effect on our business.
In addition, a number of participants in the consumer financial services industry have been the subject of putative class action lawsuits, state attorney general actions and other state
regulatory actions, federal regulatory enforcement actions, including actions relating to alleged unfair, deceptive or abusive acts or practices, violations of state licensing and lending laws,
including state usury laws, actions alleging violations of the Americans with Disabilities Act, discrimination on the basis of race, ethnicity, gender or other prohibited bases, and allegations of
noncompliance with various state and federal laws and regulations relating to originating and servicing consumer finance loans and other consumer financial services and products. The current
regulatory environment, increased regulatory compliance efforts, and enhanced regulatory enforcement have resulted in significant operational and compliance costs and may prevent us from
providing certain products and services. There is no assurance that these regulatory matters or other factors will not, in the future, affect how we conduct our business or adversely affect our
business. In particular, legal proceedings brought under state consumer protection statutes or under several of the various federal consumer financial services statutes subject to the jurisdiction
of the CFPB may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages substantially in excess of the amounts
we earned from the underlying activities.
Some of our consumer financing agreements include arbitration clauses. If our arbitration agreements were to become unenforceable for any reason, we could experience an increase to our
consumer litigation costs and exposure to potentially damaging class action lawsuits.
In addition, from time to time, through our operational and compliance controls, we identify compliance issues that require us to make operational changes and, depending on the nature of
the issue, result in financial remediation to impacted members. These self-identified issues and voluntary remediation payments could be significant, depending on the issue and the number of
members impacted, and could generate litigation or regulatory investigations that subject us to additional risk.
Internet-based and electronic signature-based loan origination processes may give rise to greater risks than paper-based processes.
We use internet-based loan processes to obtain application information, distribute certain legally required notices to applicants and borrowers, and to obtain electronically signed loan
documents in lieu of paper documents with wet borrower signatures obtained in person. These processes may entail greater risks than would paper-based loan origination processes, including
risks regarding the sufficiency of notice for compliance with consumer protection laws, risks that borrowers may challenge the authenticity of their signature or of the loan documents, risks
that a court of law may not enforce electronically signed loan documents and risks that, despite controls, unauthorized changes are made to the electronic loan documents. If any of those
factors were to cause any loans, or any of the terms of the loans, to be unenforceable against the borrowers, or impair our ability to service our loans, the value of our loan assets would
decrease significantly to us and to our whole loan purchasers, securitization investors and warehouse lenders. In addition to increased default rates and losses on our loans, this could lead to the
loss of whole loan purchasers and securitization investors and trigger terminations and amortizations under our debt warehouse facilities, each of which would materially adversely impact our
business.
31
The CFPB has broad authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new agency could impact our
business.
The CFPB has broad authority to create and modify regulations under federal consumer financial protection laws and regulations, such as the Truth in Lending Act and Regulation Z, the
Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act and Regulation V, the Electronic Funds Transfer Act and Regulation E, and to enforce compliance with those
laws. The CFPB is charged with the examination and supervision of certain participants in the consumer financial services market, including short-term, small dollar lenders, and larger
participants in other areas of financial services. While historically, we have not been subject to CFPB supervisory authority, it is possible that we may become subject to additional regulatory
scrutiny and compliance costs going forward through supervision by the CFPB. In recent publications, the CFPB has indicated that the agency is significantly increasing its oversight and
scrutiny over consumer finance and on April 25, 2022, the CFPB announced that it was invoking a previously unused legal provision to examine nonbank financial companies that it believes
pose risk to consumers. The CFPB may also request, through examination or investigation, reports concerning our organization, business conduct, markets and activities and if the CFPB were
to determine that we were engaging in activities that pose risks to consumers, may conduct on-site examinations of our business on a periodic basis. On October 19, 2022, in Community
Financial Services Association of America v. Consumer Financial Protection Bureau, the U.S. Court of Appeals for the Fifth Circuit found that the CFPB's independent funding through the
Federal Reserve violated the U.S. Constitution’s appropriations clause and invalidated the remaining portions of the CFPB’s restrictions on the lenders offering payday, auto title and other
short-term, high-interest loans. The CFPB has appealed the decision to the Supreme Court of the United States and we are unable to predict the timing, outcome, and impact of this litigation.
In addition, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products, including the credit products we
offer. This system could inform future CFPB decisions with respect to its regulatory, enforcement or examination focus. The CFPB also may issue requests for public input in certain areas of
concern that may lead to increased regulatory scrutiny on us, our products and consumer finance industry and impose restrictions on fees and charges, thereby impacting results of our business.
For example, in March 2022, it requested public input on fees for financial products and has indicated that it plans to ramp up enforcement actions against lenders that illegally charge credit
card late-payment fees and may rewrite its rules that set thresholds for such fees. Further, in February 2023, the CFPB proposed a rule that would amend regulations to limit credit card late-
payment fees to $8 or 25% of the minimum payment due, whichever is greater.
On March 3, 2021, we received a Civil Investigative Demand (CID) from the CFPB. The stated purpose of the CID is to determine whether small-dollar lenders or associated persons, in
connection with lending and debt-collection practices, have failed to comply with certain federal consumer protection laws over which the CFPB has jurisdiction. We have received additional
information requests related to the CID. The information requests are focused on our legal collection practices from 2019 to 2021 and hardship treatments offered to members during the
COVID-19 pandemic. On September 15, 2022, we received a Notice and Opportunity to Respond and Advise (“NORA”) letter from the staff of the CFPB in connection with the CID, stating
that it is considering whether to recommend that the CFPB take legal action against us based on alleged violations focused on our failure to timely dismiss certain lawsuits and the hardship
treatments offered during the COVID-19 pandemic, including credit reporting related thereto. On October 14, 2022, we provided the CFPB with a written response to the NORA letter
disputing the allegations. The Company is cooperating fully with the CFPB with respect to this matter and we believe that our business practices have been in full compliance with applicable
laws. Because the CFPB has broad authority to determine what it views as potentially unfair, deceptive or abusive acts or practices, at this time, the Company is unable to predict the ultimate
outcome of this matter.
Digit received a CID from the CFPB in June 2020. The CID was disclosed and discussed during the acquisition process. The stated purpose of the CID is to determine whether Digit, in
connection with offering its products or services, misrepresented the terms, conditions, or costs of the products or services in a manner that is unfair, deceptive, or abusive. While the Company
believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, in the interest of resolving this matter, on August 11, 2022, Digit
agreed to a consent order with the CFPB resolving such CID. In connection with such consent order, Digit agreed to implement a redress and compliance plan to pay at least $68,145 in
consumer redress to consumers who may have been harmed and paid a $2.7 million civil penalty to the CFPB in the third quarter of 2022.
Other federal or state regulators could launch similar investigations or join the CFPB in its investigation. In addition, actions by the CFPB could result in requirements to alter or cease
offering affected financial products and services, making them less attractive and restricting our ability to offer them. The CFPB could also implement rules that restrict our effectiveness in
servicing our financial products and services. Future actions by the CFPB (or other regulators) against us or our competitors that discourage the use of our or their services or restrict our
business activities could result in reputational harm and adversely affect our business. If the CFPB changes regulations that were adopted in the past by other regulators and transferred to the
CFPB by the Dodd-Frank Act, or modifies through supervision or enforcement past regulatory guidance or interprets existing regulations in a different or stricter manner than they have been
interpreted in the past by us, the industry or other regulators, our compliance costs and litigation exposure could increase materially. The current presidential administration has appointed and is
expected to continue to appoint consumer-oriented regulators at federal agencies such as the CFPB, FTC, OCC and FDIC, and the government’s focus on enforcement of federal consumer
protection laws is expected to increase. It is possible that these regulators could promulgate rulemakings and bring enforcement actions that materially impact our business and the business of
our lending partners.
The collection, storage, use, disclosure, and other processing of personal information is an area of increasing complexity and scrutiny.
We collect, store, use, disclose, and otherwise process a large volume of personal information about individuals (including members and employees). New laws and regulations concerning
the processing of personal information continue to be vigorously debated and enacted at all levels of government across the United States and around the globe while existing laws, such as the
Gramm-Leach-Bliley Act, are being amended or reinterpreted to account for the rapidly evolving data economy. The California Consumer Privacy Act (the "CCPA"), including the California
Privacy Rights Act of 2020 ("CPRA") amendments imposes significant requirements on businesses processing consumer personal information – principally
32
around enabling and honoring consumer choices related to such processing. Violations of the CCPA can result in civil penalties assessed by the Attorney General or the California Privacy
Protection Agency and individual plaintiffs may pursue statutory damages in a private right of action for certain data breaches. Several U.S. states have already followed California’s lead in
enacting comprehensive privacy legislation and others are likely to do so in the future. At the federal level, regulators, including the CFPB and FTC, have adopted, or are considering adopting,
laws and regulations concerning personal information and data privacy and security. The FTC, for example, released its updated Standards for Safeguarding Customer Information (Safeguards
Rule), effective June 9, 2023, which raises the bar for covered financial institutions’ information security programs through proscriptive requirements for things like accountability and
oversight, performing risk assessments, encryption, and enabling multi-factor authentication to protect all forms of customer information. This patchwork of legislation and regulation may give
rise to conflicts or differing views of personal privacy rights.
The rapidly evolving privacy and data protection regulatory environment, along with increased scrutiny from consumers and their advocates and increased complexity in Oportun’s
organizational structure, demands careful attention to our own processing of personal information and processing by third parties acting on our behalf. For example, we’ve seen an increase in
third-party arrangements, including, for example, with lead aggregators, bank partners, Lending as a Service partners and affiliate relationships through our subsidiary Digit. Our failure, or a
failure by third parties with whom we do business, to comply with applicable privacy laws or regulations and contractual obligations required by our business partners, and even a perceived
failure, could damage our reputation, harm our ability to obtain market adoption, discourage existing and prospective members from using our products and services, require us to change our
business practices, business partners or operational structure, or result in investigations, claims, or fines by governmental agencies and private plaintiffs. Even in the absence of a challenge to
our practices, we may incur substantial costs to implement new systems to comply with regulatory requirements, such as consumer requests concerning the processing of their personal
information and to honor any choices that may be available to them by law.
Our business is subject to the regulatory framework applicable to registered investment advisers, including regulation by the SEC.
We offer investment management services through Digit Advisors, LLC which provides automated investment advice regarding the selection of a portfolio of exchange traded funds
through our mobile application. Digit Advisors is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is subject to regulation
by the SEC.
Investment advisers are subject to the anti-fraud provisions of the Advisers Act and to fiduciary duties derived from these provisions, which apply to our relationships with our members
who are advisory clients, as well as the funds we manage. These provisions and duties impose restrictions and obligations on us with respect to our dealings with our members, including for
example restrictions on transactions with our affiliates. Our investment adviser has in the past and will in the future be subject to periodic SEC examinations. Our investment adviser is also
subject to other requirements under the Advisers Act and related regulations primarily intended to benefit advisory clients. These additional requirements relate to matters including maintaining
effective and comprehensive compliance programs, record-keeping and reporting and disclosure requirements. The Advisers Act generally grants the SEC broad administrative powers,
including the power to limit or restrict an investment adviser from conducting advisory activities in the event such investment adviser fails to comply with federal securities laws. Additional
sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individuals from associating with an investment adviser, the revocation of
registrations and other censures and fines. Even if an investigation or proceeding did not result in a sanction or the sanction imposed against us or our employees were small in monetary
amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and ability to gain or retain members.
Our bank partnership products may lead to regulatory risk and may increase our regulatory burden.
We provide our credit card products through a bank partnership program with WebBank and we have bank partnership programs with Pathward, N.A., to offer unsecured installment loans
and provide deposit accounts, debit card services and other transaction services to our members. State and federal agencies have broad discretion in their interpretation of laws and their
interpretation of requirements related to bank partnership programs and may elect to alter standards or the interpretation of the standards applicable to these programs. In addition, as a result of
our bank partnerships, prudential bank regulators with supervisory authority over our partners have the ability to regulate aspects of our business. There has also been significant recent
government enforcement action and litigation challenging the validity of such arrangements for lending products, including disputes seeking to recharacterize lending transactions on the basis
that the non-bank party rather than the bank is the “true lender” or “de facto lender”, and in case law challenging the “valid when made” doctrine, which holds that based on federal preemption,
state interest rate limitations are not applicable in the context of certain bank-non-bank partnership arrangements.
The uncertainty of the federal and state regulatory environments around bank partnership programs means that our efforts to launch products and services through bank partners may not
ultimately be successful, or may be challenged by legislation or regulatory action. If the legal structure underlying our relationship with our bank partners were to be successfully challenged,
we may be found to be in violation of state licensing requirements and state laws regulating interest rates and fees. In the event of such a challenge or if our arrangements with our bank partners
were to change or end for any reason, we would need to rely on an alternative bank relationship, find an alternative bank relationship, rely on existing state licenses, obtain new state licenses,
pursue a national bank charter, and/or be subject to the interest rate limitations of certain states. In addition, adverse orders or regulatory enforcement actions against our bank partners, even if
unrelated to our business, could impose restrictions on their ability to continue to extend credit or on current terms. Regulation by federal and state regulators may also subject us to increased
compliance, legal and operational costs, and could subject our business model to scrutiny and otherwise increase our regulatory burden, or may adversely affect our ability to expand our
business.
33
Anti-money laundering, anti-terrorism financing and economic sanctions laws could have adverse consequences for us.
We maintain a compliance program designed to enable us to comply with all applicable anti-money laundering and anti-terrorism financing laws and regulations, including the Bank
Secrecy Act and the USA PATRIOT Act and U.S. economic sanctions laws administered by the Office of Foreign Assets Control. This program includes policies, procedures, processes and
other internal controls designed to identify, monitor, manage and mitigate the risk of money laundering and terrorist financing and engaging in transactions involving sanctioned countries
persons and entities. These controls include procedures and processes to detect and report suspicious transactions, perform member due diligence, respond to requests from law enforcement,
and meet all recordkeeping and reporting requirements related to particular transactions involving currency or monetary instruments. Our failure to comply with anti-money laundering,
economic and trade sanctions regulations, and similar laws could subject us to substantial civil and criminal penalties, or result in the loss or restriction of our state licenses, or liability under
our contracts with third parties, which may significantly affect our ability to conduct some aspects of our business. Changes in this regulatory environment, including changing interpretations
and the implementation of new or varying regulatory requirements, may significantly affect or change the manner in which we currently conduct some aspects of our business.
We may have to constrain our business activities to avoid being deemed an investment company under the Investment Company Act.
The Investment Company Act of 1940, as amended (the "Investment Company Act") contains substantive legal requirements that regulate the way “investment companies” are permitted
to conduct their business activities. We believe we have conducted, and we intend to continue to conduct, our business in a manner that does not result in our company being characterized as an
investment company, including by relying on certain exemptions from registration as an investment company. We rely on guidance published by the SEC staff or on our analyses of such
guidance to determine our qualification under these and other exemptions. To the extent that the SEC staff publishes new or different guidance with respect to these matters, we may be required
to adjust our business operations accordingly. If we are deemed to be an investment company, we may attempt to seek exemptive relief from the SEC, which could impose significant costs and
delays on our business. We may not receive such relief on a timely basis, if at all, and such relief may require us to modify or curtail our operations. If we are deemed to be an investment
company, we may also be required to institute burdensome compliance requirements and our activities may be restricted.
We are subject to governmental export and import controls that could subject us to liability, impair our ability to compete in international markets and adversely affect our business.
Although our business does not involve the commercial sale or distribution of hardware, software or technology, in the normal course of our business activities we may from time to time
ship general commercial equipment outside the United States to our subsidiaries or affiliates for their internal use. In addition, we may export, transfer or provide access to software and
technology to non-U.S. persons such as employees and contractors, as well as third-party vendors and consultants engaged to support our business activities. In all cases, the sharing of software
and/or technology is solely for the internal use of the company or for the use by business partners to provide services to us, including software development. However, such shipments and
transfers may be subject to U.S. and foreign regulations governing the export and import of goods, software and technology. If we fail to comply with these laws and regulations, we and certain
of our employees could be subject to significant sanctions, fines, penalties and reputational harm. Further, any change in applicable export, import or economic sanctions regulations or related
legislation, shift in approach to the enforcement or scope of existing regulations or change in the countries, persons or technologies targeted by these regulations could adversely affect our
business.
General Risk Factors
You may be diluted by the future issuance of additional common stock in connection with our equity incentive plans, acquisitions or otherwise.
Our amended and restated certificate of incorporation authorizes us to issue shares of common stock authorized but unissued and rights relating to common stock for the consideration and
on the terms and conditions established by our Board in its sole discretion, whether in connection with acquisitions or otherwise. We have authorized 9,072,159 shares for issuance under our
2019 Equity Incentive Plan, 1,593,052 shares for issuance under our 2019 Employee Stock Purchase Plan, and 563,955 shares for issuance under our 2021 Inducement Equity Incentive Plan,
each subject to adjustment in certain events. Any common stock that we issue, including under our existing equity incentive plans or other equity incentive plans that we may adopt in the
future, could dilute your percentage ownership.
The issuance of shares of our Common Stock upon exercise of our outstanding Warrants issued in connection with the Amended Credit Agreement would increase the number of shares
eligible for future resale in the public market and result in dilution to our stockholders.
As of March 10, 2023, the Warrants to purchase 1,980,242 shares of our Common Stock issued in connection with the Amended Credit Agreement were outstanding and exercisable. The
exercise price of these Warrants is $0.01 per share. In addition, pursuant to the Amended Credit Agreement, in connection with the funding of the Incremental Tranche A-2 Loans, the
Company will issue Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock, in connection with the funding of the
Incremental Tranche B Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche B Loans to purchase 1,048,363 shares of the Company’s common stock, and
in connection with the funding of the Incremental Tranche C Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363 shares
of the Company’s common stock, in each case, at an exercise price of $0.01 per share. The Company also entered into the Registration Rights Agreement, which stipulates that the Company
will file a registration statement with the Securities and Exchange Commission with respect to the shares underlying the Warrants. To the extent such warrants are exercised, additional shares
of common stock will be issued, which will result in dilution to holders of our common stock and increase the number of shares
34
eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price
of our common stock.
The price of our common stock may be volatile, and you could lose all or part of your investment.
The trading price of our common stock has been and may continue to be volatile and will depend on a number of factors, including those described in this “Risk Factors” section, many of
which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock, because you
might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the trading price of our common stock include the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
failure to meet quarterly or annual guidance with regard to revenue, margins, earnings or other key financial or operational metrics;
fluctuations in the trading volume of our share or the size of our public float;
price and volume fluctuations in the overall stock market from time to time;
changes in operating performance and market valuations of similar companies;
failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the
expectations of investors;
speculation in the press or investment community;
any major change in our management;
sales of shares of our common stock by us or our stockholders;
actual or anticipated fluctuations in our results of operations;
actual or perceived data security breaches or incidents impacting us or our third-party service providers;
changes in prevailing interest rates;
quarterly fluctuations in demand for our loans;
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
developments or disputes concerning our intellectual property or other proprietary rights;
litigation, government investigations and regulatory actions;
passage of legislation or other regulatory developments that adversely affect us or our industry;
general economic conditions, such as rising interest and inflation rates; and
other risks and uncertainties described in these risk factors.
Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility
in the overall market and the market prices of particular companies’ securities, securities class action litigation has often been instituted against these companies. Such litigation could result in
substantial costs and a diversion of our management’s attention and resources, which could harm our business. We may be the target of additional litigation of this type in the future as well.
If financial or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading
volume could decline.
The trading market for our common stock is influenced by the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts or
the content and opinions included in their reports. If any of the analysts who cover us issue an adverse or misleading opinion regarding our stock price, our stock price would likely decline. If
one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock
price or trading volume to decline.
The enactment of tax reform legislation could adversely impact our financial position and results of operations.
Legislation or other changes in U.S. and international tax laws could increase our liability and adversely affect our after-tax profitability. For example, the United States recently enacted
the Inflation Reduction Act, which implemented, among others, a 15% alternative minimum tax on adjusted financial statement income for certain large companies and a 1% excise tax on
certain stock buybacks. In addition, many countries and the Organisation for Economic Co-operation and Development have reached an agreement to implement a 15% global minimum tax.
Such proposed changes, as well as regulations and legal decisions interpreting and applying these changes, may have significant impacts on our effective tax rate, cash tax expenses and net
deferred taxes in the future.
Our directors, officers, and principal stockholders have substantial control over our company, which could limit your ability to influence the outcome of key transactions, including a
change of control.
Our directors, executive officers, and each of our 5% stockholders and their affiliates, in the aggregate, beneficially own a significant number of the outstanding shares of our common
stock. As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval
of mergers, acquisitions or other extraordinary transactions. They
35
may also have interests that differ from yours, and they may vote in a way with which you disagree or which may be adverse to your interests. This concentration of ownership may have the
effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale
of our company and might ultimately affect the market price of our common stock.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified Board members.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended ( the "Exchange Act"), the Sarbanes-Oxley Act, the Dodd-Frank
Act, the listing standards of the Nasdaq Stock Market, and other applicable securities rules and regulations, including changes in corporate governance practices and the establishment and
maintenance of effective disclosure and financial controls. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult,
time-consuming or costly and increases demand on our systems and resources.
In addition, changing laws, regulations and standards or interpretations thereof relating to corporate governance and public disclosure are creating uncertainty for public companies,
increasing legal and financial compliance costs and making some activities more time-consuming. We intend to invest resources to comply with evolving laws, regulations and standards, and
this investment may result in increased general and administrative expenses and a diversion of management’s time and attention. If our efforts to comply with new laws, regulations and
standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings
against us.
Certain of our market opportunity estimates, growth forecasts, and key metrics could prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and
negatively affect our business.
Market opportunity estimates, growth forecasts and key metrics, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and
estimates that may not prove to be accurate. The estimates and forecasts relating to the size and expected growth of our market opportunity may prove to be inaccurate. It is impossible to offer
every loan product, term or feature that every member wants, and our competitors may develop and offer products, terms or features that we do not offer. The variables that go into the
calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of the individuals covered by our market opportunity
estimates will generate any particular level of revenues. Even if the markets in which we compete meet our size estimates and growth forecasts, our business could fail to grow at expected
rates, if at all, for a variety of reasons outside of our control. Furthermore, in order for us to successfully address this broader market opportunity, we will need to successfully expand into new
geographic regions where we do not currently operate.
Our key metrics are calculated using internal company data, including Members and Products, and have not been validated by an independent third-party. We have in the past
implemented, and may in the future implement, new methodologies for calculating these metrics which may result in the metrics from prior periods changing, decreasing or not being
comparable to prior periods. As our business develops, we may revise or cease reporting metrics if we determine that such metrics are no longer appropriate measures of our performance. Our
key metrics may also differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. If investors or analysts do not
perceive our metrics to be sufficient or accurate representations of our business, or if we discover material inaccuracies in our metrics, our stock price, reputation and prospects would be
adversely affected.
Certain provisions in our charter documents and under Delaware law could limit attempts by our stockholders to replace or remove our Board, delay or prevent an acquisition of our
company, and adversely affect the market price of our common stock.
Provisions in our amended and restated certificate of incorporation, and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our
Board. These provisions include the following:
•
•
•
•
•
•
a classified Board with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our Board;
our Board has the right to elect directors to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from
being able to fill Board vacancies;
our stockholders may not act by written consent or call special stockholders’ meetings;
our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director
candidates;
stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the Board or to propose matters that can be acted upon at a
stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting
to obtain control of our company; and
our Board may issue, without stockholder approval, shares of undesignated preferred stock, which may make it possible for our Board to issue preferred stock with voting or other
rights or preferences that could impede the success of any attempt to acquire us.
36
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder
of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board has approved the transaction. Such provisions could allow our Board to
prevent or delay an acquisition of our company.
Certain of our executive officers may be entitled, pursuant to the terms of their employment arrangements, to accelerated vesting of their stock options following a change of control of our
company under certain conditions. In addition to the arrangements currently in place with some of our executive officers, we may enter into similar arrangements in the future with other
officers. Such arrangements could delay or discourage a potential acquisition.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a potential acquisition
could limit the opportunity for our stockholders to receive a premium for their shares of our common stock in connection with such acquisition, and could also affect the price that some
investors are willing to pay for our common stock.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware or the U.S. federal district courts will be the exclusive forums for
substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or
other employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for the following types of actions or
proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any
of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any
provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, (4) any action to interpret, apply, enforce or
determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws, or (5) any action asserting a claim against us or any of our directors, officers
or other employees that is governed by the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or the rules and
regulations thereunder. Furthermore, Section 22 of the Securities Act of 1933, as amended (“Securities Act”), creates concurrent jurisdiction for federal and state courts over all such Securities
Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or
contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that U.S. federal district courts will be the exclusive
forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially
valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the
validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving
such action in other jurisdictions, which could adversely affect our business and financial condition, and there can be no assurance that the provisions will be enforced by a court in those other
jurisdictions.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other
employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our amended and restated
certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of
which could seriously harm our business.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our corporate headquarters is located in San Carlos, California pursuant to a lease expiring in February 2026. We are currently subleasing a portion of our headquarters space to third
parties. As of December 31, 2022, we leased additional facilities and office space in California, Texas, Mexico, and India. We also operate retail locations and co-locations throughout the
United States.
Item 3. Legal Proceedings
The information set forth under Note 16, Leases, Commitments and Contingencies, in the accompanying Notes to the Consolidated Financial Statements is incorporated herein by
reference. From time to time, we may bring or be subject to other legal proceedings and claims in the ordinary course of business, including legal proceedings with third parties asserting
infringement of their intellectual property rights, consumer litigation, and regulatory proceedings. Other than as described in this report, we are not presently a party to any legal proceedings
that, if determined adversely to us, we believe would individually or taken together have a material adverse effect on our business, financial condition, cash flows or results of operations.
Item 4. Mine Safety Disclosures
None.
37
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Stockholders
Oportun's common stock has been listed for trading on the Nasdaq Global Select Market since September 26, 2019 under the symbol "OPRT". As of March 8, 2023, we had 132 registered
stockholders of our common stock. This figure does not reflect the beneficial ownership of shares held in nominee name or held in trust by other entities. Therefore, the actual number of
stockholders is greater than this number of registered stockholders of record.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. We
currently intend to retain all available funds and any future earnings to support operations and to finance the growth of our business. Any future determination to pay dividends will be made at
the discretion of our Board.
Stock Performance
As a “Smaller Reporting Company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Issuer Purchases of Equity Securities
None.
Unregistered Sales of Equity Securities
None.
Use of Proceeds
None.
Item 6. Reserved
38
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
For more information about terms and abbreviations used in this report see the “ Glossary” at the end of Part II of this report.
An index to our management's discussion and analysis follows:
Topic
Overview
Key Financial and Operating Metrics
Seasonality
Historical Credit Performance
Results of Operations
Fair Value Estimate Methodology for Loans Receivable at Fair Value
Non-GAAP Financial Measures
Liquidity and Capital Resources
Critical Accounting Policies and Significant Judgments and Estimates
Recently Issued Accounting Pronouncements
39
41
44
42
45
50
51
54
57
58
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (this “MD&A”) is intended to help the reader understand our results of
operations and financial condition. This MD&A is provided as a supplement to, and should be read together with, our audited consolidated financial statements and the related notes thereto
and other disclosures included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this MD&A, including information with respect to our plans and strategy
for our business, includes forward-looking statements that involve risks and uncertainties. You should review the information contained in Part I, Item 1A. “Risk Factors” of this Annual
Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements
contained in this MD&A.
Overview
We are a digital banking platform that puts our members’ financial goals within reach. With intelligent borrowing, savings, budgeting, and spending capabilities, we empower members
with the confidence to build a better financial future. By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our
business is well positioned for significant growth. We take a holistic approach to serving our members and view it as our purpose to responsibly meet their current capital needs, help grow our
members’ financial profiles, increase their financial awareness and put them on a path to a financially healthy life. In our 16-year lending history, we have extended more than $15.5 billion in
responsible credit through more than 6.3 million loans and credit cards. We have been certified as a Community Development Financial Institution ("CDFI") by the U.S. Department of the
Treasury since 2009.
With our acquisition of Digit in 2021, we believe we now have a strong competitive advantage over other fintechs and neobanks. As a combined company, we can now offer access to a
comprehensive suite of digital banking products, offered either directly or through partners, including lending, savings and investing powered by A.I. and tailored to each member's goals.
Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to
our members. Our credit products include personal loans, secured personal loans and credit cards. Our digital banking products include digital banking, automated savings, long-term investing
and retirement savings. Consumers are able to become members and access our products through our digital banking app—the Oportun Mobile app—and the Oportun.com website, which are
our primary channels for onboarding and serving members. Our personal loan products are also available over the phone or through over 700 retail locations, which includes 590 of our
Lending as a Service partner locations.
Credit Products
Personal Loans - Our personal loan is a simple-to-understand, affordable, unsecured, fully amortizing installment loan with fixed payments throughout the life of the loan. We charge
fixed interest rates on our loans, which vary based on the amount disbursed and applicable state law, with a cap of 36% annual percentage rate (“APR”) in all cases. As of December 31, 2022,
for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 38 months and 32.0%, respectively. The average loan size for loans we
originated in 2022 was $4,189. Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $12,000 with terms of 12 to 60 months. Generally, loan
payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of their income. As part of our underwriting process, we verify income for all applicants
and only approve loans that meet our ability-to-pay criteria. As of December 31, 2022, we originate unsecured personal loans in 12 states through state licenses and in 30 states through our
partnership with Pathward, N.A. (formerly known as MetaBank, N.A.).
Secured Personal Loans - In April 2020, we launched a personal installment loan product secured by an automobile, which we refer to as secured personal loans. Our secured personal
loans range in size from $2,525 to $18,000 with terms ranging from 27 to 63 months. The average loan size for secured personal loans we originated in 2022 was $8,304. As of December 31,
2022, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 49 months and 28.3%, respectively. As part of our underwriting
process, we
39
evaluate the collateral value of the vehicle, verify income for all applicants and only approve loans that meet our ability-to-pay criteria. Our secured personal loans are currently offered in
California, Texas, Florida, Arizona and New Jersey and we are in the process of considering expansion into other states.
Credit Cards - We launched Oportun® Visa® Credit Card, issued by WebBank, Member FDIC, in December 2019, and offer credit cards in 45 states as of December 31, 2022. Credit
lines on our credit cards range in size from $300 to $3,000 with an APR between 24.9% to 29.9%. The average APR of the outstanding credit card receivables was 29.8% as of December 31,
2022. The average credit line for credit cards activated in 2022 was $834.
Digital Banking Products
Savings – Our Savings product is designed to understand a member’s cash flows and save the right amount on a regular basis to effortlessly achieve savings goals. Our savings product
utilizes machine learning to analyze a member’s transaction activity and build forecasts of the member’s future cash flows to make small, frequent savings decisions according to the member’s
financial goals in a personalized manner. Members integrate their existing bank accounts into the platform or they can make Digit their primary banking relationship through a bank partner.
After one year using the automated savings product, members have been able to increase their liquid savings by approximately 50%. Since 2015 Digit has helped members save more than $8.9
billion.
Direct – Our Direct product offers a full checking account, through a bank partner, that intelligently organizes and budgets a member’s money across bills, savings, and spending. The
bank account with a brain™, Direct leverages the same A.I. engine used for our savings product to automatically identify and organize recurring bills and guides spending to ensure members'
savings goals are met, and that members know exactly what they can safely spend. This is on top of what members can expect from a traditional checking account, including a physical and
virtual debit card to use for purchases and ATM withdrawals and checks.
Investing and Retirement – Our investment and retirement products are a longer-term savings solution via an A.I.-driven portfolio allocation into low-cost investments based upon risk-
tolerance. Our long-term investment solutions automatically allocates our members' savings into low-cost risk-adjusted portfolios held in brokerage accounts or tax-advantaged IRAs. Since
2020, our members have invested $66.6 million into long-term goals through low-cost ETF portfolios. The investment products include a general investing account and a retirement account for
our members’ longer term goals, utilizing smart recommendations to invest savings in risk-adjusted portfolios.
The funds in these savings, checking, investing and retirement accounts are owned by members of our digital banking products and are not the assets of the Company. Therefore, these
funds are not included in the Consolidated Balance Sheets.
Lending as a Service
Beyond our core direct-to-consumer lending business, we believe that we can leverage our proprietary credit scoring and underwriting model to partner with other consumer brands and
expand our member base. With our Lending as a Service model, our partner markets loans and enters borrower applications into our system and Oportun underwrites, originates and services
the loans. Our first lending as a service partner was DolEx Dollar Express, Inc. with an initial launch in December 2020. In October of 2021, we launched another Lending as a Service
partnership with Barri Financial Group in select locations. In January of 2022, we announced our first all-digital Lending as a Service partnership with Sezzle, a leading provider of Buy Now
Pay Later ("BNPL") financing options which launched in the first quarter of 2023. Oportun is now available as a checkout option, through Sezzle, for larger purchases which we believe will
allow us to reach more new members. We believe we will be able to offer Lending as a Service to additional partners, and expand our membership base.
Capital Markets Funding
To fund our growth at a low and efficient cost, we have built a diversified and well-established capital markets funding program, which allows us to partially hedge our exposure to rising
interest rates or credit spreads by locking in our interest expense for up to three years. Over the past eight years, we have executed 20 bond offerings in the asset-backed securities market, the
last 17 of which include tranches that have been rated investment grade. We have issued two- and three-year fixed rate bonds which have provided us committed capital to fund future loan
originations at a fixed Cost of Debt. On July 22, 2022, we issued $400.0 million of amortizing asset-backed notes. On September 14, 2022, we entered into a credit agreement for a $150.0
million senior secured term loan, which was upsized and amended on March 10, 2023 to provide the ability to be able to borrow up to an additional $75.0 million. On March 10, 2023, we
borrowed $20.8 million of Incremental Tranche A-1 Loans and intend to borrow an additional $4.2 million of Incremental Tranche A-2 Loans on or about March 27, 2023, which amount has
been committed by the applicable lenders. We may borrow up to an aggregate additional amount of $50.0 million on an uncommitted basis, in two $25.0 million tranches, expected to be
available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively. On November 3, 2022, we issued $300.0 million of amortizing asset-backed notes.
Through March 4, 2022, we were also party to a whole loan sale program whereby we sold a percentage of our loans to a third-party financial institution. We allowed the whole loan sale
program agreement to expire on its own terms. In March 2022, we participated in a securitization and sold loans through the issuance of amortizing asset-backed notes secured by a pool of our
unsecured and secured personal installment loans. We also sold our share of the residual interest in the pool. The sold loans had an aggregate unpaid principal balance of approximately $227.6
million ("2022-1 transaction"). During 2022, we sold certain populations of our personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid
interest and fees, of approximately $66.2 million. In addition to possible future whole loan, structured or other loan sales, we also have a $600.0 million Personal Loan Warehouse facility with
a term through September 2024 and a $150.0 million Credit Card Warehouse facility with a term through December 2023 which also helps to fund our receivables growth. On March 8, 2023,
the Credit Card Warehouse facility
40
was amended, extending its term through December 2024 and reducing its commitment from $150.0 million to $120.0 million.
Streamlining Operations
On February 9, 2023, we announced that we are taking a series of measures to streamline our operations, including reducing the size of our corporate staff by 10%, impacting
approximately 155 employees, and reducing our expenditures on external contractors. In relation to these and other personnel related activities, we expect to incur non-recurring, pre-tax
charges of $6 to $7 million in the first quarter of 2023. These reductions are anticipated to result in annualized run-rate savings in compensation and benefits of approximately $38 million
beginning in 2023. We have also identified certain non-personnel related operational efficiencies that are anticipated to result in annualized run-rate savings of $10 to $15 million beginning in
2023.
Retail Network Optimization
During the first quarter of 2022, we closed an additional 27 retail locations in April 2022 and reduce a portion of the workforce who manage and operate these retail locations. The income
statement impact for the twelve months ended December 31, 2022 was $1.9 million, and was recorded through General, administrative and other on the Consolidated Statements of Operations.
This amount included expenses related to the retail location closures and all severance and benefits-related costs. While we do not expect any significant additional expenses to be incurred
related to these closures, we are continually evaluating the performance of retail and partner locations. During the first quarter of 2021, pursuant to our retail network optimization plan we
closed 136 retail locations and reduced a portion of the employee workforce who managed and operated these retail locations. The income statement impact for the twelve months ended
December 31, 2021 was $12.8 million, and was recorded through General, administrative and other on the Consolidated Statements of Operations. This amount included expenses related to
the retail location closures and all severance and benefits-related costs.
Key Financial and Operating Metrics
We monitor and evaluate the following key metrics in order to measure our current performance, develop and refine our growth strategies, and make strategic decisions.
The following table and related discussion set forth key financial and operating metrics for our operations as of and for the years ended December 31, 2022 and 2021. For similar financial
and operating metrics and discussion of our 2021 results compared to our 2020 results, refer to Part II. Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 1, 2022.
(1)
(1)
(in thousands of dollars)
Key Financial and Operating Metrics
Members
Products
Aggregate Originations
30+ Day Delinquency Rate
Annualized Net Charge-Off Rate
Return on Equity
Adjusted Return on Equity
Other Metrics
Managed Principal Balance at End of Period
Owned Principal Balance at End of Period
Average Daily Principal Balance
As of or for the Year Ended December 31,
2022
2021
$
$
$
$
1,877,260
2,006,245
2,922,871
5.6 %
10.1 %
(13.5)%
12.1 %
3,406,981
3,098,609
2,740,318
$
$
$
$
1,479,660
1,545,463
2,295,012
3.9 %
6.8 %
8.9 %
14.7 %
2,583,462
2,272,864
1,756,170
(1)
The 1,479,660 Members and 1,545,463 Products reported as of December 31, 2021 reflect our previously defined and disclosed "Members" and "Products" metrics. Beginning January 1, 2022, we modified
our definition of Members to reflect the long-term nature of our relationship with our members and modified our definition of Products to reflect multiproduct adoption by our members.
See “Glossary” at the end of Part II of this report for formulas and definitions of our key performance metrics.
41
Members
We define Members as borrowers with an outstanding or successfully paid off loan, originated by us or under a bank partnership program that we service, or individuals who have been
approved for a credit card issued under a bank partnership program. Members also include individuals who have signed-up to use or are using any of our Savings, Direct, Investing and/or
Retirement products. We view Members as an indication of growth of our business and our ability to establish long term relationships with the users of our products. Member growth is
generally an indicator of future revenue, but is not directly correlated with revenue, since not all Members who sign up for one of our products fully utilize or continue to use our products.
Members as of December 31, 2022 grew to 1.9 million, as compared to 1.5 million as of December 31, 2021. This increase was due to the success in our marketing efforts during the year.
Products
Products refers to the aggregate number of personal loans and/or credit card accounts that our Members have had or been approved for that have been originated by us or through one of
our bank partners. Products also include the aggregate number of digital banking products we offer as a result of our acquisition of Digit, including Savings, Direct, Investing and Retirement,
that our Members use or have signed-up to use. We view Products as an indicator of the effectiveness of our member acquisition efforts and multiproduct adoption.
Products as of December 31, 2022, grew to 2.0 million, compared to the 1.5 million Products we had as of December 31, 2021. This increase was due to growth in both our credit products
and our digital banking products.
Aggregate Originations
Aggregate Originations increased to $2.92 billion for the year ended December 31, 2022 from $2.30 billion for the year ended December 31, 2021, representing a 27.4% increase. The
increase is primarily driven by a growth in average loan size due to a focus on returning members with historically lower credit risk and a larger number of loans originated. We originated
764,516 and 753,474 loans for the years ended December 31, 2022 and 2021, respectively. The increase is primarily driven by an increased number of applications due to higher demand,
partially offset by a reduction in our approval rate as we tightened credit.
30+ Day Delinquency Rate
Our 30+ Day Delinquency Rate increased to 5.6% as of December 31, 2022 from 3.9% as of December 31, 2021. The increase reflects the higher mix of first-time borrowers and the
return to pre-pandemic underwriting criteria later in 2021. In mid-2022, we took numerous actions to improve the credit performance on newly originated loans; including significantly
tightening our underwriting standards for all borrowers, particularly for higher risk digital marketing channels, and adjusting loan size based on member free cash flow. We also focused
lending towards existing and returning members to address rising delinquencies.
Annualized Net Charge-Off Rate
Annualized Net Charge-Off Rate for the years ended December 31, 2022 and 2021 was 10.1% and 6.8%, respectively. The increase is primarily driven by a higher mix of first-time
borrowers in 2022 compared to 2021. In mid-2022, we took numerous actions to improve the credit performance on newly originated loans; including significantly tightening our underwriting
standards for all borrowers, particularly for higher risk digital marketing channels, and adjusting loan size based on member free cash flow. We also focused lending towards existing and
returning members to improve credit outcomes as existing and returning members historically have had lower loss rates. Further, due to credit tightening in response to the COVID-19
pandemic and government stimulus payments our Annualized Net Charge-Off Rate was lower in 2021. We anticipate that this rate may increase in 2023 due to the impact of inflation and other
macroeconomic factors on members.
Return on Equity and Adjusted Return on Equity
For the year ended December 31, 2022 and 2021, Return on Equity was (13.5)% and 8.9%, respectively. The decrease in Return on Equity is primarily due to lower net income, primarily
as a result of the goodwill impairment.
For the year ended December 31, 2022 and 2021, Adjusted Return on Equity was 12.1% and 14.7%, respectively. The decrease in Adjusted Return on Equity is primarily due to lower
Adjusted Net Income. Adjusted Net Income was lower due to higher credit losses, higher cost of funds and decreased fair value of our loan portfolio as a result of higher loss and discount rate
assumptions. For a reconciliation of Return on Equity to Adjusted Return on Equity, see “Non–GAAP Financial Measures.”
Historical Credit Performance
Our Annualized Net Charge-off Rate ranged between 7% and 9% from 2011 to 2019 and was 9.8% in 2020, a modest variance above this range during the pandemic. Due to credit
tightening in response to the COVID-19 pandemic and government stimulus payments our Annualized Net Charge-Off Rate decreased to 6.8% in 2021. Our Annualized Net Charge-off Rate
increased to 10.1% in 2022 primarily due to a higher mix of first-time borrowers in 2021 and the first half of 2022. In response to this increase, we tightened our credit underwriting standards
and focused lending towards existing and returning members to improve credit outcomes. Consistent with our charge-off policy, we evaluate our loan portfolio and charge a loan off at the
earlier of when the loan is determined to be uncollectible or when loans are 120 days contractually past due and charge-off a credit
42
card account when it is 180 days contractually past due.
In addition to monitoring our loss and delinquency performance on an owned portfolio basis, we also monitor the performance of our loans by the period in which the loan was disbursed,
generally years or quarters, which we refer to as a vintage. We calculate net lifetime loan loss rate by vintage as a percentage of original principal balance. Net lifetime loan loss rates equal the
net lifetime loan losses for a given year through December 31, 2022 divided by the total origination loan volume for that year.
The below chart and table shows our net lifetime loan loss rate for each annual vintage of our personal loan product since we began lending in 2006, excluding loans originated from July
2017 to August 2020 under a loan program for borrowers who did not meet the qualifications for our core loan origination program. 100% of those loans were sold pursuant to a whole loan
sale agreement. We have managed to stabilize cumulative net loan losses since the financial crisis that started in 2008. We even achieved a net lifetime loan loss rate of 5.5% during the peak
of the recession in 2009. The evolution of our credit models has allowed us to increase our average loan size and commensurately extend our average loan terms. Cumulative net lifetime loan
losses for the 2015, 2016, 2017, and 2018 vintages increased partially due to the delay in tax refunds in 2017 and 2019, the impact of natural disasters such as Hurricane Harvey, and the longer
duration of the loans. The 2018 and 2019 vintages are increasing due to the COVID-19 pandemic. The 2021 vintage is running higher than prior vintages primarily due to a higher percentage
of loan disbursements to new members. We have tightened credit and began reducing loan volumes to new and returning members in the third quarter of 2021 and reduced further in the
second half of 2022.
43
Dollar weighted average
original term for vintage in
months
Net lifetime loan losses as
of December 31, 2022 as a
percentage of original
principal balance
Outstanding principal
balance as of December
31, 2022 as a percentage of
original amount disbursed
2007
2008
2009
2010
2011
2012
2013
Year of Origination
2014
2015
2016
2017
2018
2019
2020
2021
9.3
9.9
10.2
11.7
12.3
14.5
16.4
19.1
22.3
24.2
26.3
29.0
30.0
32.0
33.3
7.7 %
8.9 %
5.5 %
6.4 %
6.2 %
5.6 %
5.6 %
6.1 %
7.1 %
8.0 %
8.2 %
9.8 %
10.6 %*
7.5 %*
8.7 %*
— %
— %
— %
— %
— %
— %
— %
— %
— %
— %
— %
— %
2.2 %
14.5 %
50.6 %
* Vintage is not yet fully mature from a loss perspective.
Seasonality
Our quarterly results of operations may not necessarily be indicative of the results for the full year or the results for any future periods. Our business is highly seasonal, and the fourth
quarter is typically our strongest quarter in terms of loan originations. For the three months ended December 31, 2022, our business exhibited lower than typical originations due to our credit
tightening. Prior to the pandemic, we historically experienced a seasonal decline in credit performance in the fourth quarter primarily attributable to competing demand of our borrowers'
available cash flow around the holidays. General increases in our borrowers’ available cash flow in the first quarter, including from cash received from tax refunds, temporarily reduces our
borrowers’ borrowing needs. We experienced this seasonal trend in 2022, consistent with years prior to the COVID-19 pandemic.
44
Results of Operations
The following tables and related discussion set forth our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. For a discussion regarding our operating
and financial data for the year ended December 31, 2021, as compared to the same period in 2020, refer to Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and
Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022.
(in thousands of dollars)
Revenue
Interest income
Non-interest income
Total revenue
Less:
Interest expense
Total net decrease in fair value
Net revenue
Operating expenses:
Technology and facilities
Sales and marketing
Personnel
Outsourcing and professional fees
General, administrative and other
Goodwill impairment
Total operating expenses
Income (loss) before taxes
Income tax expense
Net income (loss)
Total revenue
(in thousands of dollars)
Revenue
Interest income
Non-interest income
Total revenue
Percentage of total revenue:
Interest income
Non-interest income
Total revenue
Years Ended December 31,
2022
2021
$
$
$
876,114
76,431
952,545
93,046
(218,842)
640,657
216,120
110,033
154,850
67,630
58,838
108,472
715,943
(75,286)
2,458
(77,744)
$
575,839
50,943
626,782
47,669
(48,632)
530,481
139,564
116,882
115,833
57,931
37,480
—
467,690
62,791
15,377
47,414
Year Ended December 31,
2022 vs. 2021 Change
2022
876,114
76,431
952,545
$
$
2021
575,839
50,943
626,782
$
$
$
300,275
25,488
325,763
$
$
%
52.1
50.0
52.0
%
%
%
92.0
8.0
100.0
%
%
%
91.9
8.1
100.0
%
%
%
Interest income. Total interest income increased by $300.3 million, or 52.1%, from $575.8 million for 2021 to $876.1 million for 2022. The increase is primarily attributable to growth in
our Average Daily Principal Balance, which grew from $1.76 billion for 2021 to $2.74 billion for 2022, an increase of 56.0%. The increase was partially offset by a decrease in portfolio yield
of 82 basis points in the year ended December 31, 2022 compared to the year ended December 31, 2021 driven by our tightening of credit underwriting standards and focusing lending towards
existing and returning members in the second half of 2022. Existing and returning members generally receive lower APRs, but historically have lower loss rates compared to new members.
Non-interest income. Total non-interest income increased by $25.5 million, or 50.0%, from $50.9 million for 2021 to $76.4 million for 2022. This increase is primarily due to $37.5
million attributable to Digit subscription income and $6.7 million increase in servicing revenue. This was partially offset by decreased gain on loans sold of $21.5 million under our whole loan
sale programs due to the expiration of our whole loan sale agreement on March 4, 2022.
See Note 2, Summary of Significant Accounting Policies, and Note 13, Revenue, of the Notes to the Consolidated Financial Statements included elsewhere in this report for further
discussion on our interest income, non-interest income and revenue.
45
Interest expense
(in thousands of dollars)
Interest expense
Percentage of total revenue
Cost of Debt
Leverage as a percentage of Average Daily Principal Balance
$
2022
93,046
9.8
3.7
91.2
%
%
%
$
2021
47,669
7.6
3.1
88.5
%
%
%
$
$
45,377
%
95.2
%
Year Ended December 31,
2022 vs. 2021 Change
Interest expense. Interest expense increased by $45.4 million, or 95.2%, from $47.7 million for 2021 to $93.0 million for 2022. We financed approximately 91.2% of our loans receivable
through debt for 2022 as compared to 88.5% for 2021, and our Average Daily Debt Balance increased from $1.55 billion to $2.50 billion for 2022, an increase of 60.9%. Our Cost of Debt has
increased due to increases in interest rates and wider credit spreads on our new asset-backed securitization issuances. We expect our interest expense to increase as benchmark interest rates rise
and as we continue to fund our portfolio growth through debt.
See Note 2, Summary of Significant Accounting Policies , and Note 9, Borrowings, in the Notes to the Consolidated Financial Statements included elsewhere in this report for further
information on our Interest expense and our borrowings.
Total net decrease in fair value
Net increase (decrease) in fair value reflects changes in fair value of loans receivable held for investment and asset-backed notes on an aggregate basis and is based on a number of factors,
including benchmark interest rates, credit spreads, remaining cumulative charge-offs and borrower payment rates. Increases in the fair value of loans increase Net Revenue. Conversely,
decreases in the fair value of loans decrease Net Revenue. Increases in the fair value of asset-backed notes decrease Net Revenue. Decreases in the fair value of asset-backed notes increase Net
Revenue. We also have derivative instruments related to our bank partnership program with Pathward, N.A. Changes in the fair value of the derivative instrument are reflected in the total fair
value mark-to-market adjustment below.
(in thousands of dollars)
Fair value mark-to-market adjustment:
Fair value mark-to-market adjustment on Loans Receivable at Fair Value
Fair value mark-to-market adjustment on asset-backed notes
Fair value mark-to-market adjustment on derivatives
Total fair value mark-to-market adjustment
Charge-offs, net of recoveries on loans receivable at fair value
Net settlements on derivative instruments
Fair value mark on loans sold
(1)
Total net decrease in fair value
Percentage of total revenue:
Fair value mark-to-market adjustment
Charge-offs, net of recoveries on loans receivable at fair value
Total net decrease in fair value
Discount rate
Remaining cumulative charge-offs
Average life in years
Year Ended December 31,
$
$
2022
(68,897)
184,906
3,702
119,711
(276,796)
(15,688)
(46,069)
(218,842)
12.6
(29.1)
(16.5)
11.48
10.38
1.00
2021
57,044
15,408
(3,097)
69,355
(119,413)
1,426
—
(48,632)
$
$
%
%
%
%
%
11.1
(19.1)
(8.0)
6.94
9.60
0.86
%
%
%
%
2022 vs. 2021 Change
$
%
$
$
(125,941)
169,498
6,799
50,356
(157,383)
(17,114)
(46,069)
(170,210)
*
*
*
*
*
*
*
* Not meaningful
(1)
The fair value mark-to-market adjustment on loans receivable at fair value shown for the year ended December 31, 2022, excludes $(46.1) million related to the cumulative fair value mark on loans sold as part
of the structured and other loan sales in 2022. For details regarding the structured and other loan sales in 2022, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial
Statements included elsewhere in this report.
Net decrease in fair value. Net decrease in fair value for 2022 was $218.8 million. This amount represents a total fair value mark-to-market increase of $119.7 million, and $276.8 million
of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment consists of a $(68.9) million mark-to-market adjustment on Loans
Receivable at Fair Value due to (a) an increase in remaining cumulative charge-offs from 9.60% as of December 31, 2021 to 10.38% as of December 31, 2022, (b) an increase in the discount
rate from 6.94% as of December 31, 2021 to 11.48% as of December 31, 2022, partially offset by (c) an increase in average life from 0.86 years as of December 31, 2021 to 1.00 years as of
December 31, 2022. The $184.9 million mark-to-market adjustment on asset-back notes is due to rising rates and widening asset-backed securitization spreads. The total net increase (decrease)
in fair value for the year ended December 31, 2022 includes a $(46.1) million adjustment related to the fair value mark on loans sold as part of the structured and other loan sales in 2022. In
2023, we expect to continue to see volatility in fair value primarily as a result of macroeconomic conditions.
46
Charge-offs, net of recoveries
(in thousands of dollars)
Total charge-offs, net of recoveries
Average Daily Principal Balance
Annualized Net Charge-Off Rate
Charge-offs, net of recoveries.
Year Ended December 31,
2022 vs. 2021 Change
$
2022
276,796
2,740,318
10.1
%
$
2021
119,413
1,756,170
6.8
%
$
$
157,383
984,148
%
131.8
56.0
%
%
Our Annualized Net Charge-Off Rate increased to 10.1% for the year ended December 31, 2022 from 6.8% for the year ended December 31, 2021. Net charge-offs for the year ended
December 31, 2022 increased primarily due to a higher mix of first-time borrowers in 2021 and the first half of 2022. In response to this increase, we tightened our credit underwriting standards
and focused lending towards existing and returning members to improve credit outcomes in the second half of 2022. Further, due to credit tightening in response to the COVID-19 pandemic
and government stimulus payments, our charge-offs were lower in 2021. Consistent with our charge-off policy, we evaluate our loan portfolio and charge a loan off at the earlier of when the
loan is determined to be uncollectible or when the loan is 120 days contractually past due and we charge-off a credit card account when it is 180 days contractually past due.
Operating expenses
Operating expenses consist of technology and facilities, sales and marketing, personnel, outsourcing and professional fees and general, administrative and other expenses.
Technology and facilities
Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our A.I.-enabled digital platform, and consists of
three components. The first component comprises costs associated with our technology, engineering, information security, cybersecurity, platform development, maintenance, and end user
services, including fees for software licenses, consulting, legal and other services as a result of our efforts to grow our business, as well as personnel expenses. The second component includes
rent for retail and corporate locations, utilities, insurance, telephony costs, property taxes, equipment rental expenses, licenses and fees and depreciation and amortization. Lastly, the third
component includes all software licenses, subscriptions, and technology service costs to support our corporate operations, excluding sales and marketing.
(in thousands of dollars)
Technology and facilities
Percentage of total revenue
Year Ended December 31,
2022 vs. 2021 Change
$
2022
216,120
22.7
$
%
2021
139,564
22.3
%
$
$
76,556
%
54.9
%
Technology and facilities. Technology and facilities expense increased by $76.6 million, or 54.9%, from $139.6 million for 2021 to $216.1 million for 2022. The increase is primarily due
to a $31.7 million increase in salaries and benefits due to the increase in headcount, a $27.2 million increase in service costs related to higher usage of software and cloud services which
includes a $7.4 million increase attributable to Digit bank processing fees, $13.5 million incurred for India off-shoring services and other temporary contractors to supplement staffing related to
new product investment and $11.5 million of increased depreciation commensurate with growth in internally developed software. These increases are partially offset by $8.0 million lower
expense due to higher capitalization of internally developed software in 2022 compared to 2021 and $1.9 million lower office rent due to retail location closures in early 2021 and early 2022.
We expect our technology and facilities expense may increase in 2023 compared to 2022 due to increased depreciation related to internally developed software and increased service costs due
to higher usage of software and cloud services.
Sales and marketing
Sales and marketing expenses consist of two components and represent the costs to acquire our members. The first component is comprised of the expense to acquire a member through
various paid marketing channels including direct mail, digital marketing and brand marketing. The second component is comprised of the costs associated with our telesales, lead generation
and retail operations, including personnel expenses, but excluding costs associated with retail locations.
(in thousands of dollars, except CAC)
Sales and marketing
Percentage of total revenue
Customer Acquisition Cost (CAC)
Year Ended December 31,
2022 vs. 2021 Change
2022
110,033
11.6
144
%
$
$
2021
116,882
18.6
155
%
$
$
$
(6,849)
(11)
$
$
%
(5.9)
(7.1)
%
%
47
Sales and marketing. Sales and marketing expenses to acquire our members decreased by $6.8 million, or 5.9%, from $116.9 million for 2021 to $110.0 million for 2022. Our net decrease
in marketing spend during the year ended December 31, 2022 was $14.8 million across various marketing channels, including digital advertising and direct mail. We decreased marketing
spend as we shifted our strategy to focus lending towards existing and returning members to improve credit outcomes. The decrease in marketing spend was partially offset by an increase of
$4.1 million related to outsourcing and professional fees primarily due to outsourced telesales FTEs as a result of an increase in demand for new applications and $2.7 million higher salaries
and benefit costs due to increased headcount and increase in average compensation. As a result of our decreased marketing spend during the year ended December 31, 2022, our CAC decreased
by 7.1%, from $155 for the year ended December 31, 2021 to $144 for the year ended December 31, 2022. We expect our sales and marketing expense to decrease in 2023 compared to 2022 as
we maintain focus on our strategy to improve credit outcomes by focusing lending towards existing and returning members.
Personnel
Personnel expense represents compensation and benefits that we provide to our employees, and include salaries, wages, bonuses, commissions, related employer taxes, medical and other
benefits provided and stock-based compensation expense for all of our staff with the exception of our telesales, lead generation, and retail operations which are included in sales and marketing
expenses and technology which is included in technology and facilities.
(in thousands of dollars)
Personnel
Percentage of total revenue
Year Ended December 31,
2022 vs. 2021 Change
$
2022
154,850
16.3
$
%
2021
115,833
18.5
%
$
$
39,017
%
33.7
%
Personnel. Personnel expense increased by $39.0 million, or 33.7%, from $115.8 million for 2021 to $154.9 million for 2022. $13.2 million of the increase is attributable to the Digit
acquisition and the remaining increase is due to a 17.0% increase in U.S. headcount. We expect our personnel expense to decrease in 2023 compared to 2022 as a result of our recently
announced plan to reduce headcount and streamline operations.
Outsourcing and professional fees
Outsourcing and professional fees consist of costs for various third-party service providers and contact center operations, primarily for the sales, customer service, collections and store
operation functions. The costs related to our third-party contact centers located in Colombia, Jamaica and the Philippines are included in outsourcing and professional fees. These third-party
contact centers provide business support, including application processing, verification, customer service and collections. Professional fees also include the cost of legal and audit services,
credit reports, recruiting, cash transportation, collection services and fees and consultant expenses. Direct loan origination expenses related to application processing are expensed when
incurred. In addition, outsourcing and professional fees include any financing expenses, including legal and underwriting fees, related to our asset-backed notes.
(in thousands of dollars)
Outsourcing and professional fees
Percentage of total revenue
Year Ended December 31,
2022 vs. 2021 Change
$
2022
67,630
7.1
$
%
2021
57,931
9.2
%
$
$
9,699
%
16.7
%
Outsourcing and professional fees. Outsourcing and professional fees increased by $9.7 million, or 16.7%, from $57.9 million for 2021 to $67.6 million for 2022. The increase is primarily
attributable to $7.5 million of higher professional service costs related to credit card programs and other consulting services and $3.3 million related to 84.2% growth in contact center
outsourced FTEs as a result of an increase in demand for new applications and the new Philippines contact center. These increases were partially offset by a $3.4 million decrease in debt
financing fees and expenses incurred on asset-backed notes issued in 2022 compared to asset-backed notes issued in 2021. We expect our outsourcing and professional fees to decrease in 2023
compared to 2022 as a result of our continued focus on cost cutting and streamlining operations.
General, administrative and other
General, administrative and other expense includes non-compensation expenses for employees, who are not a part of the technology and sales and marketing organization, which include
travel, lodging, meal expenses, political and charitable contributions, office supplies, printing and shipping. Also included are franchise taxes, bank fees, foreign currency gains and losses,
transaction gains and losses, debit card expenses, litigation reserve, retail network optimization expenses and Digit-related acquisition and integration expenses.
(in thousands of dollars)
General, administrative and other
Percentage of total revenue
Year Ended December 31,
2022 vs. 2021 Change
$
2022
58,838
6.2
$
%
2021
37,480
6.0
%
$
$
21,358
%
57.0
%
General, administrative and other. General, administrative and other expense increased by $21.4 million, or 57.0%, from $37.5 million for 2021 to $58.8 million for 2022, primarily due
to an increase of $19.6 million of transaction and integration related expenses as a result of the Digit acquisition, $6.1 million of losses related to fraudulent loans, $2.7 million increase in
litigation expense related to Digit CID litigation and $7.1 million increase in postage and printing expenses, travel expenses and other general and administrative expenses due to new products
and services
48
and continuing growth of the business. These increases were partially offset by a $3.3 million decrease attributable to an impairment charge recognized in 2021 on a right-of-use asset related to
our leased office space in San Carlos, California, not present in 2022 and a $10.9 million decrease in retail network optimization expenses incurred in the year ended December 31, 2022
compared to the year ended December 31, 2021. We expect our general, administrative and other expense to decrease in 2023 compared to 2022 as a result of our continued focus on cost
cutting and strong expense discipline.
Goodwill impairment
(in thousands, except percentages)
Goodwill impairment
Percentage of total revenue
Year Ended December 31,
$
2022
108,472
11.4
$
%
2021
—
—
$
%
2022 vs. 2021 Change
$
108,472
%
*
Goodwill impairment. In response to a sustained decline in our share price primarily driven by macroeconomic conditions, we conducted a quantitative test of our goodwill as of
September 30, 2022. As a result of this quantitative test, we identified an impairment to goodwill resulting in recognition of a $108.5 million non-cash goodwill impairment charge for the year
ended December 31, 2022. There were no goodwill impairment charges during the year ended December 31, 2021.
Income taxes
Income taxes consist of U.S. federal, state and foreign income taxes, if any. For the years ended December 31, 2022 and 2021 we recognized tax expense attributable to U.S. federal, state
and foreign income taxes.
(in thousands of dollars)
Income tax expense
Percentage of total revenue
Effective tax rate
Year Ended December 31,
2022 vs. 2021 Change
$
2022
2,458
0.3
(3.3)
%
%
$
2021
15,377
2.5
24.5
%
%
$
(12,919)
$
%
84.0
%
Income tax expense. Income tax expense decreased by $12.9 million or 84.0%, from $15.4 million for 2021 to $2.5 million for 2022, primarily resulting from the tax benefits of the
return-to-provision adjustments, generation of tax credits, and having lower pretax income for the year ended December 31, 2022 as a result of the goodwill impairment, which is non-
deductible for income tax purposes.
See Note 2, Summary of Significant Accounting Policies, and Note 14, Income Taxes, of the Notes to the Consolidated Financial Statements included elsewhere in this report for further
discussion on our income taxes.
49
Fair Value Estimate Methodology for Loans Receivable at Fair Value
Summary
Fair value is an electable option under GAAP to account for any financial instruments, including loans receivable and debt. It differs from amortized cost accounting in that loans
receivable and debt are recorded on the balance sheet at fair value rather than on a cost basis. Under the fair value option credit losses are recognized through income as they are incurred
rather than through the establishment of an allowance and provision for losses. The fair value of instruments under this election is updated at the end of each reporting period, with changes
since the prior reporting period reflected in the Consolidated Statements of Operations as net increase (decrease) in fair value which impacts Net Revenue. Changes in interest rates, credit
spreads, realized and projected credit losses and cash flow timing will lead to changes in fair value and therefore impact earnings. These changes in the fair value of the Loans Receivable at
Fair Value may be partially offset by changes in the fair value of the asset-backed notes, depending upon the relative duration of the instruments.
Fair Value Estimate Methodology for Loans Receivable at Fair Value
We calculate the fair value of Loans Receivable at Fair Value using a model that projects and discounts expected cash flows. The fair value is a function of:
•
•
•
•
•
Portfolio yield;
Average life;
Prepayments (or principal payment rate for our credit card receivables);
Remaining cumulative charge-offs; and
Discount rate.
Portfolio yield is the expected interest and fees collected from the loans and credit cards as an annualized percentage of outstanding principal balance. Portfolio yield is based upon (a) the
contractual interest rate, reduced by expected delinquencies and interest charge-offs and (b) late fees, net of late fee charge-offs based upon expected delinquencies. Origination fees are not
included in portfolio yield for personal loans since they are generally capitalized as part of the loan’s principal balance at origination.
Average life is the time-weighted average of expected principal payments divided by outstanding principal balance. The timing of principal payments is based upon the contractual
amortization of loans, adjusted for the impact of prepayments, Good Customer Program refinances, and charge-offs.
For personal loans, prepayments are the expected remaining cumulative principal payments that will be repaid earlier than contractually required over the life of the loan, divided by the
outstanding principal balance. For credit cards, we estimate principal payment rates which are the expected amount and timing of principal payments over the life of the receivable.
Remaining cumulative charge-offs is the expected net principal charge-offs over the remaining life of the loans and credit cards, divided by the outstanding principal balance.
For personal loans, the discount rate is the sum of the interest rate and the credit spread. The interest rate is based upon the interpolated treasury curve rate that corresponds to the average
life. The credit spread is based upon the credit spread implied by the loan purchase price at the time loans are sold, updated for observable changes in the fixed income markets, which serve as
a proxy for how a potential loan buyer would adjust their yield requirements relative to the originally agreed price.
For credit cards, the discount rate is the sum of our weighted average cost of funds and the spread implied by the personal loan discount rate. An implied spread is calculated by
subtracting the weighted average borrowing cost of the Personal Loan Warehouse from the personal loan discount rate. This spread is then added to the weighted average borrowing cost of the
Credit Card Warehouse to arrive at a discount rate for credit cards.
It is also possible to estimate the fair value of our loans using a simplified calculation. The table below illustrates a simplified calculation to aid investors in understanding how fair value
may be estimated using the last eight quarters:
•
Subtracting the servicing fee from the weighted average portfolio yield over the remaining life of the loans to calculate net portfolio yield;
• Multiplying the net portfolio yield by the weighted average life in years of the loans receivable, which is based upon the contractual amortization of the loans and expected remaining
prepayments and charge-offs to calculate net cash flow;
Subtracting the remaining cumulative charge-offs from the net portfolio yield to calculate the net cash flow;
Subtracting the product of the discount rate and the average life from the net cash flow to calculate the gross fair value premium as a percentage of loan principal balance; and
Subtracting the accrued interest and fees as a percentage of loan principal balance from the gross fair value premium as a percentage of loan principal balance to calculate the fair value
premium as a percentage of loan principal balance.
•
•
•
50
The table below reflects the application of this methodology for the eight quarters since January 1, 2021, on loans held for investment. The data for the periods ending on or after
December 31, 2021 in the table below represents all of our credit products. The data for the three months ended September 30, 2021 in the table below represents our secured and unsecured
loan portfolio. For prior quarters, the data in the table below represents only our unsecured personal loan portfolio which was the primary driver of fair value during those periods.
Weighted average portfolio yield over the remaining
life of the loans
Less: Servicing fee
Net portfolio yield
Multiplied by: Weighted average life in years
Pre-loss cash flow
Less: Remaining cumulative charge-offs
Net cash flow
Less: Discount rate multiplied by average life
Gross fair value premium (discount) as a percentage of
loan principal balance
Less: Accrued interest and fees as a percentage of loan
principal balance
Fair value premium (discount) as a percentage of loan
principal balance
Discount Rate
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
Three Months Ended
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
29.50 %
(5.00) %
24.50 %
1.000
24.50 %
(10.38) %
14.12 %
(11.48) %
29.90 %
(5.00) %
24.90 %
0.924
23.01 %
(11.67) %
11.34 %
(9.42) %
30.27 %
(5.00) %
25.27 %
0.895
22.61 %
(11.25) %
11.37 %
(8.03) %
30.15 %
(5.00) %
25.15 %
0.847
21.30 %
(10.37) %
10.93 %
(5.73) %
30.14 %
(5.00) %
25.14 %
0.859
21.60 %
(9.60) %
12.00 %
(5.96) %
30.35 %
(5.00) %
25.35 %
0.761
19.26 %
(7.53) %
11.73 %
(4.96) %
30.28 %
(5.00) %
25.28 %
0.769
19.43 %
(7.59) %
11.84 %
(5.03) %
30.25 %
(5.00) %
25.25 %
0.778
19.64 %
(8.60) %
11.04 %
(5.17) %
2.64 %
1.92 %
3.34 %
5.21 %
6.04 %
6.77 %
6.81 %
5.87 %
(1.18) %
(1.19) %
(1.10) %
(1.09) %
(1.03) %
(0.90) %
(0.87) %
(0.92) %
1.45 %
11.48 %
0.73 %
10.19 %
2.24 %
8.97 %
4.12 %
6.76 %
5.01 %
6.94 %
5.87 %
6.52 %
5.94 %
6.54 %
4.95 %
6.65 %
The illustrative table included above is designed to assist investors in understanding the impact of our election of the fair value option.
Non-GAAP Financial Measures
We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Operating Efficiency and
Adjusted Return on Equity, can provide useful measures for period-to-period comparisons of our core business and useful information to investors and others in understanding and evaluating
our operating results. However, non-GAAP financial measures are not calculated in accordance with United States generally accepted accounting principles, or GAAP, and should not be
considered as an alternative to any measures of financial performance calculated and presented in accordance with GAAP. There are limitations related to the use of these non-GAAP financial
measures versus their most directly comparable GAAP measures, which include the following:
▪
▪
▪
▪
▪
Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.
These measures do not consider the potentially dilutive impact of stock-based compensation.
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and Adjusted EBITDA does not reflect
cash capital expenditure requirements for such replacements or for new capital expenditure requirements.
Although the fair value mark-to-market adjustment is a non-cash adjustment, it does reflect our estimate of the price a third party would pay for our loans receivable held for investment
or our asset-backed notes.
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us.
Reconciliations of non-GAAP to GAAP measures can be found below.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure defined as our net income, adjusted to eliminate the effect of certain items as described below. We believe that Adjusted EBITDA is
an important measure because it allows management, investors and our Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from
period-to-period by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of taxes,
certain non-cash items, variable charges and timing differences.
• We believe it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing
business operations.
• We believe it is useful to exclude the impact of depreciation and amortization and stock-based compensation expense because they are non-cash charges.
51
• We believe it is useful to exclude the impact of interest expense associated with the Company's Corporate Financing, as we view this expense as related to our capital structure rather
than our funding.
• We believe it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with a litigation reserve, our retail network optimization plan, impairment
charges and acquisition and integration related expenses because these items do not reflect ongoing business operations.
• We also reverse origination fees for Loans Receivable at Fair Value, net. We recognize the full amount of any origination fees as revenue at the time of loan disbursement in advance of
our collection of origination fees through principal payments. As a result, we believe it is beneficial to exclude the uncollected portion of such origination fees, because such amounts
do not represent cash that we received.
• We also reverse the fair value mark-to-market adjustment because it is a non-cash adjustment as shown in the table below.
Components of Fair Value Mark-to-Market Adjustment (in thousands)
Fair value mark-to-market adjustment on loans receivable at fair value
Fair value mark-to-market adjustment on asset-backed notes
Fair value mark-to-market adjustment on derivatives
(1)
Total fair value mark-to-market adjustment
Year Ended December 31,
2022
2021
$
$
(68,897)
184,906
3,702
119,711
$
$
57,044
15,408
(3,097)
69,355
(1)
The fair value mark-to-market adjustment on loans receivable at fair value shown for the year ended December 31, 2022, excludes $(46.1) million related to the cumulative fair value mark on loans sold as part
of the structured and other loan sales in 2022. For details regarding the structured and other loan sales in 2022, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial
Statements included elsewhere in this report.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the years ended December 31, 2022 and 2021:
Adjusted EBITDA (in thousands)
Net income (loss)
Adjustments:
Income tax expense
Interest on corporate financing
Depreciation and amortization
Impairment
Stock-based compensation expense
Litigation reserve
Retail network optimization expenses
Acquisition and integration related expenses
Origination fees for loans receivable at fair value, net
Fair value mark-to-market adjustment
Adjusted EBITDA
Adjusted Net Income
Year Ended December 31,
2022
2021
(77,744)
$
2,458
5,987
35,182
108,472
27,620
2,750
1,882
29,682
(26,845)
(119,711)
(10,267)
$
47,414
15,377
—
23,714
3,324
18,857
—
12,828
10,648
(15,836)
(69,355)
46,971
$
$
We define Adjusted Net Income as our net income, adjusted to exclude income tax expense, stock-based compensation expenses and certain non-recurring charges. We believe that
Adjusted Net Income is an important measure of operating performance because it allows management, investors, and our Board to evaluate and compare our operating results, including our
return on capital and operating efficiencies, from period to period.
• We believe it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular tax items that do not reflect our ongoing business
operations.
• We believe it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with a litigation reserve, our retail network optimization plan, impairment
charges and acquisition and integration related expenses, because these items do not reflect ongoing business operations.
• We believe it is useful to exclude stock-based compensation expense because it is a non-cash charge.
• We include the impact of normalized statutory income tax expense by applying the income tax rate noted in the table.
52
The following table presents a reconciliation of net income (loss) to Adjusted Net Income for the years ended December 31, 2022 and 2021:
Adjusted Net Income (in thousands)
Net income (loss)
Adjustments:
Income tax expense
Impairment
Stock-based compensation expense
Litigation reserve
Retail network optimization expenses
Acquisition and integration related expenses
Adjusted income before taxes
Normalized income tax expense
Adjusted Net Income
Income tax rate
(1)
$
$
Year Ended December 31,
2022
2021
(77,744)
$
2,458
108,472
27,620
2,750
1,882
29,682
95,120
25,682
69,438
$
47,414
15,377
3,324
18,857
—
12,828
10,648
108,448
29,715
78,733
27.0 %
27.4 %
(1)
Income tax rates for the years ended December 31, 2022 and December 31, 2021, are based on a normalized statutory rate.
Adjusted Earnings Per Share (“Adjusted EPS”)
Adjusted Earnings Per Share is a non-GAAP financial measure that allows management, investors and our Board to evaluate the operating results, operating trends and profitability of the
business in relation to diluted adjusted weighted-average shares outstanding.
The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the years ended December 31, 2022 and 2021. For the reconciliation of net income (loss) to
Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”
(in thousands, except share and per share data)
Diluted earnings (loss) per share
Adjusted EPS
Adjusted Net Income
Basic weighted-average common shares outstanding
Weighted average effect of dilutive securities:
Stock options
Restricted stock units
Diluted adjusted weighted-average common shares outstanding
Adjusted Earnings Per Share
Adjusted Return on Equity
Year Ended December 31,
2022
2021
$
$
$
(2.37)
69,438
32,825,772
252,357
173,092
33,251,221
2.09
$
$
$
1.56
78,733
28,191,610
1,375,915
755,669
30,323,194
2.60
We define Adjusted Return on Equity as annualized Adjusted Net Income divided by average stockholders’ equity. Average stockholders’ equity is an average of the beginning and
ending stockholders’ equity balance for each period. We believe Adjusted Return on Equity is an important measure because it allows management, investors and our Board to evaluate the
profitability of the business in relation to stockholders' equity and how efficiently we generate income from stockholders' equity.
The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity for the years ended December 31, 2022 and 2021. For the reconciliation of net income
(loss) to Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”
(in thousands)
Return on Equity
Adjusted Return on Equity
Adjusted Net Income
Average stockholders' equity
Adjusted Return on Equity
As of or for the Year Ended December 31,
2022
2021
(13.5)%
69,438
575,740
$
$
12.1 %
8.9 %
78,733
535,255
14.7 %
$
$
53
Adjusted Operating Efficiency
We define Adjusted Operating Efficiency as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges such as expenses associated
with a litigation reserve, our retail network optimization plan, impairment charges and acquisition and integration related expenses divided by total revenue. We believe Adjusted Operating
Efficiency is an important measure because it allows management, investors and our Board to evaluate how efficiently we manage costs relative to revenue.
The following table presents a reconciliation of Operating Efficiency to Adjusted Operating Efficiency for the years ended December 31, 2022 and 2021:
(in thousands)
Operating Efficiency
Adjusted Operating Efficiency
Total revenue
Total operating expense
Impairment
Stock-based compensation expense
Litigation reserve
Retail network optimization expenses
Acquisition and integration related expenses
Total adjusted operating expenses
Adjusted Operating Efficiency
Liquidity and Capital Resources
As of or for the Year Ended December 30,
2022
2021
75.2 %
74.6 %
$
$
952,545
715,943
(108,472)
(27,620)
(2,750)
(1,882)
(29,682)
545,537
$
$
626,782
467,690
(3,324)
(18,857)
—
(12,828)
(10,648)
422,033
57.3 %
67.3 %
To date, we fund the majority of our operating liquidity and operating needs through a combination of cash flows from operations, securitizations, secured borrowings, corporate financing
and whole loan sales. We may utilize these or other sources in the future. Our material cash requirements relate to funding our lending activities, our debt service obligations, our operating
expenses, and investments in the long-term growth of the company.
During 2022, available liquidity increased primarily due to the closing of our Corporate Financing facility and the issuance of additional asset-backed securitizations. We generally target
liquidity levels to support at least twelve months of our expected net cash outflows, including new originations, without access to our Corporate Financing facility or equity markets. Rising
interest rates, credit trends and other macroeconomic conditions could continue to have an impact on market volatility which could adversely impact our business, liquidity, and capital
resources. Future decreases in cash flows from operations resulting from delinquencies, defaults, losses, would decrease the cash available for the capital uses described above. In addition to
the $75.0 million that may be available under the recent amendment to the Corporate Financing facility and the associated warrants, we may incur additional indebtedness or issue equity in
order to meet our capital spending and liquidity requirements, as well as to fund growth opportunities that we may pursue.
Cash and cash flows
The following table summarizes our cash and cash equivalents, restricted cash and cash flows for the periods indicated:
(in thousands)
Cash, cash equivalents and restricted cash
Cash provided by (used in)
Operating activities
Investing activities
Financing activities
Year Ended December 31,
2022
2021
$
203,817
$
247,875
(1,171,548)
934,530
192,960
163,447
(884,786)
745,709
Our cash is held for working capital purposes and originating loans. Our restricted cash represents collections held in our securitizations and is applied currently after month-end to pay
interest expense and satisfy any amount due to whole loan buyer with any excess amounts returned to us.
Operating Activities
Our net cash provided by operating activities was $247.9 million and $163.4 million for the years ended December 31, 2022 and 2021, respectively. Cash flows from operating activities
primarily include net income or losses adjusted for (i) non-cash items included in net income or loss, including depreciation and amortization expense, goodwill impairment charges, fair value
adjustments, net, origination fees for loans at fair value, net, gain on loan sales, stock-based compensation expense and deferred tax provision, net, (ii) originations of loans sold and held for
sale, and proceeds from sale of loans and (iii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of
54
business due to the amount and timing of various payments.
Investing Activities
Our net cash used in investing activities was $1,171.5 million and $884.8 million for the years ended December 31, 2022 and 2021, respectively. Our investing activities consist primarily
of loan originations and loan repayments. We invest in purchases of property and equipment and incur system development costs. Purchases of property and equipment, and capitalization of
system development costs may vary from period to period due to the timing of the expansion of our operations, the addition of employee headcount and the development cycles of our system
development. The change in our net cash used in investing activities is primarily due to disbursements on originations of loans increasing by $920.6 million while repayments of loan principal
only increased by $289.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. Our net cash used in investing activities for the year ended December
31, 2022, includes proceeds of $249.3 million related to a structured loan sale in the first quarter 2022 and other loan sales during the remainder of 2022. The change in our net cash used in
investing activities is also driven by our acquisition of Digit, net of acquirer's cash received, of $111.7 million for the year ended December 31,2021.
Financing Activities
Our net cash provided by financing activities was $934.5 million and $745.7 million for the years ended December 31, 2022 and 2021, respectively. For the year ended December 31,
2022, net cash provided by financing activities was primarily driven the issuance of our Series 2022-A, Series 2022-2 and Series 2022-3 asset-backed notes and the borrowings under our
Secured Financing facilities and Acquisition and Corporate Financing facilities, partially offset by repayments of borrowings on our Secured Financing facilities and scheduled amortization
payments on our Acquisition Financing facility and our Series 2019-A, Series 2022-2 and Series 2022-3 asset-backed notes. For the year ended December 31, 2021, net cash provided by
financing activities was primarily driven by the issuance of our Series 2021-A, Series 2021-B and Series 2021-C asset-backed notes and the borrowings under our Secured Financing facilities
and Acquisition Financing, partially offset by redemptions of our Series 2018-A, Series 2018-B, Series 2018-C and Series 2018-D asset-backed notes and repayments of borrowings on our
Secured Financing facility.
Sources of Funds
Debt and Available Credit
Asset-Backed Securitizations
As of December 31, 2022, we had $2.39 billion of outstanding asset-backed notes. During 2022, we issued $1.10 billion of asset-backed securities. Our securitizations utilize special
purpose entities which are also variable interest entities (VIEs) that meet the requirements to be consolidated in our financial statements. For more information regarding our VIEs and asset-
backed securitizations, see Note 4, Variable Interest Entities and Note 9, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Our ability to utilize our asset-backed securitization facilities as described herein is subject to compliance with various requirements including eligibility criteria for the loan collateral and
covenants and other requirements. As of December 31, 2022, we were in compliance with all covenants and requirements of all our asset-backed notes.
Secured Financings
As of December, 31, 2022, we had Secured Financing facilities with warehouse lines of $750.0 million in the aggregate with undrawn capacity of $430.0 million. On March 8, 2023, the
Credit Card Warehouse facility was amended, reducing its commitment from $150.0 million to $120.0 million, thereby reducing the combined commitment to $720.0 million. Our ability to
utilize our Secured Financing facilities as described herein is subject to compliance with various requirements, including eligibility criteria for collateral, concentration limits for our collateral
pool, and covenants and other requirements.
Acquisition Financing
On December 20, 2021, Oportun RF, LLC, our wholly-owned subsidiary, issued a $116.0 million asset-backed floating rate variable funding note, and an asset-backed residual certificate,
both of which are secured by certain residual cash flows from our securitizations and guaranteed by Oportun, Inc. The note was used to fund the cash consideration paid for the acquisition of
Digit. On May 24, 2022, and subsequently on July 28, 2022, pursuant to amended indentures, Oportun RF, LLC issued an additional $20.9 million and $9.1 million asset-backed floating rate
variable funding notes, and asset-backed residual certificates, both of which are also secured by certain cash flows from our securitizations and guaranteed by Oportun, Inc., increasing the size
of the facility to $119.5 million. The amendments also replaced the interest rate based on LIBOR with an interest rate based on SOFR plus 8.00%. The Acquisition Financing facility was
scheduled to pay down based on an amortization schedule with a final payment in May 2024. Subsequently, on February 10, 2023, the Acquisition Financing facility was further amended,
including among other things, revising the interest rate to SOFR plus 11.00% and adjusting the amortization schedule to defer $42.0 million in principal payments through July 2023, with final
payment in October 2024.
55
Corporate Financing
On September 14, 2022, we entered into an agreement to borrow $150.0 million of a senior secured term loan (the “Corporate Financing”). The term loan bears interest, payable in cash, at
an amount equal to 1-month term SOFR plus 9.00%. The term loan is scheduled to mature on September 14, 2026, and is not subject to amortization. Certain prepayments of the term loan are
subject to a prepayment premium. The obligations under the Credit Agreement are secured by our assets and certain of our subsidiaries guaranteeing the term loan, including pledges of the
equity interests of certain subsidiaries that are directly or indirectly owned by us, subject to customary exceptions. On March 10, 2023 we upsized and amended our Corporate Financing
facility to be able to borrow up to an additional $75.0 million. At closing and as part of the Incremental Tranche A-1, we borrowed $20.8 million and intend to borrow an additional $4.2
million in Incremental Tranche A-2 loans on or about March 27, 2023, which amount has been committed by the applicable lenders. We may borrow up to an aggregate additional amount of
$50.0 million on an uncommitted basis in two $25.0 million additional Incremental Tranche B and Incremental Tranche C loans expected to be available, if provided by the applicable lenders,
on or about April 21, 2023 and June 23, 2023, respectively. The term loan now bears interest at (a) an amount payable in cash equal to 1-month term SOFR plus 9.00% plus (b) an amount
payable in cash or in kind, at the Company’s option, equal to 3.00%.
As of December 31, 2022, we were in compliance with all covenants and requirements on our outstanding debt and available credit. For more information regarding our Secured Financing
facilities and Acquisition Financing and Corporate Financing, see Note 9, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Structured Loan Sales
In March 2022, we participated in a securitization and sold loans through the issuance of amortizing asset-backed notes secured by a pool of our unsecured and secured personal
installment loans. We also sold our share of the residual interest in the pool. The sold loans had an aggregate unpaid principal balance of approximately $227.6 million. For further information
on the structured loan sale transactions, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Other Loan Sales
During 2022, we entered into agreements to sell certain populations of its personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid
interest and fees, of approximately $66.2 million. For further information on these sales, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements
included elsewhere in this report.
Whole Loan Sales
Through March 4, 2022, we had a commitment to sell to a third-party institutional investor 10% of our unsecured loan originations that satisfy certain eligibility criteria, and an additional
5% subject to certain eligibility criteria and minimum and maximum volumes. We chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022. The
originations of loans sold and held for sale during the year ended December 31, 2022 was $52.7 million. For further information on the whole loan sale transactions, see Note 5, Loans Held for
Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Bank Partnership Program and Servicing Agreement
We entered into a bank partnership program with Pathward, N.A. on August 11, 2020. In accordance with the agreements underlying the bank partnership program, Oportun has a
commitment to purchase an increasing percentage of program loans originated by Pathward based on thresholds specified in the agreements. Lending under the partnership was launched in
August of 2021.
Contractual Obligations and Commitments
The material cash requirements for our contractual and other obligations primarily include those related our outstanding borrowings under our asset-backed notes, Acquisition Financing
and Secured Financing, corporate and retail leases, and purchase commitments for technology used in the business. See Note 9, Borrowings and Note 16, Leases, Commitments and
Contingencies of the Notes to the Consolidated Financial Statements included in this report for more information.
Liquidity Risks
We believe that our existing cash balance, anticipated positive cash flows from operations and available borrowing capacity under our credit facilities will be sufficient to meet our
anticipated cash operating expense and capital expenditure requirements through at least the next 12 months. We do not have any significant unused sources of liquid assets. On the Second
Amendment Closing Date, the Company borrowed $20.8 million of incremental term loans and intends to borrow an additional $4.2 million of Incremental Tranche A-2 Loans on or about
March 27, 2023, which amount has been committed by the applicable lenders. Under the Amended Credit Agreement, the Company may borrow up to an aggregate additional amount of $50.0
million on an uncommitted basis, in two $25.0 million tranches, the Incremental Tranche B Loans and Incremental Tranche C Loans expected to be available, if provided by the applicable
lenders, on or about April 21, 2023 and June 23, 2023, respectively. We anticipate that we will likely draw down these additional incremental commitments, however, given their uncommitted
nature there can be no assurance that we will be able to access such additional capital. If our available cash balances are insufficient to satisfy our liquidity requirements, we will seek
additional debt or equity financing and we may have to take additional actions to decrease expenses, curtail the origination of loans, and our ability to continue to support our growth and to
respond to challenges could be impacted. In a rising interest rate environment, our ability to issue additional equity or incur debt may be impaired and our borrowing costs may increase. If we
raise additional funds through the issuance of additional debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior
to shares of our
56
common stock. The sale of equity may result in dilution to our stockholders and those securities may have rights senior to those of our common stock. We may require additional capital
beyond our currently anticipated amounts and additional capital may not be available on reasonable terms, or at all.
Critical Accounting Policies and Significant Judgments and Estimates
Our Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance
with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses
and the related disclosures. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies, in our Notes to the Consolidated Financial Statements included
elsewhere in this report, we believe the following critical accounting policies affect the more significant estimates, assumptions and judgments we use to prepare our consolidated financial
statements.
Fair Value of Loans Held for Investment
We elected the fair value option for our loans receivable held for investment. We primarily use a discounted cash flow model to estimate fair value based on the present value of estimated
future cash flows. This model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value. The following
describes the primary inputs that require significant judgment:
•
•
•
•
Remaining Cumulative Charge-offs - Remaining cumulative charge-offs are estimates of the principal payments that will not be repaid over the life of a loan held for investment.
Remaining cumulative loss expectations are adjusted to reflect the expected principal recoveries on charged-off loans. Remaining cumulative loss expectations are primarily based on
the historical performance of our loans but also incorporate adjustments based on our expectations of future credit performance and are quantified by the remaining cumulative charge-
off rate.
Remaining Cumulative Prepayments - Remaining cumulative prepayments are estimates of the principal payments that will be repaid earlier than contractually required over the life of
a loan held for investment. Remaining cumulative prepayment rates are primarily based on the historical performance of our loans but also incorporate adjustments based on our
expectations of future borrower behavior and refinancings through our Good Customer Program. For credit card receivables, we estimate the principal payment rate which is the
amount of principal we expect to get repaid each month.
Average Life - Average life is the time weighted average of the estimated principal payments divided by the principal balance at the measurement date. The timing of estimated
principal payments is impacted by scheduled amortization of loans, charge-offs, and prepayments.
Discount Rates - The discount rates applied to the expected cash flows of loans held for investment reflect our estimates of the rates of return that investors would require when
investing in financial instruments with similar risk and return characteristics. Discount rates are based on our estimate of the rate of return likely to be received on new loans. Discount
rates for aged loans are adjusted to reflect the market relationship between interest rates and remaining time to maturity.
We developed an internal model to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the model combines receivable characteristics
with assumptions about borrower behavior based on our historical loan performance. These cash flows are then discounted using a required rate of return that management estimates would be
used by a market participant.
We test the fair value model by comparing modeled cash flows to historical loan performance to ensure that the model is complete, accurate and reasonable for our use.
As discussed above, our fair value model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value. For a
summary of how these inputs have changed over the last eight quarters since January 1, 2021, refer to Fair Value Estimate Methodology for Loans Receivable at Fair Value in Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of Operations". For more information regarding the potential impact that changes in these inputs might have on our
"Net increase (decrease) in fair value" on our Consolidated Statements of Operations, please refer to Item 7A., "Quantitative and Qualitative Disclosures About Market Risk" included
elsewhere in this report.
Goodwill Impairment
Goodwill is tested for impairment annually and more frequently if events and circumstances indicate that the asset might be impaired. We have a single reporting unit for the purpose of
conducting the goodwill impairment assessment. A goodwill impairment charge is recognized for the amount that the carrying value, including goodwill, exceeds the fair value, limited to the
total amount of goodwill. Factors that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration of projected financial
performance, future acquisitions and/or mergers, and a decline in our market value as a result of a significant decline in our stock price.
In response to a sustained decline in our share price primarily driven by macroeconomic conditions, we conducted a quantitative test of its goodwill as of September 30, 2022. We
recognized a $108.5 million non-cash impairment charge for the year ended December 31, 2022. There were
57
no triggering events or goodwill impairment charges during the year ended December 31, 2021 (see Note 7, Capitalized Software, Other Intangibles and Goodwill of the Notes to the
Consolidated Financial Statements included elsewhere in this report for further details).
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies , of the Notes to the Consolidated Financial Statements included elsewhere in this report for a discussion of recent accounting
pronouncements and future application of accounting standards.
58
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices, credit performance of loans and interest rates . Certain
unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When multiple
inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input. We recorded a fair value mark-to-
market adjustment related to our Loans Receivable at Fair Value and asset-backed notes of $119.7 million for the year ended December 31, 2022, an increase of approximately $50.4 million
compared to the prior year.
Credit Performance Sensitivity
In a strong economic climate, credit losses may decrease due to low unemployment and rising wages, which will increase the fair value of our Loans Receivable at Fair Value, which
increases Net Revenue. In a weak economic climate, credit losses may increase due to high unemployment and falling wages, which will decrease the fair value of our Loans Receivable at Fair
Value, which decreases Net Revenue.
The following table presents estimates at December 31, 2022. Actual results could differ materially from these estimates:
Remaining Cumulative Charge-Offs
120% of expected
110% of expected
100% of expected
90% of expected
80% of expected
Market Rate and Interest Rate Sensitivity
Projected percentage change in the
fair value of our Loans Receivable at
Fair Value
Projected change in net fair
value recorded in earnings
($ in thousands)
(2.0) % $
(1.0) % $
— % $
1.0 % $
2.0 % $
(60,706)
(30,646)
—
31,236
63,089
The fair values of our Loans Receivable at Fair Value are estimated using a discounted cash flow methodology, where the discount rate considers various inputs such as the price that we
can sell loans to a third party in a non-public market, market conditions such as interest rates, and credit spreads. The discount rates may change due to expected loan performance. We charge
fixed rates on our loans and the average life of our loan portfolio is approximately 1.0 years. The fair value of fixed rate loans will generally change when interest rates change, because interest
rates will impact the discount rate the market uses to value our loans. As of December 31, 2022, we had $2.39 billion of fixed-rate asset-backed notes outstanding with an average life of 1.4
years. Our borrowing cost does not vary with interest rates for our asset-backed notes, but the fair value will generally change when interest rates change, because interest rates will impact the
discount rate the market uses to value our notes.
As of December 31, 2022, we had $243.0 million of outstanding borrowings under our Personal Loan Warehouse facility. The interest rate of the PLW is 1-month LIBOR plus a spread of
2.17% and the maximum borrowing amount is $600.0 million. As of December 31, 2022, we had $77.0 million of outstanding borrowings under our Credit Card Warehouse facility. The
interest rate on the Secured Financing - CCW facility is LIBOR, with a floor of 1.00%, plus 6.00% on the first $18.8 million of principal outstanding and LIBOR, with a floor of 0.00%, plus 3.41%
on the remaining outstanding principal balance and the maximum borrowing amount is $150.0 million. On March 8, 2023, the Credit Card Warehouse facility was amended, reducing the
maximum borrowing amount from $150.0 million to $120.0 million.
As of December 31, 2022, we had $85.7 million outstanding under our Acquisition Financing. The interest rate of the Acquisition Financing is SOFR plus a spread of 8.00%. As of
December 31, 2022, we had $150.0 million outstanding under our Corporate Financing. The interest rate of the Corporate Financing is SOFR plus a spread of 9.00%. On March 10, 2023 we
upsized and amended our Corporate Financing facility to be able to borrow up to an additional $75.0 million. We borrowed $20.8 million of Incremental Tranche A-1 Loans and intend to
borrow an additional $4.2 million of Incremental Tranche A-2 Loans on or about March 27, 2023, which amount has been committed by the applicable lenders. We may borrow up to an
aggregate additional amount of $50.0 million on an uncommitted basis, in two $25.0 million tranches, expected to be available, if provided by the applicable lenders, on or about April 21, 2023
and June 23, 2023, respectively. The term loan now bears interest at an amount payable in cash equal to 1-month term SOFR plus 9.00%, plus an amount payable in cash or in kind, at the
Company’s option, equal to 3.00%.
Changes in interest rates in the future will likely affect our borrowing costs of our Secured Financing facilities, Acquisition Financing and Corporate Financing. While not carried at fair
value on the Consolidated Balance Sheets, we do not expect changes in interest rates to impact the fair value of our Secured Financing facilities, Acquisition Financing or Corporate Financing
facility.
In a strong economic climate, interest rates may rise, which will decrease the fair value of our Loans Receivable at Fair Value, which reduces Net Revenue. Rising interest rates will also
decrease the fair value of our asset-backed notes, which increases Net Revenue. Conversely, in a weak economic climate, interest rates may fall, which will increase the fair value of our Loans
Receivable at Fair Value, which increases Net Revenue. Decreasing interest rates will also increase the fair value of our asset-backed notes, which reduces Net Revenue. Because the duration
and fair value of our loans and asset-backed notes are different, the respective changes in fair value will not fully offset each other.
The following table presents estimates at December 31, 2022. Actual results could differ materially from these estimates:
59
Change in Interest Rates
-100 Basis Points
-50 Basis Points
-25 Basis Points
Basis Interest Rate
+25 Basis Points
+50 Basis Points
+100 Basis Points
Prepayment Sensitivity
Projected percentage change in the
fair value of our Loans Receivable
at Fair Value
Projected percentage change in the
fair value of our asset-backed notes
Projected change in net fair
value recorded in earnings
($ in thousands)
0.8 %
0.4 %
0.2 %
— %
(0.2) %
(0.4) %
(0.8) %
0.8 % $
0.4 % $
0.2 % $
— % $
(0.2) % $
(0.4) % $
(0.8) % $
4,354
2,149
1,065
—
(1,067)
(2,115)
(4,177)
In a strong economic climate, borrowers’ incomes may increase which may lead them to prepay their loans more quickly. In a weak economic climate, borrowers' incomes may decrease
which may lead them to prepay their loans more slowly. The availability of government stimulus payments to consumers during a weak economy may cause prepayments to increase.
Additionally, changes in the eligibility requirements for our Good Customer Program, which allows borrowers with existing loans to take out a new loan and use a portion of the proceeds to
pay-off their existing loan, could impact prepayment rates. In the future, we may introduce new products or features that could impact the prepayment behavior of our existing loans. Increased
competition may also lead to increased prepayment, if our borrowers take out a loan from another lender to refinance our loan.
The following table presents estimates at December 31, 2022. Actual results could differ materially from these estimates:
Remaining Cumulative Prepayments
120% of expected
110% of expected
100% of expected
90% of expected
80% of expected
Foreign Currency Exchange Risk
Projected percentage change in the
fair value of our Loans Receivable at
Fair Value
Projected change in net fair
value recorded in earnings
($ in thousands)
(0.1) % $
(0.1) % $
— % $
0.1 % $
0.1 % $
(3,073)
(1,559)
—
1,594
3,233
All of our revenue and substantially all of our operating expenses are denominated in U.S. dollars. Our non-U.S. dollar operating expenses in Mexico and India made up 4.1% of total
operating expenses in 2022. All of our interest income is denominated in U.S. dollars and is therefore not subject to foreign currency exchange risk.
60
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of Oportun Financial Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Oportun Financial Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related
consolidated statements of operations, changes in stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and
2021, and the results of its operations and its cash flows for each of two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United
States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial
reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 13, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Loans Receivable at Fair Value — Refer to Notes 2 and 15 to the financial statements
Critical Audit Matter Description
The Company’s loans receivable at fair value were at $3,144 million as of December 31, 2022. The loans receivable at fair value were valued as Level 3 financial instruments. Level 3
financial instruments are valued utilizing pricing inputs that are unobservable and significant to the entire fair value measurement. The Company estimates the fair value of the Level 3 loans
receivable using a discounted cash flow model based on estimated future cash flows, which considers various inputs that require significant judgment. The model uses inputs that are not
observable and inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value.
We identified the Company’s unsecured personal loans receivable at fair value portfolio as a critical audit matter because of the subjective process in determining significant inputs,
assumptions, and judgments used to estimate the fair value. Auditing management’s assessment of unsecured personal loans receivable at fair value involved exercising subjective and complex
judgments, required specialized skills and knowledge, and required an increased extent of audit effort, including obtaining audit evidence of the data sources used to estimate fair value and
understanding the assumptions applied and the nature of significant inputs utilized.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of unsecured personal loans receivable at fair value included the following, among others:
• We tested the effectiveness of management’s controls covering the overall estimate and the review of the accuracy and completeness of the underlying unsecured personal loan data
utilized in the model calculations.
61
• We subjected the significant unobservable inputs to sensitivity analyses to evaluate changes in the fair value that would result from changes in the assumptions.
• We tested the accuracy and completeness of the significant unobservable inputs used in the valuation of unsecured personal loans receivable at fair value by detail testing the
segmentation of the portfolio and underlying payment history and historical performance of the unsecured personal loans.
• With the assistance of our fair value specialists, we developed independent estimates of the unsecured personal loans receivable at fair value and compared our estimates to the
Company’s estimates.
• We performed a retrospective review of management’s ability to accurately estimate the unsecured personal loans receivable at fair value by comparing modeled monthly cash flows to
actual past performance.
/s/ Deloitte & Touche LLP
San Francisco, CA
March 13, 2023
We have served as the Company's auditor since 2010.
62
OPORTUN FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31,
2022
2021
Assets
Cash and cash equivalents
Restricted cash
Loans receivable at fair value
Interest and fees receivable, net
Capitalized software and other intangibles, net
Goodwill
Right of use assets - operating
Other assets
Total assets
Liabilities and stockholders' equity
Liabilities
Secured financing
Asset-backed notes at fair value
Acquisition and corporate financing
Lease liabilities
Other liabilities
Total liabilities
Stockholders' equity
Common stock, $ 0.0001 par value - 1,000,000,000 shares authorized at December 31, 2022 and December 31, 2021; 33,626,630 shares
issued and 33,354,607 shares outstanding at December 31, 2022; 32,276,419 shares issued and 32,004,396 shares outstanding at
December 31, 2021
Common stock, additional paid-in capital
Retained earnings
Treasury stock at cost, 272,023 and 272,023 shares at December 31, 2022 and December 31, 2021
Total stockholders’ equity
Total liabilities and stockholders' equity
See Notes to the Consolidated Financial Statements.
63
$
$
$
$
98,817
105,000
3,143,653
31,796
139,801
—
30,448
64,180
3,613,695
317,568
2,387,674
222,879
37,947
100,028
3,066,096
7
547,799
6,102
(6,309)
547,599
3,613,695
$
$
$
$
$
130,959
62,001
2,386,807
20,916
131,181
104,014
38,403
72,344
2,946,625
393,889
1,651,706
114,092
47,699
135,358
2,342,744
6
526,338
83,846
(6,309)
603,881
2,946,625
OPORTUN FINANCIAL CORPORATION
Consolidated Statements of Operations
(in thousands, except share and per share data)
Revenue
Interest income
Non-interest income
Total revenue
Less:
Interest expense
Net decrease in fair value
Net revenue
Operating expenses:
Technology and facilities
Sales and marketing
Personnel
Outsourcing and professional fees
General, administrative and other
Goodwill impairment
Total operating expenses
Income (loss) before taxes
Income tax expense
Net income (loss)
Net income (loss) attributable to common stockholders
Share data:
Earnings (loss) per share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
See Notes to the Consolidated Financial Statements.
64
$
$
$
$
$
Year Ended December 31,
2022
2021
$
876,114
76,431
952,545
93,046
(218,842)
640,657
216,120
110,033
154,850
67,630
58,838
108,472
715,943
(75,286)
2,458
(77,744)
(77,744)
(2.37)
(2.37)
32,825,772
32,825,772
$
$
$
$
575,839
50,943
626,782
47,669
(48,632)
530,481
139,564
116,882
115,833
57,931
37,480
—
467,690
62,791
15,377
47,414
47,414
1.68
1.56
28,191,610
30,323,194
OPORTUN FINANCIAL CORPORATION
Consolidated Statements of Changes in Stockholders' Equity
(in thousands, except share data)
For the Years Ended December 31, 2022 and 2021
Balance – January 1, 2022
Issuance of common stock upon exercise of stock options, net of shares withheld
Repurchase of stock options
Stock-based compensation expense
Vesting of restricted stock units, net of shares withheld
Net loss
Balance – December 31, 2022
Balance – January 1, 2021
Issuance of common stock upon exercise of stock options
Stock-based compensation expense
Vesting of restricted stock units, net of shares withheld
Issuance of equity on business acquisition
Net income
Balance – December 31, 2021
See Notes to the Consolidated Financial Statements.
65
Common Stock
Shares
32,004,396
546,312
(2,706)
—
806,605
—
33,354,607
27,679,263
240,047
—
562,904
3,522,182
—
32,004,396
Par
Value
6
1
—
—
—
—
7
6
—
—
—
—
—
6
$
$
$
$
Additional
Paid-in
Capital
$ 526,338
(4,636)
(28)
30,125
(4,000)
—
$ 547,799
$ 436,499
3,272
19,888
(6,502)
73,181
—
$ 526,338
Retained
Earnings
$ 83,846
—
—
—
—
(77,744)
6,102
$
$ 36,432
—
—
—
—
47,414
$ 83,846
$
$
$
$
Treasury
Stock
Total
Stockholders'
Equity
(6,309)
—
—
—
—
—
(6,309)
(6,309)
—
—
—
—
—
(6,309)
$
$
$
$
603,881
(4,635)
(28)
30,125
(4,000)
(77,744)
547,599
466,628
3,272
19,888
(6,502)
73,181
47,414
603,881
OPORTUN FINANCIAL CORPORATION
Consolidated Statements of Cash Flow
(in thousands)
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Year Ended December 31,
2022
2021
$
(77,744)
$
47,414
Depreciation and amortization
Goodwill impairment
Fair value adjustment, net
Origination fees for loans receivable at fair value, net
Gain on loan sales
Stock-based compensation expense
Deferred tax provision, net
Other, net
Originations of loans sold and held for sale
Proceeds from sale of loans
Changes in operating assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities
Originations of loans
Proceeds from loan sales originated as held for investment
Repayments of loan principal
Capitalization of system development costs
Acquisition of Digit, net of acquirer's cash received
Other, net
Net cash used in investing activities
Cash flows from financing activities
Borrowings under secured financing
Borrowings under asset-backed notes, acquisition and corporate financing
Repayments of secured financing
Repayments of asset-backed notes, acquisition and corporate financing
Payments of deferred financing costs
Net payments related to stock-based activities
Net cash provided by financing activities
Net increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of period
Cash and cash equivalents and restricted cash, end of period
Supplemental disclosure of cash flow information
Cash and cash equivalents
Restricted cash
Total cash and cash equivalents and restricted cash
Cash paid for income taxes, net of refunds
Cash paid for interest
Cash paid for amounts included in the measurement of operating lease liabilities
Supplemental disclosures of non-cash investing and financing activities
Right of use assets obtained in exchange for operating lease obligations
Net issuance of stock related to Digit acquisition
Non-cash investment in capitalized assets
Non-cash financing activities
See Notes to the Consolidated Financial Statements.
66
47,533
108,472
218,842
(26,845)
(5,703)
27,620
—
30,336
(52,742)
58,844
(80,738)
247,875
(2,762,828)
249,271
1,396,896
(48,892)
—
(5,995)
(1,171,548)
1,972,000
1,262,059
(2,050,000)
(232,675)
(8,189)
(8,665)
934,530
10,857
192,960
203,817
98,817
105,000
203,817
(3,457)
85,775
15,696
4,161
—
2,672
1,550
$
$
$
$
$
$
$
$
$
$
27,112
—
48,632
(15,836)
(26,750)
18,857
16,451
30,567
(214,598)
242,015
(10,417)
163,447
(1,842,211)
—
1,107,850
(26,477)
(111,652)
(12,296)
(884,786)
1,291,795
1,479,332
(1,144,996)
(875,007)
(2,183)
(3,232)
745,709
24,370
168,590
192,960
130,959
62,001
192,960
3,884
46,831
17,603
12,392
73,181
2,103
33
$
$
$
$
$
$
$
$
$
$
OPORTUN FINANCIAL CORPORATION
Notes to the Consolidated Financial Statements
December 31, 2022
1.
Organization and Description of Business
Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") is a digital banking platform that puts its members’ financial goals within reach. With
intelligent borrowing, savings, budgeting, and spending capabilities, the Company empowers members with the confidence to build a better financial future. Oportun takes a holistic approach
to serving its members and view as its purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a
path to a financially healthy life. With its acquisition of Hello Digit, Inc. ("Digit") on December 22, 2021, the Company can now offer access to a comprehensive suite of digital banking
products, offered either directly or through partners, including lending, savings and investing powered by A.I. and tailored to each member's goals to make achieving financial health
automated. The Company's credit products include personal loans, secured personal loans and credit cards. The Company's digital banking products include automated savings, digital banking,
long-term investing and retirement savings. The Company is headquartered in San Carlos, California. The Company has been certified by the United States Department of the Treasury as a
Community Development Financial Institution ("CDFI") since 2009.
Segments
Segments are defined as components of an enterprise for which discrete financial information is available and evaluated regularly by the chief operating decision maker ("CODM") in
deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer and the Company's Chief Financial Officer are collectively considered to be the
CODM. The CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company’s operations
constitute a single reportable segment.
2.
Summary of Significant Accounting Policies
Basis of Presentation ‑ The Company meets the SEC's definition of a "Smaller Reporting Company”, and therefore qualifies for the SEC's reduced disclosure requirements for smaller
reporting companies. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
("GAAP"). These statements reflect all normal, recurring adjustments that are, in management's opinion, necessary for the fair presentation of results. The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain prior-period financial
information has been reclassified to conform to current period presentation.
Use of Estimates ‑ The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expenses during
the reporting period. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates and
assumptions.
Business Combinations - The Company accounts for business combinations using the acquisition method of accounting which requires the fair values of the assets acquired and the
liabilities assumed to be recognized in the consolidated financial statements. Assets acquired and liabilities assumed in a business combination are recognized at their estimated fair value as of
the acquisition date. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired requires management to make estimates, which are based on all available
information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset or liability. The excess purchase price over the fair
value of assets acquired and liabilities assumed is recorded as goodwill. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period, with
the corresponding offset to goodwill. Acquisition-related costs, such as legal and consulting fees, are recognized separately from the business combination and are expensed as incurred.
Consolidation and Variable Interest Entities ‑ The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s policy is
to consolidate the financial statements of entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by
evaluating whether the entity is a voting interest entity or variable interest entity ("VIE") and if the accounting guidance requires consolidation.
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) have
equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or
do not have the right to receive the residual returns of the entity. The Company determines whether it has a controlling financial interest in a VIE by considering whether its involvement with
the VIE is significant and whether it is the primary beneficiary of the VIE based on the following:
•
•
•
The Company has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance;
The aggregate indirect and direct variable interests held by us have the obligation to absorb losses or the right to receive benefits from the entity that could be significant to the VIE; an
Qualitative and quantitative factors regarding the nature, size, and form of the Company’s involvement with the VIE.
67
Foreign Currency Re-measurement ‑ The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities of these subsidiaries are re-
measured into U.S. dollars from the local currency at rates in effect at period-end and nonmonetary assets and liabilities are re-measured at historical rates. Revenue and expenses are re-
measured at average exchange rates in effect during each period. Foreign currency gains and losses from re-measurement and transaction gains and losses are recorded as general,
administrative and other expense in the Consolidated Statements of Operations.
Concentration of Credit Risk ‑ Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable at fair value.
As of December 31, 2022, 45%, 26%, 9%, 5% and 4% of the owned principal balance related to borrowers from California, Texas, Florida, Illinois and New Jersey, respectively. Owned
principal balance related to borrowers from each of the remaining states of operation continues to be at or below 3%. As of December 31, 2021, 49%, 27%, 7% and 6% of the owned principal
balance related to borrowers from California, Texas, Florida and Illinois, respectively, and the owned principal balance related to borrowers from each of the remaining states was at or below
3%.
Cash and Cash Equivalents ‑ Cash and cash equivalents consist of unrestricted cash balances and short-term, liquid investments with a maturity date of three months or less at the time of
purchase. Digit's savings platform connects to members’ checking accounts and analyzes their income and spending patterns to find amounts that can safely be set aside towards savings goals.
Digit calculates these amounts by identifying upcoming bills and regular spending habits to ensure optimal amounts are flagged for savings and transferred to savings accounts. The funds in
these saving accounts are owned by Digit members and are not the assets of the Company. Therefore, these funds are not included in the Consolidated Balance Sheets.
Restricted Cash ‑ Restricted cash represents cash held at a financial institution as part of the collateral for the Company’s Secured Financing, asset-backed notes and loans designated for
sale.
Loans Receivable at Fair Value ‑ Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are considered as loans held for investment. The
Company elected the fair value option for all loans receivable held for investment. Under fair value accounting, direct loan origination fees are recognized in income immediately and direct
loan origination costs are expensed in the period the loan originates. In addition, the Company recognizes annual fees on credit card receivables into income immediately upon activation of the
credit card by the credit card holder and subsequent annual fees when billed upon the anniversary of the credit card account. Loans are charged off at the earlier of when loans are determined
to be uncollectible or when loans are 120 days contractually past due, or 180 days contractually past due in the case of credit cards. Recoveries are recorded when cash is received on loans that
had been previously charged off. The Company estimates the fair value of the loans using a discounted cash flow model, which considers various unobservable inputs such as remaining
cumulative charge-offs, remaining cumulative prepayments or principal payment rates for our credit card receivables, average life and discount rate. The Company re-evaluates the fair value
of loans receivable at the close of each measurement period. Changes in fair value are recorded in "Net decrease in fair value" in the Consolidated Statements of Operations in the period of the
fair value changes.
Fair Value Measurements ‑ The Company follows applicable guidance that establishes a fair value measurement framework, provides a single definition of fair value and requires
expanded disclosure summarizing fair value measurements. Such guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair
value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.
Fair value guidance establishes a three-level hierarchy for inputs used in measuring the fair value of a financial asset or financial liability.
•
•
•
Level 1 financial instruments are valued based on unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level 2 financial instruments are valued using quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or models using inputs that are observable or
can be corroborated by observable market data of substantially the full term of the assets or liabilities.
Level 3 financial instruments are valued using pricing inputs that are unobservable and reflect the Company’s own assumptions that market participants would use in pricing the asset or
liability.
Loans Held for Sale ‑ Loans held for sale are recorded at the lower of cost or fair value, until the loans are sold. Loans held for sale are sold within four days of origination. Cost of loans
held for sale is inclusive of unpaid principal plus net deferred origination costs.
Derivatives - Derivative financial instruments are recognized as either assets or liabilities in the consolidated balance sheet at fair value. Changes in fair value and settlements of
derivative instruments are reflected in earnings as a component of "net decrease in fair value" in the Consolidated Statements of Operations. The Company does not use derivative instruments
for trading or speculative purposes. Based on the agreements entered into with Pathward, N.A. (formerly known as MetaBank, N.A.) for all loans originated and retained by Pathward,
Pathward receives a fixed interest rate. Oportun bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreements.
Goodwill ‑ Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. The Company performs impairment testing for goodwill annually or
more frequently if an event or change in circumstances indicates that goodwill may be impaired. The Company first assesses qualitative factors to determine if it is more likely than not that the
fair value of the reporting unit is less than its carrying
68
value. If the Company concludes the fair value is less than its carrying value a quantitative test is performed. The Company performs a quantitative goodwill impairment test by determining
the fair value of the reporting unit and comparing it to the carrying value of the reporting unit. If the fair value of the reporting unit is greater than the reporting unit's fair value, then the
carrying value of the reporting unit is deemed to be recoverable. If the carrying value of the reporting unit is greater than the reporting unit's fair value, goodwill is impaired and written down
to the reporting unit's fair value.
In response to a sustained decline in the Company's share price primarily driven by macroeconomic conditions, the Company conducted a quantitative test of our goodwill as of
September 30, 2022. As a result of this quantitative test, the Company identified an impairment to goodwill resulting in recognition of a $108.5 million non-cash goodwill impairment charge
for the year ended December 31, 2022. There were no goodwill impairment charges during the year ended December 31, 2021. For further discussion, refer to Note 7, Capitalized Software,
Other Intangibles and Goodwill.
Intangible Assets other than Goodwill - At the time intangible assets are initially recognized, a determination is made with regard to each asset as it relates to its useful life. We have
determined that each of our intangible assets has a finite useful life with the exception of certain trade names, which we have determined have indefinite lives.
Intangible assets with a finite useful life are amortized on a straight-line basis over their estimated useful lives. Intangible assets with a finite useful life are presented net of accumulated
amortization on the Consolidated Balance Sheets. The Company reviews the intangible assets with finite useful lives for impairment at least annually and whenever changes in circumstances
indicate their carrying amounts may not be recoverable. Impairment is indicated if the sum of undiscounted estimated future cash flows is less than the carrying value of the respective asset.
Impairment is permanently recognized by writing down the asset to the extent that the carrying value exceeds the estimated fair value.
For indefinite-lived intangible assets, we review for impairment at least annually and whenever events occur or circumstances change that would indicate the assets are more likely than
not to be impaired. We first complete an annual qualitative assessment to determine whether it is necessary to perform a quantitative impairment test. If the qualitative assessment indicates that
the assets are more likely than not to have been impaired, we proceed with the fair value calculation of the assets. If the fair value is less than the carrying value, an impairment loss will be
recognized in an amount equal to the difference and the indefinite life classification will be evaluated to determine whether such classification remains appropriate.
Fixed Assets ‑ Fixed assets are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective
assets, which is generally three years for computer and office equipment and furniture and fixtures, and three to five years for purchased software, vehicles and leasehold improvements. When
assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss, if any, is included in the Consolidated Statements of
Operations. Maintenance and repairs are charged to the Consolidated Statements of Operations as incurred.
The Company does not own any buildings or real estate. The Company enters into term leases for its corporate offices, call center and store locations. Leasehold improvements are
capitalized and depreciated over the lesser of their physical life or lease term of the building.
Systems Development Costs ‑ The Company capitalizes software developed or acquired for internal use, and these costs are included in Capitalized software and other intangibles, net on
the Consolidated Balance Sheets. The Company has internally developed its proprietary Web-based technology platform, which consists of application processing, credit scoring, loan
accounting, servicing and collections, debit card processing, data and analytics and digital banking services.
The Company capitalizes its costs to develop software when preliminary development efforts are successfully completed; management has authorized and committed project funding; and
it is probable the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance,
are expensed as incurred. When the software developed for internal use has reached its technological feasibility, such costs are amortized on a straight-line basis over the estimated useful life
of the assets, which is generally three years. Costs incurred for upgrades and enhancements that are expected to result in additional functionality are capitalized and amortized over the
estimated useful life of the upgrades.
The Company acquired developed technology with its acquisition of Digit. Developed technology is included in capitalized software. Such costs are amortized on a straight-line basis over
the estimated useful life of the assets, which was determined to be seven years.
Impairment ‑ The Company reviews long-lived assets, including fixed assets, right of use assets and system development costs, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result
from the use of the asset and its eventual disposition are less than its carrying amount. The Company determined that there were no events or changes in circumstances that indicated our long-
lived assets were impaired for the years ended December 31, 2022 and 2021, except as disclosed in Note 7, Capitalized Software, Other Intangibles and Goodwill.
Asset-Backed Notes at Fair Value ‑ The Company elected the fair value option to account for all asset-backed notes. The Company calculates the fair value of the asset-backed notes
using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures. The Company re-evaluates
the fair value of the asset-backed notes at the close of each measurement period. Changes in fair value are recorded in Net decrease in fair value in the Consolidated Statements of Operations
in the period of the fair value changes.
Acquisition Financing ‑ The Acquisition Financing is an asset-backed note carried at amortized cost. The Company reports issuance costs associated with the financing on its balance
sheet as a direct reduction in the carrying amount of the note, and they are amortized over the life of the
69
note using the effective interest method. The Acquisition Financing was used to fund the cash component of the purchase price for the Digit acquisition and, as a result, the interest payments
are recorded to General, administrative and other in the Consolidated Statements of Operations.
Revenue Recognition ‑ The Company’s primary sources of revenue consist of interest and non-interest income.
Interest Income
Interest income includes interest and fees on loans. Generally, the Company’s loans require semi-monthly or biweekly borrower payments of interest and principal. Fees on loans include
billed late fees offset by charged-off fees and provision for uncollectible fees. The Company charges borrowers a late fee if a scheduled installment payment becomes delinquent. Depending on
the loan, late fees are assessed when the loan is eight to 16 days delinquent. Late fees are recognized when they are billed. When a loan is charged off, uncollected late fees are also written off.
For Loans Receivable at Fair Value, interest income includes (i) billed interest and late fees, plus (ii) origination fees recognized at loan disbursement, less (iii) charged-off interest and late
fees, less (iv) provision for uncollectible interest and late fees. Additionally, direct loan origination expenses are recognized in operating expenses as incurred. For Loans Receivable at Fair
Value, loan origination fees and costs are recognized when incurred.
Interest income on our personal loan receivables is recognized based upon the amount the Company expects to collect from its borrowers. When a loan becomes delinquent for a period of
90 days or more, interest income continues to be recorded until the loan is charged off. Delinquent loans are charged off at month-end during the month it becomes 120 days’ delinquent. For
personal loans receivable, the Company mitigates the risk of income recorded for loans that are delinquent for 90 days or more by establishing a 100% provision and the provision for
uncollectible interest and late fees is offset against interest income. Previously accrued and unpaid interest is also charged off in the month the Company receives a notification of bankruptcy, a
judgment or mediated agreement by the court, or loss of life, unless there is evidence that the principal and interest are collectible.
Interest income on our credit card receivables is recognized on the current balance on the account, inclusive of outstanding principal balance plus previously unpaid interest and fees, at
the end of the monthly billing cycle. Delinquent credit card accounts, including unpaid interest and fees are charged off at month-end during the month they become 180 days contractually past
due.
Non-Interest Income
Non-interest income includes subscription revenue, servicing fees, gain on loan sales, debit card income, documentation fees, sublease income and other income.
Subscription Revenue - The Company earns revenue on a subscription basis from users of its platform. Revenue is recognized ratably over each month as the performance obligation is
satisfied over time. Deferred revenue is recognized when the service period spans into the following month.
Servicing Fees ‑ The Company retains servicing rights on sold loans. Servicing fees comprise the contractual annual servicing fee based upon the average daily principal balance of loans
sold that the Company earns for servicing loans sold to a third-party financial institution. The servicing fee compensates the Company for the costs incurred in servicing the loans, including
providing customer services, receiving borrower payments and performing appropriate collection activities. Management believes the fee approximates a market rate and accordingly has not
recognized a servicing asset or liability.
Gain on Loan Sales ‑ The Company recognizes a gain on sale from the difference between the proceeds received from the purchaser and the carrying value of the loans on the Company’s
books. The Company sells a certain percentage of new loans twice weekly.
A transfer of a financial asset, a group of financial assets, or a participating interest in a financial asset is accounted for as a sale if all of the following conditions are met:
•
•
•
The financial assets are isolated from the transferor and its consolidated affiliates as well as its creditors.
The transferee or beneficial interest holders have the right to pledge or exchange the transferred financial assets.
The transferor does not maintain effective control of the transferred assets.
For the years ended December 31, 2022 and 2021 all of the Company's loan sales met the requirements for sale treatment. The Company records the gain on the sale of a loan at the sale
date in an amount equal to the proceeds received less outstanding principal, accrued interest, late fees and net deferred origination costs.
Debit card income is the revenue from interchange fees when borrowers use our reloadable debit card for purchases as well as the associated card user fees.
Documentation Fees - On a monthly basis Pathward, N.A. pays the Company documentation fees as compensation for its role in facilitation of loan originations by Pathward. The
documentation fees are equivalent to loan origination fees charged by Pathward to its borrowers. Documentation fees to which the Company expects to be entitled are variable consideration
because loan volume originated over the contractual term is not known at the contract’s inception. The transaction fee is determined each time a loan is issued based on that loan’s initial
principal amount and is recognized when performance is complete and upon the successful origination of a borrower's loan.
Sublease income is the rental income from subleasing a portion of our existing right of use assets.
70
Other income includes marketing incentives paid directly to us by the merchant clearing company based on transaction volumes, interest earned on cash and cash equivalents and
restricted cash, and gain (loss) on asset sales.
Interest expense ‑ Interest expense consists of interest expense associated with the Company’s asset-backed notes, Corporate Financing and Secured Financing, and it includes the
amortization of deferred origination costs for the Corporate Financing and Secured Financing facilities as well as fees for the unused portion of the Secured Financing facility. The Company
elected the fair value option for all asset-backed notes. Accordingly, all origination costs for such asset-backed notes at fair value are expensed as incurred.
Income Taxes ‑ The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference
between the consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.
The Company evaluates uncertain tax positions by reviewing against applicable tax law all positions taken by the Company with respect to tax years for which the statute of limitations is
still open. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any
related appeals or litigation processes, based on the technical merits. The Company recognizes interest and penalties related to the liability for unrecognized tax benefits, if any, as a component
of the Income tax expense line in the accompanying Consolidated Statements of Operations.
Stock-Based Compensation ‑ The Company accounts for stock-based employee awards based on the fair value of the award which is measured at grant date. Accordingly, stock-based
compensation cost is recognized in operating expenses in the Consolidated Statements of Operations over the requisite service period. The fair value of stock options granted or modified is
estimated using the Black-Scholes option pricing model. The Company accounts for forfeitures as they occur and does not estimate forfeitures as of the award grant date.
The Company granted restricted stock units ("RSUs") to employees that vest upon the satisfaction of time-based criterion of up to four years and previously some included a performance
criterion, a liquidity event in connection with an initial public offering or a change in control. These RSUs were not considered vested until both criteria were met and provided that the
participant was in continuous service on the vesting date. Compensation cost for awards with performance criteria, measured on the grant date, was recognized when both the service and
performance conditions were probable of being achieved. For grants and awards with just a service condition, the Company recognizes stock-based compensation expenses using the straight-
line basis over the requisite service period net of forfeitures. For grants and awards with both service and performance conditions, the Company recognizes expenses using the accelerated
attribution method.
As a result of shares vesting as part of the Company's stock-based plans shares are surrendered to the Company to satisfy the tax withholding obligations and the Company pays the
associated payroll taxes and the shares go back to the plan for future use.
Treasury Stock ‑ Treasury stock is reported at cost, and no gain or loss is recorded on stock repurchase transactions. Repurchased shares are held as treasury stock until they are retired or
re-issued. The Company did not retire or re-issue any treasury stock for the years ended December 31, 2022 and 2021.
Basic and Diluted Earnings per Share ‑ Basic earnings per share is computed by dividing net income per share available to common stockholders by the weighted average number of
common shares outstanding for the period and excludes the effects of any potentially dilutive securities. The Company computes earnings per share using the two-class method required for
participating securities. The Company considers all series of convertible preferred stock to be participating securities due to their noncumulative dividend rights. As such, net income allocated
to these participating securities, which includes participation rights in undistributed earnings, are subtracted from net income to determine total undistributed net income to be allocated to
common stockholders. All participating securities are excluded from basic weighted-average common shares outstanding.
Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. It is computed by dividing net income
attributable to common stockholders by the weighted-average common shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method
or the two-class method, whichever is more dilutive.
Recently Adopted Accounting Standards
None.
71
3.
Earnings (Loss) per Share
Basic and diluted earnings (loss) per share are calculated as follows:
(in thousands, except share and per share data)
Net income (loss)
Net income (loss) attributable to common stockholders
Basic weighted-average common shares outstanding
Weighted average effect of dilutive securities:
Stock options
Restricted stock units
Diluted weighted-average common shares outstanding
Earnings (loss) per share:
Basic
Diluted
Year Ended December 31,
2022
2021
(77,744)
(77,744)
$
$
47,414
47,414
32,825,772
28,191,610
—
—
32,825,772
1,375,915
755,669
30,323,194
(2.37)
(2.37)
$
$
1.68
1.56
$
$
$
$
The following common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for
the periods presented:
Stock options
Restricted stock units
Total anti-dilutive common share equivalents
4.
Variable Interest Entities
Year Ended December 31,
2022
2021
3,527,096
4,347,899
7,874,995
2,038,022
19,073
2,057,095
Variable interest entities ("VIEs") are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial
support or, as a group, the holders of equity investment at risk lack the ability to direct the entity's activities that most significantly impact economic performance through voting or similar
rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.
For all VIEs in which we are involved, we assess whether we are the primary beneficiary of the VIE on an ongoing basis. In circumstances where we have both the power to direct the
activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, we would conclude
that we are the primary beneficiary of the VIE, and we consolidate the VIE. In situations where we are not deemed to be the primary beneficiary of the VIE, we do not consolidate the VIE and
only recognize our interests in the VIE.
Consolidated VIEs
As part of the Company’s overall funding strategy, the Company transfers a pool of designated loans receivable to wholly owned special-purpose subsidiaries ("VIEs") to collateralize
certain asset-backed financing transactions. For these VIEs where the Company has determined that it is the primary beneficiary because it has the power to direct the activities that most
significantly impact the VIEs’ economic performance and the obligation to absorb the losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs the
VIEs assets and related liabilities are consolidated with the results of the Company. Such power arises from the Company’s contractual right to service the loans receivable securing the VIEs’
asset-backed debt obligations. The Company has an obligation to absorb losses or the right to receive benefits that are potentially significant to the VIEs because it retains the residual interest
of each asset-backed financing transaction in the form of an asset-backed certificate. Accordingly, the Company includes the VIEs’ assets, including the assets securing the financing
transactions, and related liabilities in its consolidated financial statements.
Each consolidated VIE issues a series of asset-backed securities that are supported by the cash flows arising from the loans receivable securing such debt. Cash inflows arising from such
loans receivable are distributed monthly to the transaction’s lenders and related service providers in accordance with the transaction’s contractual priority of payments. The creditors of the
VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets. The
Company retains the most subordinated economic interest in each financing transaction through its ownership of the respective residual interest in each VIE. The Company has no obligation to
repurchase loans receivable that initially satisfied the financing transaction’s eligibility criteria but subsequently became delinquent or a defaulted loans receivable.
72
The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s consolidated balance sheets:
(in thousands)
Consolidated VIE assets
Restricted cash
Loans receivable at fair value
Interest and fee receivable
Total VIE assets
Consolidated VIE liabilities
(1)
Secured financing
Asset-backed notes at fair value
Acquisition financing
(1)
Total VIE liabilities
(1)
Amounts exclude deferred financing costs. See Note 9, Borrowings for additional information.
5.
Loans Held for Sale and Loans Sold
December 31,
2022
2021
91,395
3,081,557
30,443
3,203,395
320,000
2,387,674
85,679
2,793,353
$
$
41,803
2,267,205
19,869
2,328,877
398,000
1,651,706
116,000
2,165,706
$
$
Structured Loan Sales - On March 31, 2022, the Company participated in a securitization whereby the Company and funds managed by Ellington Management Group both contributed
collateral and were co-sponsors of the transaction, which totaled $400.0 million in issued asset-backed notes. As part of the securitization, the Company sold loans to OPTN Funding Grantor
Trust 2022-1 through the issuance of amortizing asset-backed notes secured by a pool of its unsecured and secured personal installment loans. The Company also sold its share of the residual
interest in the pool. The Company's continued involvement in the unconsolidated VIEs is in the form of servicer of these loans. The Company does not have variable interest in the Grantor
Trust or the issuer established for this transaction. The sold loans were accounted for under the fair value option and had an aggregate unpaid principal balance of approximately
$227.6 million, a cumulative fair value mark of $15.9 million and unpaid interest of $1.5 million. The Company received $ 245.0 million of net proceeds and by selling both its notes and
residual interest, the Company derecognized these loans from its Consolidated Balance Sheets.
Other Loan Sales - The Company enters into agreements to sell certain populations of its personal loans and credit card receivables from time to time. The sold loans were accounted for
under the fair value option. During the year ended December 31, 2022, the Company sold loans that had an aggregate unpaid principal balance, including unpaid interest and fees, of
approximately $66.2 million, and a cumulative fair value mark of $(61.9) million. The Company received $ 4.3 million of net proceeds. The loan sales qualified for sale accounting treatment
and the Company derecognized these loans from its Consolidated Balance Sheets when the loans were sold.
Whole Loan Sale Program ‑ In November 2014, the Company entered into a whole loan sale agreement with an institutional investor. Pursuant to the agreement, the Company sold at
least 10% of its unsecured loan originations, with an option to sell an additional 5%, subject to certain eligibility criteria and minimum and maximum volumes. The Company chose not to
renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.
The originations of loans sold and held for sale during the year ended December 31, 2022 was $ 52.7 million and the Company recorded a gain on sale of $ 5.7 million and servicing
revenue of $17.4 million. The originations of loans sold and held for sale during the year ended December 31, 2021 was $ 214.6 million and the Company recorded a gain on sale of $ 26.8
million and servicing revenue of $13.3 million.
6.
Acquisition
On December 22, 2021, the Company completed its acquisition of Digit. Digit is a digital banking platform that provides automated savings, investing and banking tools. Digit members
can keep and integrate their existing bank accounts into the platform, or they can make Digit their primary banking relationship by opening new accounts via Digit’s bank partner. By acquiring
Digit, Oportun has further expanded its A.I. and digital banking capabilities, adding to its services to provide consumers a holistic offering built to address their financial needs.
The total consideration the Company provided for Digit was approximately $ 205.3 million, comprised of $73.2 million in equity and $132.1 million in cash, subject to customary
adjustments. The Company acquired 100% of the voting interests of Digit.
(in thousands)
Fair value of Oportun common stock issued to Digit stockholders
Cash paid to common and preferred stockholders, warrant holders, and vested option holders
(1)
(2)
Total purchase consideration
(3)
December 31,
2021
$
$
73,181
132,151
205,332
(1)
The fair value is based on 3,522,182 shares of Company common stock at $ 20.72 per share, which represents the mid-point of the trading price of Oportun shares on December 22, 2021. The mid-point was
used because the transaction closed during the trading day. $0.2 million relates to replacement restricted stock units awarded to Digit unvested option holders.
73
(2)
$1.3 million of the cash paid is being held in escrow as security for purpose of securing any amounts payable by the selling parties on account of indemnification obligations, purchase price adjustments, and
other amounts payable under the merger agreement.
(3)
The total consideration as reported herein differs from the amounts previously disclosed due to changes in the underlying value of the stock between the date of the definitive agreement and the closing of the
acquisition. The number of shares of Company common stock comprising the stock portion of the consideration was determined using the stock price as of the signing of the definitive agreement.
The acquisition has been accounted for as a business combination. The purchase consideration was allocated to the tangible and intangible assets and liabilities acquired and assumed as of
the acquisition date, with the excess recorded to goodwill as shown below.
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:
(in thousands)
Goodwill
Acquired intangible assets
Developed technology
Cash and cash equivalents
Other assets acquired and liabilities assumed, net
Total purchase consideration
December 22,
2021
104,014
35,300
48,500
20,499
(2,981)
205,332
$
$
The goodwill of $104.0 million arising from the acquisition consists largely of revenue synergies expected from combining the operations of the Company and Digit. The goodwill is not
deductible for U.S. federal income tax purposes. We recognized a $108.5 million non-cash impairment charge for the year ended December 31, 2022. For details regarding the impairment
charge, refer to Note 7, Capitalized Software, Other Intangibles and Goodwill.
The table below summarizes the acquired intangible assets and developed technology, with estimated useful lives, as of the acquisition date:
Member relationships
Trade name
Developed technology
Total acquired intangibles and developed technology
Estimated fair values (in thousands)
Estimated useful life (years)
$
$
34,500
800
48,500
83,800
7.0
3.0
7.0
The fair values of the acquired intangibles and developed technology were determined using the following methodologies: We valued the developed technology using the multi-period
excess earnings method under the income approach. Member relationships were valued using the with-and-without method under the income approach. Trade names were valued by applying
the relief-from-royalty method under the income approach. The acquired intangibles and developed technology have a total weighted average amortization period of 7.0 years.
The unaudited pro forma information does not necessarily reflect the actual results of operations of the combined entities that would have been achieved, nor are they necessarily
indicative of future results of operations. The unaudited pro forma information reflects certain adjustments that were directly attributable to the acquisition of Digit, including additional
depreciation and amortization adjustments for the fair value of the assets acquired and liabilities assumed. The pro forma net loss for the year ended December 31, 2021 was adjusted to
exclude nonrecurring acquisition-related costs of $29.7 million.
(in thousands)
Total revenues
Net income (loss) attributable to shareholders
December 31,
2021
$
$
666,158
33,971
The Company recognized acquisition and integration related costs of approximately $ 29.7 million and $10.6 million in the years ended December 31, 2022 and 2021, respectively, which
are included in the General, administrative and other expense in the Consolidated Statements of Operations.
74
7.
Capitalized Software, Other Intangibles and Goodwill
Capitalized software, net consists of the following:
(in thousands)
Capitalized software, net:
System development costs
Acquired developed technology
Less: Accumulated amortization
Total capitalized software, net
Capitalized software, net
December 31,
2022
2021
$
$
135,303
48,500
(79,679)
104,124
$
$
84,550
48,500
(45,433)
87,617
Amortization of system development costs and acquired developed technology for years ended December 31, 2022 and 2021 was $34.2 million and $16.9 million, respectively. System
development costs capitalized in the years ended December 31, 2022 and 2021 were $51.5 million and $77.1 million, respectively.
Acquired developed technology was $48.5 million and is related to the acquisition of Digit.
Intangible Assets
The gross carrying amount and accumulated amortization, in total and by major intangible asset class are as follows:
(in thousands)
Intangible assets:
Member relationships
Trademarks
Other
Less: Accumulated amortization
Total intangible assets, net
Amortization of intangible assets for the years ended December 31, 2022 and 2021 was $7.9 million and $0.3 million.
Expected future amortization expense for intangible assets as of December 31, 2022 is as follows:
(in thousands)
2023
2024
2025
2026
2027
Thereafter
Total
Goodwill
December 31,
2022
December 31,
2021
34,500
6,426
3,000
(8,249)
35,677
$
$
$
Fiscal Years
$
$
34,500
6,364
3,000
(300)
43,564
7,948
7,798
4,929
4,929
4,929
4,780
35,313
The Company recorded goodwill of $ 104.0 million arising from the acquisition of Digit on December 22, 2021. The Company recorded increases to goodwill of $ 4.5 million, during the
twelve months ended December 31, 2022, as part of the twelve-month measurement period. These increases were primarily due to changes in deferred taxes resulting from the filing of Digit's
pre-acquisition tax returns.
Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. The Company performs impairment tests
related to its goodwill on an annual basis or when certain triggering events or circumstances are identified that would more likely than not reduce the estimated fair value of the goodwill below
its carrying amount.
In response to a sustained decline in the Company’s share price primarily driven by macroeconomic conditions, the Company conducted a quantitative test of its goodwill as of September
30, 2022. The Company considered the income approach, the guideline public company multiples approach and the market approach in determining a fair value for the Company which was
determined to be the only reporting unit for purposes of testing the goodwill. Given the uncertain macroeconomic environment there was a wide range of indications of fair value across the
approaches.
75
Although the corresponding value was the lowest in the range, the Company utilized the market approach because it was based on market observable inputs. The market approach estimates
fair value using the market capitalization of the Company as a basis.
As of September 30, 2022, the market capitalization plus the estimated control premium was less than the carrying value of the Company. As a result, the Company recognized a non-cash
pre-tax impairment charge of $108.5 million during the year ended December 31, 2022 to write down the carrying value of goodwill. The non-cash impairment charge is included in Goodwill
impairment in the Consolidated Statements of Operations for the year ended December 31, 2022. There were no goodwill impairment charges during the year ended December 31, 2021.
The following table represents the changes in goodwill since December 31, 2021:
(in thousands)
Balance as of December 31, 2021
Measurement adjustments during period
Impairment
Balance as of December 31, 2022
8.
Other Assets
Other assets consist of the following:
(in thousands)
Fixed assets
Total fixed assets
Less: Accumulated depreciation
Total fixed assets, net
Other assets
Loans held for sale
Prepaid expenses
Deferred tax assets
Current tax assets
Other
Total other assets
Fixed Assets
$
$
Goodwill
104,014
4,458
(108,472)
—
December 31,
2022
2021
48,212
(37,688)
10,524
50
24,167
1,793
8,245
19,401
64,180
$
$
$
$
44,100
(34,185)
9,915
491
25,355
3,923
13,330
19,330
72,344
$
$
$
$
Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $5.2 million and $9.4 million, respectively.
9.
Borrowings
The following table presents information regarding the Company's Secured Financing facilities:
Variable Interest Entity
Facility Amount
Maturity Date
Interest Rate
December 31, 2022
Balance
December 31, 2021
Balance
(in thousands)
Oportun CCW Trust
(1)
Oportun PLW Trust
Total secured financing
$
$
150,000
600,000
750,000
December 1, 2023
Variable
(1)
September 1, 2024
LIBOR (minimum of 0.00%)
+ 2.17%
$
$
76,574
$
240,994
317,568
$
40,108
353,781
393,889
(1)
The interest rate on the Secured Financing - CCW facility is LIBOR (minimum of 1.00%) plus 6.00% on the first $ 18.8 million of principal outstanding and LIBOR (minimum of 0.00%) plus 3.41% on the
remaining outstanding principal balance.
76
The following table presents information regarding asset-backed notes:
Variable Interest Entity
Initial note
amount issued
(1)
Initial collateral
balance
(2)
December 31, 2022
Current
collateral
balance
(2)
Current balance
(1)
Weighted average
interest
rate
(3)
Original revolving
period
(4)
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2022-3)
Oportun Issuance Trust (Series 2022-2)
Oportun Issuance Trust (Series 2022-A)
Oportun Issuance Trust (Series 2021-C)
Oportun Issuance Trust (Series 2021-B)
Oportun Funding XIV, LLC (Series 2021-A)
Oportun Funding XIII, LLC (Series 2019-A)
Total asset-backed notes recorded at fair value
Variable Interest Entity
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2021-C)
Oportun Issuance Trust (Series 2021-B)
Oportun Funding XIV, LLC (Series 2021-A)
Oportun Funding XIII, LLC (Series 2019-A)
Total asset-backed notes recorded at fair value:
$
$
300,000
400,000
400,000
500,000
500,000
375,000
279,412
2,754,412
$
$
310,993
410,212
410,211
512,762
512,759
383,632
294,118
2,834,687
$
$
285,218
313,689
380,313
435,951
432,123
348,046
192,334
2,387,674
$
$
301,967
344,218
414,293
518,929
519,182
389,740
218,571
2,706,900
8.43 %
7.03 %
5.44 %
2.48 %
2.05 %
1.79 %
3.46 %
N/A
N/A
2 years
3 years
3 years
2 years
3 years
Initial note
amount issued
(1)
Initial collateral
balance
(2)
December 31, 2021
Current
collateral
balance
(2)
Current balance
(1)
Weighted average
interest rate
(3)
Original revolving
period
(4)
$
$
500,000
500,000
375,000
279,412
1,654,412
$
$
512,762
512,759
383,632
294,118
1,703,271
$
$
497,774
498,487
374,363
281,082
1,651,706
$
$
525,436
521,174
391,325
299,310
1,737,245
2.48 %
2.05 %
1.79 %
3.46 %
3 years
3 years
2 years
3 years
(1)
(2)
(3)
Initial note amount issued includes notes retained by the Company as applicable. The current balances are measured at fair value for asset-backed notes recorded at fair value.
Includes the unpaid principal balance of loans receivable, the balance of required reserve funds, cash, cash equivalents and restricted cash pledged by the Company.
Weighted average interest rate excludes notes retained by the Company. There were no notes retained by the Company as of December 31, 2022. The weighted average interest rate for Series 2022-2 and Series
2022-3 will change over time as the notes pay sequentially (in class priority order).
(4)
The revolving period for Series 2019-A ended on August 1, 2022 and the asset-backed notes have been amortizing since then. Series 2022-2 and Series 2022-3 are both amortizing deals with no revolving
period.
77
The following table presents information regarding the Company's Acquisition and Corporate Financings:
Entity
Original Balance
(1)
Maturity Date
(2)
Interest Rate
(3)
December 31, 2022
Balance
December 31, 2021
Balance
(in thousands)
Oportun Financial Corporation
Oportun RF, LLC
Total acquisition and corporate financing
$
$
150,000
116,000
266,000
September 14, 2026
9.00% $
141,957
$
SOFR (minimum of 0.00% +
May 1, 2024
SOFR (minimum of 0.00%) +
8.00%
$
80,922
222,879
$
—
114,092
114,092
(1)
The Acquisition Financing Facility (Oportun RF, LLC) was amended on May 24, 2022 and upsized for an additional $ 20.9 million and was amended again on July 28, 2022 and upsized for an additional
$9.1 million.
(2)
Pursuant to an amendment on November 2, 2022, the maturity date of the Acquisition Financing Facility (Oportun RF, LLC) was changed from October 2024 to June 2024. The Acquisition Financing Facility
was further amended on December 2, 2022 to change the maturity date to May 2024.
(3)
The interest rate on the Acquisition Financing Facility (Oportun RF, LLC) was LIBOR (minimum of 0.00%) plus 8.00% as of December 31, 2021.
On May 24, 2022 the Company completed the issuance of $ 400.0 million of two-year asset-backed notes in a private asset-backed securitization secured by a pool of its unsecured and
secured personal installment loans (the “2022-A Securitization”). The 2022-A Securitization included four classes of fixed rate notes: Class A, Class B, Class C and Class D notes. The Class
A, Class B and Class C notes were priced with a weighted average yield of 5.68% per annum. The Class D notes were initially retained by an affiliate of the Company and subsequently sold to
third parties on July 28, 2022.
Also on May 24, 2022, and subsequently on July 28, 2022, pursuant to amended indentures, Oportun RF, LLC, a wholly owned subsidiary of the Company issued an additional
$20.9 million and $9.1 million asset-backed floating rate variable funding notes, and asset-backed residual certificates, both of which are secured by certain cash flows from the Company's
securitizations and guaranteed by Oportun, Inc., increasing the size of the Acquisition Financing facility to $ 119.5 million The amendments also replaced the interest rate based on LIBOR with
an interest rate based on SOFR plus 8.00%. The Acquisition Financing facility was scheduled to pay down based on an amortization schedule with a final payment in May 2024. Subsequently,
on February 10, 2023, the Acquisition Financing facility was further amended, including among other things, revising the interest rate to SOFR plus 11.00% and adjusting the amortization
schedule to defer $42.0 million in principal payments through July 2023, with final payment in October 2024.
On July 22, 2022 the Company completed the issuance of $ 400.0 million of Series 2022-2 fixed rate asset-backed notes in a private asset-backed securitization transaction secured by a
pool of unsecured and secured installment loans. The notes were priced with a weighted average yield of 8.00% per annum and weighted average interest rate over the term of the transaction of
7.77% per annum.
On September 14, 2022, the Company entered into a credit agreement to borrow $150.0 million of a senior secured term loan (the “Corporate Financing”). The term loan bears interest,
payable in cash, at an amount equal to 1-month term SOFR plus 9.00%. The term loan is scheduled to mature on September 14, 2026, and is not subject to amortization. Certain prepayments of
the term loan is subject to a prepayment premium. The obligations under the credit agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the term
loan, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions. On March 10, 2023 we upsized and
amended our Corporate Financing facility to be able to borrow up to an additional $75 million. At closing and as part of the Incremental Tranche A-1, we borrowed $20.8 million and will
receive an additional $4.2 million in Incremental Tranche A-2 loans on or about March 27, 2023. We may borrow up to an aggregate additional amount of $ 50.0 million on an uncommitted
basis, in two $25.0 million tranches, expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively. The term loan now bears
interest at an amount payable in cash equal to 1-month term SOFR plus 9.00% plus an amount payable in cash or in kind, at the Company’s option, equal to 3.00%.
On November 3, 2022, the Company completed the issuance of $ 300 million of Series 2022-3 fixed rate asset-backed notes in a private asset-backed securitization transaction secured by
a pool of unsecured and secured installment loans. The notes were priced with a weighted average yield of 10.94% per annum and weighted average interest rate of 9.51% per annum.
On March 8, 2023, the Credit Card Warehouse was amended. This amendment, among other things, extends the revolving period by a year, to December 31, 2024, and reduces the
commitment from $150.0 million to $120.0 million.
As of December 31, 2022 and 2021, the Company was in compliance with all covenants and requirements of the Secured Financing, Acquisition Financing and Corporate Financing
facilities and asset-backed notes.
78
10.
Other Liabilities
Other liabilities consist of the following:
(in thousands)
Accounts payable
Accrued compensation
Accrued expenses
Accrued interest
Amount due to whole loan buyer
Deferred tax liabilities
Current tax liabilities and other
Total other liabilities
11.
Stockholders' Equity
December 31,
2022
2021
$
$
9,670
12,502
26,193
8,445
3,073
30,575
9,570
100,028
$
$
8,343
36,417
36,464
3,276
14,062
28,424
8,372
135,358
Preferred Stock - The Board has the authority, without further action by the Company's stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and
preferences, including voting rights, designated from time to time by the Board. There were no shares of undesignated preferred stock issued or outstanding as of December 31, 2022 or 2021.
Common Stock - As of December 31, 2022 and 2021, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $0.0001 per share. As of December
31, 2022, 33,626,630 and 33,354,607 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock. As of December 31, 2021, 32,276,419 and 32,004,396
shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.
12.
Equity Compensation and Other Benefits
2019 Equity Incentive Plan
We currently have one stockholder-approved plan from which we can issue stock-based awards, which was approved by our stockholders in fiscal year 2019 (the "2019 Plan"). The 2019
Plan became effective on September 25, 2019 and replaced the Amended and Restated 2005 Stock Option / Stock Issuance Plan and the 2015 Stock Option/Stock Issuance Plan (collectively,
the “Previous Plans”). The Previous Plans solely exist to satisfy outstanding options previously granted under those plans. The 2019 Plan provides for the grant of incentive stock options
("ISOs"), nonstatutory stock options ("NSOs"), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based awards, and other awards (collectively,
"awards"). ISOs may be granted only to the Company's employees, including officers, and the employees of its affiliates. All other awards may be granted to the employees, including
officers, non-employee directors and consultants and the employees and consultants of the Company's affiliates. The maximum number of shares of our common stock that may be issued
under the 2019 Plan will not exceed 9,072,159 shares, of which, 1,802,994 were available for future awards as of December 31, 2022. The number of shares of the Company's common stock
reserved for issuance under its 2019 Plan will automatically increase on January 1 of each year for the remaining term of the plan, by 5% of the total number of shares of its common stock
outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares determined by the Board prior to the applicable January 1st. The shares available for
issuance increased by 1,600,219 shares, on January 1, 2022, pursuant to the automatic share reserve increase provision.
2019 Employee Stock Purchase Plan
In September 2019, the Board adopted, and stockholders approved, the Company's 2019 Employee Stock Purchase Plan (the "ESPP"). The ESPP became effective on September 25, 2019.
The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward
the Company's success and that of its affiliates. The ESPP includes two components. One component is designed to allow eligible U.S. employees to purchase common stock in a manner that
may qualify for favorable tax treatment under Section 423 of the Code. In addition, purchase rights may be granted under a component that does not qualify for such favorable tax treatment
when necessary or appropriate to permit participation by eligible employees who are foreign nationals or employed outside of the United States while complying with applicable foreign laws.
The maximum aggregate number of shares of common stock that may be issued under the ESPP is 1,593,052 shares and as of December 31, 2022, no shares have been issued under the ESPP.
The number of shares of the Company's common stock reserved for issuance under its ESPP will automatically increase on January 1 of each calendar year for the remaining term of the plan
by the lesser of (1) 1% of the total number of shares of its capital stock outstanding on December 31 of the preceding calendar year, (2) 726,186 shares, and (3) a number of shares determined
by the Board. The shares available for issuance increased by 320,043 shares, on January 1, 2022, pursuant to the automatic share reserve increase provision.
Generally, all regular employees, including executive officers, employed by the Company or by any of its designated affiliates, will be eligible to participate in the ESPP and may
contribute, normally through payroll deductions, up to 15% of their earnings (as defined in the ESPP) for the purchase of common stock under the ESPP. Unless otherwise determined by the
Board, common stock will be purchased for the accounts of
79
employees participating in the ESPP at a price per share equal to the lower of (a) 85% of the fair market value of a share of the Company's common stock on the first date of an offering or
(b) 85% of the fair market value of a share of the common stock on the date of purchase.
2021 Inducement Equity Incentive Plan
Effective December 30, 2021, the Company adopted the 2021 Inducement Equity Incentive Plan (the “2021 Inducement Plan”), pursuant to which the Company reserved 563,955 shares
of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s
entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The maximum number of shares of our common stock that may be issued under
the 2021 Inducement Plan will not exceed 563,955 shares, of which, 39,635 were available for future awards as of December 31, 2022. The 2021 Inducement Plan was approved by the
Company’s Board without stockholder approval in accordance with such rule.
Stock Options
The term of an option may not exceed 10 years as determined by the Board, and each option generally vests over a four-year period with 25% vesting on the first anniversary date of the
grant and 1/36th of the remaining amount vesting at monthly intervals thereafter. Option holders are allowed to exercise unvested options to acquire restricted shares. Upon termination of
employment, option holders have a period of up to three months in which to exercise any remaining vested options. The Company has the right to repurchase at the original purchase price any
unvested but issued common shares upon termination of service. Unexercised options granted to participants who separate from the Company are forfeited and returned to the pool of stock
options available for grant.
The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The fair value is then amortized ratably over the requisite service periods of
the awards, which is generally the vesting period.
The fair value of stock option grants was estimated with the following assumptions:
Expected volatility (employee)
Risk-free interest rate (employee)
Expected term (employee, in years)
Expected dividend
These assumptions are defined as follows:
Year Ended December 31,
2022
63.4%
2.3%
6.1
—%
2021
62.5%
0.9%
6.1
—%
•
•
•
•
Expected Volatility ‑ Since the Company does not have enough trading history to use the volatility of its own common stock, the option’s expected volatility is estimated based on
historical volatility of a peer group’s common stock.
Risk-Free Interest Rate‑ The risk-free interest rate is based on the U.S. Treasury zero-coupon issues in effect at the time of grant for periods corresponding with the expected term of
the option.
Expected Term ‑ The option’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding.
Expected Dividend - The Company has no plans to pay dividends.
Stock Option Activity - A summary of the Company's stock option activity under the 2005 Plan, 2015 Plan, and 2019 Plan at December 31, 2022 is as follows:
(in thousands, except share and per share data)
Balance – January 1, 2022
Options granted
Options exercised
Options canceled
Options forfeited
Balance – December 31, 2022
Options vested and expected to vest - December 31, 2022
Options vested and exercisable - December 31, 2022
Options Weighted-
Average Exercise Price
14.63
13.02
1.58
20.25
17.24
17.71
17.71
18.39
Options Outstanding
4,187,855
541,713
(1,005,738)
(331,273)
(94,019)
3,298,538
3,298,538
2,482,741
80
Weighted Average
Remaining Life
(in years)
Aggregate Intrinsic
Value
4.59
$
27,011
5.43
5.43
4.55
$
$
$
202
202
202
Information on stock options granted, exercised and vested is as follows:
(in thousands, except per share data)
Weighted average fair value per share of options granted
Cash received from options exercised, net
Aggregate intrinsic value of options exercised
Fair value of shares vested
(1)
Year Ended December 31,
2022
2021
$
$
7.76
(4,636)
11,884
3,863
12.11
3,272
2,380
4,974
(1)
The amount reflected for the year ended December 31, 2022 is the net of cash received from options exercised of $1.6 million and the cash paid for employee tax withholding settled in shares of $6.2 million.
As of December 31, 2022 and 2021, the Company’s total unrecognized compensation cost related to nonvested stock-based option awards granted to employees was, $6.2 million and $6.9
million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.6 years and 2.2 years, respectively.
Restricted Stock Units
The Company’s restricted stock units ("RSUs") vest upon the satisfaction of time-based criterion of up to four years. In most cases, the service-based requirement will be satisfied in
installments as follows: 25% of the total number of RSUs awarded will have the service-based requirement satisfied during the month in which the 12-month anniversary of the vesting
commencement date occurs, and thereafter 1/16th of the total award in a series of 12 successive equal quarterly installments or 1/4th of the total award in a series of three successive equal
annual installments following the first anniversary of the initial service vest date.
Stock-based compensation cost for RSUs is measured based on the fair market value of the Company’s common stock on the date of grant.
As part of the Digit acquisition in 2021, 501,906 shares of the Company’s restricted stock units were issued to certain Digit employees to replace the outstanding unvested stock options
that were previously issued to the employees of Digit. The RSUs are subject to the same service-based requirements as the historical stock option grants. The Company awarded an additional
650,460 RSUs to certain Digit employees that vest upon satisfaction of time-based criterion of up to four years. For grants with a one-year vesting term, 50% will vest on the six-month
anniversary of the vesting commencement date with the balance vesting in two successive equal quarterly installments thereafter. For grants with a two-year vesting term, 25% will vest on the
six-month anniversary of the vesting commencement date with the balance vesting in six equal quarterly installments thereafter or 50% will vest on the twelve-month anniversary of the
vesting commencement date with the balance vesting in four successive equal quarterly installments thereafter. For grants with a three-year vesting term, 16.667% will vest on the six-month
anniversary of the vesting commencement date, with the balance vesting in ten successive equal quarterly installments thereafter. For grants with four-year vesting term, 12.5% will vest on the
six-month anniversary of the vesting commencement date, with the balance vesting in 14 successive equal quarterly installments thereafter.
A summary of the Company’s RSU activity under the 2015 Plan, 2019 Plan and 2021 Inducement Plan for the year ended December 31, 2022 is as follows:
Balance – January 1, 2022
Granted
Vested
Forfeited
(1)
Balance – December 31, 2022
Expected to vest after December 31, 2022
RSU Outstanding
Weighted Average Grant-
Date Fair Value
3,354,333
3,091,511
(1,224,579)
(726,318)
4,494,947
4,420,579
19.48
11.48
19.52
16.95
14.37
14.45
(1)
The Company allows its Board to defer all or a portion of monetary remuneration paid to the Director. As of December 31, 2022, there were 74,368 restricted stock units vested for which the holders elected to
defer delivery of the Company's shares.
As of December 31, 2022 and 2021, the Company's total unrecognized compensation cost related to nonvested restricted stock unit awards granted to employees was, $51.6 million and
$54.1 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.7 years and 2.6 years, respectively.
81
Stock-based Compensation - Total stock-based compensation expense included in the Consolidated Statements of Operations, net of amounts capitalized to system development costs is
as follows:
(in thousands of dollars)
Technology and facilities
Sales and marketing
Personnel
Total stock-based compensation
(1)
Year Ended December 31,
2022
2021
$
$
6,993
143
20,484
27,620
$
$
2,844
125
15,888
18,857
(1)
Amounts shown are net of $2.5 million and $1.0 million of capitalized stock-based compensation for the year ended December 31, 2022 and 2021, respectively.
Cash flows from the tax shortfalls or benefits for tax deductions resulting from the exercise of stock options in comparison to the compensation expense recorded for those options are
required to be classified as cash from financing activities. The Company recognized $8.1 million and $5.4 million of income tax benefit in its consolidated statement of operations related to
stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively. Additionally, the total income tax expense (benefit) recognized in the income statement
for share-based compensation exercises was $3.3 million and $(0.2) million for the years ended December 31, 2022 and 2021, respectively.
Retirement Plan
The Company maintains a 401(k) Plan, which enables employees to make pre-tax or post-tax deferral contributions to the participating employees account. Employees may contribute a
portion of their pay up to the annual amount as set periodically by the Internal Revenue Service. The Company provides for an employer 401(k) contribution match of up to 4% of an
employee’s eligible compensation. The total amount contributed by the Company for the years ended December 31, 2022 and 2021 was $6.4 million and $3.7 million, respectively. All
employee and employer contributions will be invested according to participants’ individual elections.
13.
Revenue
Interest Income - Total interest income included in the Consolidated Statements of Operations is as follows:
(in thousands)
Interest income
Interest on loans
Fees on loans
Total interest income
Non-interest Income - Total non-interest income included in the Consolidated Statements of Operations is as follows:
(in thousands)
Non-interest income
Gain on loan sales
Servicing fees
Subscription revenue
Other income
Total non-interest income
14.
Income Taxes
The following are the domestic and foreign components of the Company’s income before taxes:
(in thousands)
Domestic
Foreign
Income (loss) before taxes
82
Year Ended December 31,
2022
2021
854,245
21,869
876,114
$
$
566,155
9,684
575,839
Year Ended December 31,
2022
2021
5,703
19,928
31,186
19,614
76,431
$
$
26,750
13,253
813
10,127
50,943
Year Ended December 31,
2022
2021
(83,793)
8,507
(75,286)
$
$
61,087
1,704
62,791
$
$
$
$
$
$
The provision for income taxes consisted of the following:
(in thousands)
Current
Federal
State
Foreign
Total current
Deferred
Federal
State
Foreign
Total deferred
Total provision for income taxes
Year Ended December 31,
2022
2021
(1,217)
1,505
2,227
2,515
(712)
806
(151)
(57)
2,458
$
$
$
$
$
$
(1,394)
(516)
836
(1,074)
11,005
5,372
74
16,451
15,377
$
$
$
$
$
$
Income tax expense was $ 2.5 million and $15.4 million for the years ended December 31, 2022 and 2021, which represents an effective tax rate of (3.3)% and 24.5%, respectively.
A reconciliation of income tax expense with the amount computed by applying the statutory U.S. federal income tax rates to income before provision for income taxes is as follows:
(in thousands)
Income tax (benefit) expense computed at U.S. federal statutory rate
State tax
Foreign rate differential
Federal tax credits
Share based compensation expense
Change in unrecognized tax benefit reserves
Net operating loss carryback tax rate differential
Return to provision adjustment
Non-deductible acquisition costs
Goodwill impairment
Fines and penalties
Other
Income tax expense
Effective tax rate
83
Year Ended December 31,
2022
2021
$
$
(15,810)
1,403
289
(2,621)
506
1,326
—
(5,798)
—
22,779
578
(194)
2,458
$
$
13,186
4,646
552
(1,962)
(353)
853
(172)
(2,812)
1,458
—
6
(25)
15,377
(3.3)%
24.5 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes, and operating losses and tax credit carryforwards.
The primary components of the Company’s net deferred tax assets and liabilities are composed of the following:
(in thousands)
Deferred tax assets:
Accrued expenses and reserves
Leases
Share-based compensation
CARES Act payroll taxes
Net operating loss & credit carryforward
Other
Total deferred tax assets
Valuation allowance
Deferred tax liabilities:
System development costs
Right of use assets
Depreciation and amortization
Fair value adjustment - Loans Receivable
Fair value adjustment - Bonds Payable
Other
Total deferred tax liabilities
Net deferred taxes
December 31,
2022
2021
$
$
$
$
$
3,361
10,174
8,335
—
41,169
245
63,284
—
(11,803)
(8,163)
(6,813)
(12,077)
(53,210)
—
(92,066)
(28,782)
$
$
$
$
$
3,356
12,859
7,410
536
23,916
—
48,077
—
(22,323)
(10,353)
(7,112)
(30,718)
(1,838)
(234)
(72,578)
(24,501)
As provided for in the Tax Cuts and Jobs Act of 2017, our historical earnings were subject to the one-time transition tax and can now be repatriated to the U.S. with a de minimis tax cost
due to the participation exemption put in place by the 2017 Tax Act. The Company continues to assert that both its historical and current earnings in its foreign subsidiaries are permanently
reinvested and therefore no deferred taxes have been provided.
On December 22, 2021, the Company completed the acquisition of Digit, in which Digit became a wholly-owned subsidiary of the Company, triggering an ownership change under
Section 382 of the Internal Revenue Code of 1986, as amended. This transaction was considered a stock acquisition for tax purposes. The tax attributes acquired were updated during the year
due to the twelve-month measurement period. Digit has a $53.3 million federal net operating loss carryforward, all of which is available to offset future taxable income during the carryforward
periods based on limitations under IRC Section 382. The Company also acquired state NOLs of $27.4 million. The Company has not recorded a valuation allowance on the federal or state net
operating loss balances as it believes that it is more likely than not that the deferred tax assets will be realized.
As of December 31, 2022, the Company had federal net operating loss carryforwards of $135.2 million, of which $17.7 million expires beginning in 2033 and $117.5 million carries
forward indefinitely. Additionally, the Company had state net operating loss carryforwards of $ 119.1 million which are set to begin expiring in 2031. As of December 31, 2022, the Company
had federal and California research and development tax credit carryforwards of $5.2 million and $5.0 million, respectively. The federal research and development tax credit expires beginning
in 2041, and the California research and development tax credits are not subject to expiration.
The following table summarizes the activity related to the unrecognized tax benefits:
(in thousands)
Balance as of January 1,
Increases related to current year tax positions
Increases related to prior year tax positions
Decreases related to prior year tax positions
Balance as of December 31,
Year Ended December 31,
2022
2021
5,170
894
544
—
6,608
$
$
3,927
680
638
(75)
5,170
$
$
Interest and penalties related to the Company’s unrecognized tax benefits accrued as of December 31, 2022 and 2021 were $ 0.9 million and $0.4 million, respectively. The Company’s
policy is to recognize interest and penalties associated with income taxes in income tax expense. The Company does not expect to release any of the uncertain tax positions within the next
twelve months. The total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, is $4.5 million.
84
Due to the net operating loss carryforwards, the Company’s United States federal and significant state returns are open to examination by the Internal Revenue Service and state
jurisdictions for years ended December 31, 2012 and 2013, respectively, and forward. For Mexico, all tax years ended December 31, 2017 and forward remain open for examination by the
Mexico taxing authorities. For India, all tax years remain open for examination by the India taxing authorities.
15.
Fair Value of Financial Instruments
Financial Instruments at Fair Value
The Company elected the fair value option for all loans receivable held for investment and for all asset-backed notes. Loans that the Company designates for sale will continue to be
accounted for as held for sale and recorded at the lower of cost or fair value until the loans receivable are sold.
The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances as of the dates shown:
(in thousands)
Assets
Loans receivable - personal loans
Loans receivable - credit cards
Total loans receivable
Liabilities
Asset-backed notes
December 31, 2022
December 31, 2021
Unpaid Principal
Balance
Fair Value
Unpaid Principal
Balance
Fair Value
$
$
$
2,967,266
131,343
3,098,609
2,582,025
$
$
$
3,027,401
116,252
3,143,653
2,387,674
$
$
$
2,205,537
67,327
2,272,864
1,654,412
$
$
$
2,321,150
65,657
2,386,807
1,651,706
The Company calculates the fair value of the asset-backed notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar
notes, which are Level 2 input measures.
The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses
inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value. The following tables present
quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value. The personal loan receivables
balance at fair value as of 12/31/2022, consists of $2,903.2 million of unsecured personal loan receivables and $ 124.2 million of secured personal loan receivables.
Personal Loan Receivables
Remaining cumulative charge-offs
Remaining cumulative prepayments
Average life (years)
Discount rate
(1)
(1)
Minimum
5.06%
—%
0.05
11.34%
December 31, 2022
December 31, 2021
(3)
Maximum
51.45%
33.59%
1.52
11.34%
Weighted Average
(2)
9.86%
28.73%
1.01
11.34%
Minimum
6.75%
—%
0.22
6.90%
Maximum
51.86%
44.25%
1.51
6.90%
Weighted Average
(2)
9.53%
32.47%
0.87
6.90%
(1)
(2)
(3)
Figure disclosed as a percentage of outstanding principal balance.
Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of borrower, original loan maturity terms).
The weighted average amounts disclosed for remaining cumulative charge-offs, average life and discount rate and the minimum and maximum discount rate as of December 31, 2021 differ from what was
previously disclosed for comparability to amounts disclosed as of December 31, 2022. The amounts disclosed previously as of December 31, 2021 included aggregated inputs for both personal loan
receivables and credit card receivables. This disclosure has been disaggregated as of December 31, 2022.
Credit Card Receivables
Remaining cumulative charge-offs
Principal payment rate
Average life (years)
Discount rate
(1)
(1)
(1)
Figure disclosed as a percentage of outstanding principal balance.
December 31, 2022
Range
22.80%
9.28%
0.69
14.84%
December 31, 2021
Range
11.81%
18.07%
0.34
8.35%
Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the years ended December 31, 2022 and 2021.
Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When
multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.
For personal loan receivables, the Company developed an internal model to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the
model combines receivable characteristics with assumptions about borrower behavior based on the
85
Company’s historical loan performance. These cash flows are then discounted using a required rate of return that management estimates would be used by a market participant.
The Company tested the unsecured personal loan fair value model by comparing modeled cash flows to historical loan performance to ensure that the model was complete, accurate and
reasonable for the Company’s use. The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair
value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.
For credit card receivables, the Company uses historical data to derive assumptions about certain loan portfolio characteristics such as principal payment rates, interest yields and fee
yields. Similar to the model used for personal loan receivables, the Company engaged a third party to create an independent fair value estimate, which provides a range of fair values that are
compared for reasonableness.
The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:
(in thousands)
Balance – beginning of period
Principal disbursements
Principal payments from borrowers
Gross charge-offs
Net (decrease) increase in fair value
Balance ‑ end of period
December 31,
2022
2021
2,386,807
3,111,276
(1,974,832)
(310,701)
(68,897)
3,143,653
$
$
1,696,526
2,052,280
(1,276,058)
(142,985)
57,044
2,386,807
$
$
As of December 31, 2022, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $4.1 million, and the aggregate unpaid principal balance for
loans that are 90 days or more past due was $35.2 million. As of December 31, 2021, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 3.5
million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $20.7 million.
Financial Instruments Disclosed But Not Carried at Fair Value
The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value
hierarchy:
(in thousands)
Assets
Cash and cash equivalents
Restricted cash
Liabilities
Accounts payable
Secured financing (Note 9)
Acquisition and corporate financing (Note 9)
(in thousands)
Assets
Cash and cash equivalents
Restricted cash
Loans held for sale (Note 5)
Liabilities
Accounts payable
Secured financing (Note 9)
Acquisition and corporate financing (Note 9)
$
$
Carrying value
Estimated fair value
Level 1
Estimated fair value
Level 2
Level 3
December 31, 2022
98,817
105,000
$
98,817
105,000
$
98,817
105,000
$
$
—
—
9,670
320,000
235,679
9,670
306,574
233,166
9,670
—
—
—
306,574
233,166
Carrying value
Estimated fair value
Level 1
Estimated fair value
Level 2
Level 3
December 31, 2021
$
130,959
62,001
491
8,343
398,000
116,000
$
130,959
62,001
547
8,343
396,081
116,000
$
130,959
62,001
—
8,343
—
—
$
—
—
—
—
396,081
116,000
—
—
—
—
—
—
—
547
—
—
—
The Company uses the following methods and assumptions to estimate fair value:
•
Cash, cash equivalents, restricted cash and accounts payable ‑ The carrying values of certain of the Company’s financial instruments, including cash and cash equivalents, restricted
cash and accounts payable, approximate Level 1 fair values of these financial instruments due to their short-term nature.
86
•
•
Loans held for sale ‑ The fair values of loans held for sale are based on a negotiated agreement with the purchaser.
Secured financing and acquisition and corporate financing ‑ The fair values of the secured financing and acquisition and corporate financing facilities have been calculated using
discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.
There were no transfers in or out of Level 3 assets and liabilities for the years ended December 31, 2022 and 2021.
16.
Leases, Commitments and Contingencies
Leases - The Company’s leases are primarily for real property consisting of retail locations and office space and have remaining lease terms of 10 years or less.
During the first quarter of 2022, the Company made the decision to close an additional 27 retail locations in April 2022. The Company incurred $ 1.4 million in expenses related to the
accelerated amortization of right-of-use assets for the year ended December 31, 2022. The retail location closures were substantially completed in the second quarter of 2022 and the Company
does not expect any additional expenses to be incurred.
As a result of the retail network optimization plan, for the year ended December 31, 2021, the Company incurred $ 12.8 million in expenses related to retail location closures. $5.2 million
of the expenses related to the retail location closures for the year ended December 31, 2021 relate to the accelerated amortization of right-of-use assets and the renegotiation of lease liabilities.
The initial retail network optimization plan was substantially completed in the third quarter of 2021.
The Company has elected the practical expedient to keep leases with terms of 12 months or less off the balance sheet as no recognition of a lease liability and a right-of-use asset is
required. Operating lease expense is recognized on a straight-line basis over the lease term in "Technology and facilities" in the Consolidated Statements of Operations.
All of the Company’s existing lease arrangements are classified as operating leases. At the inception of a contract, the Company determines if the contract is or contains a lease. At the
commencement date of a lease, the Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing the Company's right to use the
underlying asset for the duration of the lease term. The Company’s leases include options to extend or terminate the arrangement at the end of the original lease term. The Company generally
does not include renewal or termination options in its assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain. Variable lease payments and
short-term lease costs were deemed immaterial. The Company’s leases do not provide an explicit rate. The Company uses its contractual borrowing rate to determine lease discount rates.
As of December 31, 2022, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:
(in thousands)
Lease expense
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Imputed interest
Total leases
Total sublease income
Net lease liabilities
Weighted average remaining lease term
Weighted average discount rate
87
$
$
$
$
Operating Leases
13,879
11,940
9,969
3,918
1,032
25
40,763
(2,816)
37,947
—
37,947
3.2 years
4.06 %
As of December 31, 2021, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:
(in thousands)
Lease expense
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Imputed interest
Total leases
Sublease income
2022
2023 and thereafter
Total lease payments
Imputed interest
Total sublease income
Net lease liabilities
Weighted average remaining lease term
Weighted average discount rate
$
$
$
$
$
Operating Leases
14,927
13,214
11,142
9,238
3,387
706
52,614
(4,030)
48,584
(896)
—
(896)
11
(885)
47,699
3.9 years
4.01 %
Rental expenses under operating leases for the years ended December 31, 2022 and 2021 were $18.5 million and $24.3 million, respectively.
Purchase Commitment ‑ The Company has commitments to purchase information technology and communication services in the ordinary course of business, with various terms through
2023. These amounts are not reflective of the Company’s entire anticipated purchases under the related agreements; rather, they are determined based on the non-cancelable amounts to which
the Company is contractually obligated. The Company’s purchase obligations are $ 26.4 million in 2023, $14.1 million in 2024, $5.5 million in 2025, $2.0 million in 2026, and $0.0 million in
2027 and thereafter.
Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with Pathward, N.A. on August 11, 2020. In accordance with the
agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by Pathward based on thresholds specified
in the agreements. Lending under the partnership was launched in August of 2021 and as of December 31, 2022, the Company has a commitment to purchase an additional $0.6 million of
program loans based on originations through December 31, 2022.
Whole Loan Sale Program ‑ Through March 4, 2022, the Company had a commitment to sell to a third-party institutional investor 10% of its unsecured loan originations that satisfy
certain eligibility criteria, and an additional 5% at the Company’s sole option. The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4,
2022. For details regarding the whole loan sale program, refer to Note 5, Loans Held for Sale.
Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at December 31, 2022 and 2021 were $45.0 million and $39.8 million, respectively.
WebBank has a direct obligation to borrowers to fund such credit card commitments subject to the respective account agreements with such borrowers; however, pursuant to the Receivables
Purchase Agreement between WebBank and Oportun, Inc., the Company has the obligation to purchase receivables from WebBank representing these unfunded amounts.
Litigation
Regulatory Proceedings
On March 3, 2021, the Company received a Civil Investigative Demand (CID) from the CFPB. The stated purpose of the CID is to determine whether small-dollar lenders or associated
persons, in connection with lending and debt-collection practices, have failed to comply with certain federal consumer protection laws over which the CFPB has jurisdiction. The Company
received additional information requests related to the CID. The information requests are focused on the Company's legal collection practices from 2019 to 2021 and hardship treatments
offered to members during the COVID-19 pandemic. On September 15, 2022, the Company received a Notice and Opportunity to Respond and Advise (“NORA”) letter from the staff of the
CFPB in connection with the CID, stating that it is considering whether to recommend that the CFPB take legal action against the Company based on alleged violations focused on the
Company's failure to timely dismiss certain lawsuits and the hardship treatments offered during the COVID-19 pandemic, including credit reporting related thereto. On October 14, 2022, the
Company provided the CFPB with its written response to the NORA letter disputing the allegations. The Company is cooperating fully with the CFPB with respect to this matter and the
Company believes that its business practices have been in full compliance with applicable laws. Because the CFPB has broad authority to determine what it views as potentially unfair,
deceptive or abusive acts or practices, at this time, the Company is unable to predict the ultimate outcome of this matter.
88
Digit received a CID from the CFPB in June 2020. The CID was disclosed and discussed during the acquisition process. The stated purpose of the CID is to determine whether Digit, in
connection with offering its products or services, misrepresented the terms, conditions, or costs of the products or services in a manner that is unfair, deceptive, or abusive. While the Company
believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, in the interest of resolving this matter, on August 11, 2022, Digit
agreed to a consent order with the CFPB resolving such CID. In connection with such consent order, Digit agreed to implement a redress and compliance plan to pay at least $68,145 in
consumer redress to consumers who may have been harmed and paid a $2.7 million civil penalty to the CFPB in the third quarter of 2022. The Company had previously established a reserve
for the redress and civil penalty in the second quarter of 2022.
From time to time, the Company may bring or be subject to other legal proceedings and claims in the ordinary course of business, including legal proceedings with third parties asserting
infringement of their intellectual property rights, consumer litigation, and regulatory proceedings. The Company is not presently a party to any other legal proceedings that, if determined
adversely to the Company, would individually or taken together have a material adverse effect on its business, financial condition, cash flows or results of operations.
17.
Subsequent Events
On February 9, 2023, the Company announced that it is taking a series of measures to streamline its operations, including reducing the size of its corporate staff by 10%, impacting
approximately 155 employees, and reducing its expenditures on external contractors. In relation to these and other personnel related activities, management expects to incur non-recurring, pre-
tax charges of $6 to $7 million in the first quarter of 2023. The estimates of the charges and expenditures that the Company expects to incur in connection with these activities, and the timing
thereof, are subject to a number of assumptions, and actual amounts may differ materially from estimates. The Company may also incur charges and expenditures not currently contemplated
due to unanticipated events that may occur in connection with these measures.
On February 10, 2023, the Acquisition Financing facility was further amended. This fifth amendment, among other things, revises the interest rate from SOFR plus 8.00% to SOFR plus
11.00% and adjusts the amortization schedule to defer $42.0 million in principal payments through July 2023, with a final payment in October 2024.
On March 8, 2023, the Credit Card Warehouse was further amended. This amendment, among other things, extends the revolving period by a year, to December 31, 2024, and reduces the
commitment from $150.0 million to $120.0 million.
On March 10, 2023 (the “Second Amendment Closing Date”), the Company amended its Corporate Financing facility by entering into an Amendment No. 2 (the “Second Amendment”)
by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain affiliates of Neuberger Berman Specialty Finance as lenders, and Wilmington
Trust, National Association, as administrative agent and collateral agent (the “Agent”), which amended the Credit Agreement, dated as of September 14, 2022 (as amended, supplemented or
otherwise modified, including by the Second Amendment, the “Amended Credit Agreement”), by and among the Company, the lenders from time to time party thereto and the Agent.
On the Second Amendment Closing Date, the Company borrowed $ 20.8 million of incremental term loans (the “Incremental Tranche A-1 Loans”) and intends to borrow an additional
$4.2 million of incremental term loans (the “Incremental Tranche A-2 Loans”) on or about March 27, 2023, which amount has been committed by the applicable lenders. Under the Amended
Credit Agreement, the Company may borrow up to an aggregate additional amount of $ 50.0 million on an uncommitted basis, in two $25.0 million tranches (the “Incremental Tranche B
Loans” and the “Incremental Tranche C Loans”) expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.
The loans (the “Loans”) and other obligations under the Amended Credit Agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the Loans,
including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions.
Following the Second Amendment Closing Date the Loans bear interest, at (a) an amount equal to 1-month term SOFR plus 9.00% plus (b) an amount payable in cash or in kind, at the
Company's option, equal to 3.00%. The Loans are scheduled to mature on September 14, 2026, and are not subject to amortization. Certain prepayments of the Loans are subject to a
prepayment premium.
On the Second Amendment Closing Date, pursuant to the Second Amendment, the Company issued warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 Loans
to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $0.01 per share. In addition, (a) in connection with the funding of the Incremental Tranche A-2 Loans, the
Company will issue Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock, (b) in connection with the funding of
the Incremental Tranche B Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche B loans to purchase 1,048,363 shares of the Company's common stock,
and (c) in connection with the funding of the Incremental Tranche C Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363
shares of the Company’s common stock, in each case, at an exercise price of $0.01 per share. The Company also entered into a Registration Rights Agreement with the applicable lenders on
the Second Amendment Closing Date (the “Registration Rights Agreement”), which stipulates that the Company will file a registration statement with the Securities and Exchange Commission
with respect to the shares underlying the Warrants.
89
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange
Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
As of December 31, 2022, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act. This evaluation was conducted under the supervision of, and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on our evaluation, our Chief Executive Officer and our Chief Financial
Officer concluded that, as of December 31, 2022 our disclosure controls and procedures were effective to provide the reasonable assurance described above.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Management has
assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria established in "Internal Control-Integrated Framework" (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
As a result of this assessment, management concluded that, as of December 31, 2022, our internal control over financial reporting was effective in providing reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Our independent registered public accounting firm, Deloitte & Touche LLP, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of
their audit, has issued an audit report, included herein, on the effectiveness of our internal control over financial reporting. Their report is set forth below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of Exchange Act that
occurred during the during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial
reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our
disclosure controls and procedures and our internal controls over financial reporting have been designed to provide reasonable assurance of achieving their objectives. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may occur and not be detected.
90
Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of Oportun Financial Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Oportun Financial Corporation and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for
the year ended December 31, 2022, of the Company and our report dated March 13, 2023, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
San Francisco, CA
March 13, 2023
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
91
GLOSSARY
Terms and abbreviations used in this report are defined below.
Term or Abbreviation
30+ Day Delinquency Rate
Adjusted EBITDA
Acquisition Financing
Adjusted Earnings Per Share ("EPS")
Adjusted Net Income
Adjusted Operating Efficiency
Adjusted Return on Equity ("ROE")
Aggregate Originations
Annualized Net Charge-Off Rate
APR
Average Daily Debt Balance
Average Daily Principal Balance
Board
Corporate Financing
Cost of Debt
Credit Card Warehouse (or "CCW")
Customer Acquisition Cost (or "CAC")
Emergency Hardship Deferral
FICO® score or FICO®
GAAP
Leverage
Loans Receivable at Fair Value
Managed Principal Balance at End of Period
Members
Net Revenue
Operating Efficiency
Owned Principal Balance at End of Period
Personal Loan Warehouse (or "PLW")
Portfolio Yield
Definition
Unpaid principal balance for our owned loans and credit card receivables that are 30 or more calendar days contractually past due as of the end of the period
divided by Owned Principal Balance as of such date
Adjusted EBITDA is a non-GAAP financial measure calculated as net income (loss), adjusted to eliminate the effect of the following items: income tax
expense (benefit), stock-based compensation expense, depreciation and amortization, interest expense from corporate financing, certain non-recurring charges,
origination fees for Loans Receivable at Fair Value, net and fair value mark-to-market adjustments
Asset-backed floating rate variable funding note and asset-backed residual certificate secured by certain residual cash flows of the Company's securitizations.
The Acquisition Financing was used to fund the cash consideration for the Digit acquisition. Included as "Acquisition and corporate financing" on the
Consolidated Balance Sheets
Adjusted EPS is a non-GAAP financial measure calculated by dividing Adjusted Net Income by diluted adjusted weighted-average common shares
outstanding
Adjusted Net Income is a non-GAAP financial measure calculated by adjusting our net income (loss) adjusted to exclude income tax expense (benefit), stock-
based compensation expense, and certain non-recurring charges
Adjusted Operating Efficiency is a non-GAAP financial measure calculated by dividing adjusted total operating expenses (excluding stock-based
compensation expense and certain non-recurring charges) by total revenue
Adjusted Return on Equity is a non-GAAP financial measure calculated by dividing annualized Adjusted Net Income by average total stockholders’ equity
Aggregate amount disbursed to borrowers and credit granted on credit cards during a specified period, including amounts originated by us through our
Lending as a Service partners or under our bank partnership programs. Aggregate Originations exclude any fees in connection with the origination of a loan
Annualized loan and credit card principal losses (net of recoveries) divided by the Average Daily Principal Balance of owned loans and credit card receivables
for the period
Annual Percentage Rate
Average of outstanding debt principal balance at the end of each calendar day during the period
Average of outstanding principal balance of owned loans and credit card receivables at the end of each calendar day during the period
Oportun’s Board of Directors
Senior secured term loan secured by the assets of the Company and certain of its subsidiaries guaranteeing the term loan, including pledges of the equity
interests of certain subsidiaries that are directly or indirectly owned by the Company. Included as "Acquisition and corporate financing" on the Consolidated
Balance Sheets
Annualized interest expense divided by Average Daily Debt Balance
Revolving credit card warehouse debt facility, collateralized by credit card accounts. Included as "Secured Financing" on the Consolidated Balance Sheets
Sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand
marketing and the costs associated with our telesales and retail operations divided by number of loans originated and new credit cards activated to new and
returning borrowers during a period
Any receivable that currently has one or more payments deferred and added at the end of the loan payment schedule in connection with a local or wide-spread
emergency declared by local, state or federal government
A credit score created by Fair Isaac Corporation
Generally Accepted Accounting Principles
Average Daily Debt Balance divided by Average Daily Principal Balance
All loans receivable held for investment. Loans Receivable at Fair Value include loans receivable on our unsecured and secured personal loan products and
credit card receivable balances
Total amount of outstanding principal balance for all loans and credit card receivables, including loans sold, which we continue to service, at the end of the
period. Managed Principal Balance at End of Period also includes loans and accounts originated under a bank partnership program that we service
Members include borrowers with an outstanding or successfully paid off loan, originated by us or under a bank partnership program that we service, or
individuals who have been approved for a credit card issued under a bank partnership program. Members also include individuals who have signed-up to use
or are using any of our Digit Savings, Digit Direct, Digit Investing and/or Digit Retirement products
Net Revenue is calculated by subtracting interest expense from total revenue and adding the net increase (decrease) in fair value
Total operating expenses divided by total revenue
Total amount of outstanding principal balance for all loans and credit card receivables, excluding loans and receivables sold or loans retained by a bank
partner, at the end of the period
Revolving personal loan warehouse debt facility, collateralized by unsecured personal loans and secured personal loans that replaced the VFN facility.
Included as "Secured Financing" on the Consolidated Balance Sheets
Annualized interest income as a percentage of Average Daily Principal Balance
92
Term or Abbreviation
Definition
Principal Balance
Products
Return on Equity
Secured Financing
Variable Funding Note Warehouse (or "VFN")
Weighted Average Interest Rate
Original principal balance reduced by principal payments received and principal charge-offs to date for our personal loans. Purchases and cash advances,
reduced by returns and principal payments received and principal charge-offs to date for our credit cards
Products refers to the aggregate number of personal loans and/or credit card accounts that our Members have had or been approved for that have been
originated by us or through one of our bank partners. Products also include the aggregate number of digital banking products we offer as a result of our
acquisition of Digit, including Digit Savings, Digit Direct, Digit Investing and Digit Retirement, that our Members use or have signed-up to use
Annualized net income divided by average stockholders' equity for a period
Asset-backed revolving debt facilities, including (1) the VFN facility which was collateralized by unsecured personal loans, terminated September 8, 2021
and replaced with the PLW facility that is collateralized by unsecured personal loans and secured personal loans and (2) the CCW facility that is collateralized
by credit card accounts
Asset-backed revolving debt facility, collateralized by unsecured personal loans, terminated on September 8, 2021. Formerly defined solely as "Secured
Financing" on the Consolidated Balance Sheets
Annualized interest expense as a percentage of average debt
93
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item, including information about our directors, executive officers and audit committee and code of conduct, will be included in our proxy statement for
the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year ended December 31, 2022 ("2023 Proxy Statement") and is incorporated herein by
reference.
Item 11. Executive Compensation
The information required by this item will be included in the 2023 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
The information required by this item will be included in the 2023 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in the 2023 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be included in the 2023 Proxy Statement and is incorporated herein by reference.
94
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) (1) The following consolidated financial statements of Oportun, Inc. and its subsidiaries are included in PART II - Item 8:
Consolidated Balance Sheets, December 31, 2022 and 2021
Consolidated Statements of Operations, years ended December 31, 2022 and 2021
Consolidated Statements of Changes in Stockholders' Equity, years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flow, years ended December 31, 2022 and 2021
Notes to the Consolidated Financial Statements
(2) Financial Statement Schedules:
All other schedules have been omitted because they are either not required or inapplicable.
(3) Exhibits:
Exhibits are listed in the Exhibit Index below.
Item 16. Form 10-K Summary
None.
95
Exhibit Index
Exhibit
2.1**
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
10.1+
10.2+
10.3+
10.4+
10.5+
10.6+
10.7+
10.8+
10.8
10.9-1^
10.9-2**
10.9-3
10.9-4**
10.9-5**
10.10**
Description
Agreement and Plan of Reorganization, dated as of November 15, 2021,
by and among Oportun Financial Corporation, Yosemite Merger
Acquisition Corp., Yosemite Acquisition Sub, LLC, Hello Digit, Inc.
and Shareholder Representative Services LLC.
Amended and Restated Certificate of Incorporation of Oportun
Financial Corporation.
Amended and Restated Bylaws of Oportun Financial Corporation.
Form of Common Stock Certificate.
Amended and Restated Investors’ Rights Agreement, dated as of
February 6, 2015, by and among the Oportun Financial Corporation and
certain of its stockholders.
Form of Registration Rights Agreement.
Description of the Company's Capital Stock.
Form of Warrant
Registration Rights Agreement, dated as of March 10, 2023, by and
among Oportun Financial Corporation, Wilmington Trust, National
Association, and the Lenders party thereto.
Form of Indemnity Agreement between the Company and its directors
and officers.
Amended and Restated 2005 Stock Option/Stock Issuance Plan and
Form of Stock Option Grant Notice, Option Agreement and Form of
Notice of Exercise.
2015 Stock Option/Stock Issuance Plan and Forms of Stock Option
Grant Notice, Option Agreement, Notice of Exercise, Restricted Stock
Unit Award Grant Notice and Restricted Stock Unit Award Agreement.
2019 Equity Incentive Plan and Forms of Award Notices and
Agreements.
2019 Employee Stock Purchase Plan.
2021 Inducement Equity Incentive Plan and Form of Award Notice and
Agreement.
Form of Executive Offer Letter by and between the Registrant and
certain of its officers.
Executive Severance and Change in Control Policy
Sublease Agreement by and between Oportun, Inc. and TiVo
Corporation, dated as of July 31, 2017.
Amended and Restated Purchase and Sale Agreement by and between
Oportun, Inc. and ECL Funding LLC, dated as of June 29, 2018.
Amendment No. 1 to Amended and Restated Purchase and Sale
Agreement by and between Oportun, Inc. and ECL Funding LLC, dated
as of December 1, 2018.
Amendment No. 2 to Amended and Restated Purchase and Sale
Agreement by and between Oportun, Inc. and ECL Funding LLC, dated
as of February 1, 2019.
Amendment No. 3 to Amended and Restated Purchase and Sale
Agreement by and between Oportun, Inc. and ECL Funding LLC, dated
as of September 12, 2019.
Amendment No. 4 to Amended and Restated Purchase and Sale
Agreement by and between Oportun, Inc. and ECL Funding LLC, dated
as of January 31, 2020.
Amendment No. 5 to Amended and Restated Purchase and Sale
Agreement by and between Oportun, Inc. and ECL Funding LLC, dated
as of March 5, 2021.
96
Incorporated by Reference
Form
File No.
Exhibit
Filing Date
Filed Herewith
8-K
001-39050
2.1
11/16/2021
8-K
001-39050
8-K/A
S-1/A
S-1
001-39050
333-232685
333-232685
10-K
001-39050
001-39050
001-39050
3.1
3.1
4.1
4.2
4.3
4.1
4.2
333-232685
333-232685
10.1
10.2
8-K
8-K
S-1
S-1
S-1
9/30/2019
12/9/2022
9/16/2019
7/17/2019
3/1/2022
3/13/2023
3/13/2023
7/17/2019
7/17/2019
x
333-232685
10.3
7/17/2019
10-K
001-39050
S-1/A
S-8
S-1
S-1
S-1
S-1
333-232685
333-261964
333-232685
333-232685
333-232685
333-232685
10.4
10.5
4.3
10.6
10.7
10.8
10.9
2/23/2021
9/16/2019
1/3/2022
7/17/2019
7/17/2019
7/17/2019
7/17/2019
S-1/A
001-39050
10.9.2
9/16/2019
S-1/A
333-232685
10.9.3
9/16/2019
S-1/A
333-232685
10.9.4
9/16/2019
10-K
333-232685
10.2
2/28/2020
10-Q
001-39050
10.2
5/7/2021
10.11-1
10.11-2
10.12-1
10.12-2
10.13
10.14
10.16-1**
10.16-2 **
10.17-1**
10.17-2**
10.17-3**
10.17-4**
10.18-1**
10.18-2**
10.18-3**
10.18-4**
10.18-5**
10.19-1**
10.19-2
10.19-3
Base Indenture by and between Oportun Funding XIII, LLC and
Wilmington Trust, National Association, dated as of August 1, 2019.
Series 2019-A Supplement to Base Indenture by and between Oportun
Funding XIII, LLC and Wilmington Trust, National Association, dated as
of August 1, 2019.
Base Indenture by and between Oportun Funding XIV, LLC and
Wilmington Trust, National Association, dated as of March 8, 2021.
Series 2021-A Supplement to Base Indenture by and between Oportun
Funding XIV, LLC and Wilmington Trust, National Association, dated as
of March 8, 2021.
Indenture by and between Oportun Issuance Trust 2021-B, and Wilmington
Trust, National Association, dated as of May 10, 2021.
Indenture by and between Oportun Issuance Trust 2021-C, and Wilmington
Trust, National Association, dated as of October 28, 2021.
Receivables Retention Facility Agreement, dated February 5, 2021, by and
between Oportun, Inc. and WebBank
Amended and Restated Credit Card Program and Servicing Agreement,
dated February 5, 2021, by and between Oportun, Inc. and WebBank
Letter Agreement to Retention Facility Agreement by and between
WebBank and Oportun, Inc., dated as of July 28, 2021.
Letter Agreement to Retention Facility Agreement by and between
WebBank and Oportun, Inc., dated as of September 21, 2021.
Letter Agreement to Retention Facility Agreement by and between
WebBank and Oportun, Inc., dated as of October 29, 2021.
Letter Agreement to Retention Facility Agreement by and between
WebBank and Oportun, Inc., dated as of November 30, 2021.
Loan and Security Agreement by and between Oportun PLW Trust,
Oportun PLW Depositor, LLC, Oportun, Inc., the Lenders thereto, and
Wilmington Trust, National Association, dated as of September 8, 2021.
First Amendment to Loan and Security Agreement by and between Oportun
PLW Trust, Oportun PLW Depositor, LLC, Oportun, Inc., the Lenders
thereto, and Wilmington Trust, National Association, dated as of March 22,
2022.
Second Amendment to Loan and Security Agreement by and between
Oportun PLW Trust, Oportun PLW Depositor, LLC, Oportun, Inc., the
Lenders thereto, and Wilmington Trust, National Association, dated as of
March 25, 2022.
Third Amendment to Loan and Security Agreement by and between
Oportun PLW Trust, Oportun PLW Depositor, LLC, Oportun, Inc., the
Lenders thereto, and Wilmington Trust, National Association, dated as of
March 31, 2022.
Fourth Amendment to Loan and Security Agreement by and between
Oportun PLW Trust, Oportun PLW Depositor, LLC, Oportun, Inc., the
Lenders thereto, and Wilmington Trust, National Association, dated as of
September 14, 2022.
Indenture between Oportun RF, LLC and Wilmington Trust, National
Association, dated as of December 20, 2021.
First Amendment to Indenture by and between Oportun RF, LLC and
Wilmington Trust, National Association, dated as of May 24, 2022.
Second Amendment to Indenture by and between Oportun RF, LLC and
Wilmington Trust, National Association, dated as of July 28, 2022.
97
S-1/A
333-232685
10.17.1
9/16/2019
S-1/A
333-232685
10.17.2
9/16/2019
10-Q
001-39050
10-Q
001-39050
001-39050
001-39050
10-Q
10-Q
10-K
10.3.1
10.3.2
10.1
10.3
5/7/2021
5/7/2021
8/6/2021
11/4/2021
001-39050
10.16.1
2/23/2021
10-K
001-39050
10.16.2
2/23/2021
10-Q
001-39050
10-Q
001-39050
10-Q
001-39050
10.1.1
10.1.2
10.1.3
8/6/2021
8/6/2021
11/4/2021
10-K
001-39050
10.17.4
03/1/2022
10-Q
001-39050
10.2
11/4/2021
10-Q
001-39050
10.4.1
8/9/2022
10-Q
001-39050
10.4.2
8/9/2022
10-Q
001-39050
10.4.3
8/9/2022
10-Q
001-39050
10.2
11/8/2022
10-K
10-Q
10-Q
001-39050
001-39050
001-39050
10.19
10.3.1
10.3.2
3/1/2022
8/9/2022
8/9/2022
10.19-4
10.19-5
10.19-6
10.20-1**
10.20-2
10.20-3**
10.20-4**
10.20-5**
10.20-6**
10.21-1
10.21-2**
10.22**
10.23**
10.24-1**
10.24-2
10.24-3**
10.25**
21.1
23.1
24.1
31.1
Third Amendment to Indenture by and between Oportun RF, LLC and
Wilmington Trust, National Association, dated as of November 2, 2022.
Fourth Amendment to Indenture by and between Oportun RF, LLC and
Wilmington Trust, National Association, dated as of December 22, 2022.
Fifth Amendment to Indenture by and between Oportun RF, LLC and
Wilmington Trust, National Association, dated as of February 10, 2023.
Indenture between CCW Trust and Wilmington Trust, National Association,
dated as of December 20, 2021.
First Amendment to Indenture by and between Oportun CCW Trust and
Wilmington Trust, National Association, dated as of June 3, 2022.
Master Amendment to Transaction Documents by and between Oportun
CCW Trust, Oportun Depositor, LLC, Oportun, Inc., Wilmington Trust,
National Association, and Wilmington Savings Fund Society, FSB, dated as
of June 21, 2022.
Third Amendment to Indenture by and between Oportun CCW Trust and
Wilmington Trust, National Association, dated as of September 14, 2022.
Master Amendment to Transaction Documents by and between Oportun
CCW Trust, Oportun Depositor, LLC, Oportun, Inc., Wilmington Trust,
National Association, and Wilmington Savings Fund Society, FSB, dated as
of September 28, 2022.
Master Amendment to Transaction Documents by and between Oportun
CCW Trust, Oportun CCW Depositor, LLC, Oportun, Inc., Wilmington
Trust, National Association, and WebBank, dated as of March 8, 2023.
Base Indenture by and between Oportun Funding 2022-1, LLC and
Wilmington Trust, National Association, dated as of March 31, 2022.
Series 2022-1 Supplement to Base Indenture by and between Oportun
Funding 2022-1, LLC and Wilmington Trust, National Association, dated as
of March 31, 2022.
Indenture between Oportun Issuance Trust 2022-A and Wilmington Trust,
National Association, dated as of May 23, 2022.
Indenture between Oportun Issuance Trust 2022-2 and Wilmington Trust,
National Association, dated as of July 22, 2022.
Credit Agreement, dated as of September 14, 2022, by and among Oportun
Financial Corporation, Wilmington Trust, National Association, and the
Lenders party thereto.
Amendment No. 1 to Credit Agreement, dated as of November 22, 2022, by
and among Oportun Financial Corporation, the Subsidiary Guarantors party
thereto, Wilmington Trust, National Association, and the Lenders party
thereto.
Amendment No. 2 to Credit Agreement, dated as of March 10, 2023, by and
among Oportun Financial Corporation, the Subsidiary Guarantors party
thereto, Wilmington Trust, National Association, and the Lenders party
thereto.
Indenture between Oportun Issuance Trust 2022-3 and Wilmington Trust,
National Association, dated as of November 3, 2022.
List of Subsidiaries of Oportun Financial Corporation
Consent of Independent Registered Public Accounting Firm
Power of Attorney (incorporated by reference to the signature page to this
Annual Report on Form 10-K)
Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer and
Director of Oportun Financial Corporation
98
10-K
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
001-39050
10.2
3/1/2022
001-39050
001-39050
001-39050
001-39050
001-39050
001-39050
001-39050
001-39050
001-39050
10.5.1
10.5.2
10.3
10.4
10.2.1
10.2.2
10.1
10.2
10.1
8/9/2022
8/9/2022
11/8/2022
11/8/2022
5/10/2022
5/10/2022
8/9/2022
8/9/2022
11/8/2022
8-K
001-39050
10.1
3/13/2023
10-Q
001-39050
10.5
11/8/2022
x
x
x
x
x
x
x
x
x
31.2
32.1*
101
104
Rule 13a-14(a)/15d-14(a) Certifications of the Chief Financial Officer and Chief
Administrative Officer of Oportun Financial Corporation
Section 1350 Certifications
Interactive data files pursuant to Rule 405 of Regulation S-T:
(i) Consolidated Balance Sheets,
(ii) Consolidated Statements of Operations,
(iii) Consolidated Statements of Changes in Stockholders' Equity,
(iv) Consolidated Statements of Cash Flows, and
(v) Notes to the Consolidated Financial Statements
Cover Page Interactive Data File in Inline XBRL format (included in Exhibit 101).
x
x
* The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be
incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the
date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
+ Management contract or compensatory plan.
^ Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
** Portions of this exhibit have been omitted pursuant to Item 601 of Regulation S-K. The registrant agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit
upon request by the SEC.
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
99
Signatures
OPORTUN FINANCIAL CORPORATION
(Registrant)
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 14, 2023.
Date: March 14, 2023
By: /s/ Jonathan Coblentz
Jonathan Coblentz
Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Raul Vazquez and Jonathan Coblentz, jointly and severally,
his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with
exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
100
/s/ Raul Vazquez
Raul Vazquez
(President, Chief Executive Officer, and Director)
(Principal Executive Officer)
Date: March 14, 2023
/s/ Casey Mueller
Casey Mueller
(Senior Vice President, Global Controller and Principal Accounting Officer)
(Principal Accounting Officer)
Date: March 14, 2023
/s/ Jo Ann Barefoot
Jo Ann Barefoot
(Director)
Date: March 14, 2023
/s/ Louis P. Miramontes
Louis P. Miramontes
(Director)
Date: March 14, 2023
/s/ Sandra Smith
Sandra Smith
(Director)
Date: March 14, 2023
/s/ Frederic Welts
Frederic Welts
(Director)
Date: March 14, 2023
/s/ Jonathan Coblentz
Jonathan Coblentz
(Chief Financial Officer and Chief Administrative Officer)
(Principal Financial Officer)
Date: March 14, 2023
/s/ Roy Banks
Roy Banks
(Director)
Date: March 14, 2023
/s/ Ginny Lee
Ginny Lee
(Director)
Date: March 14, 2023
/s/ Carl Pascarella
Carl Pascarella
(Director)
Date: March 14, 2023
/s/ David Strohm
David Strohm
(Director)
Date: March 14, 2023
/s/ R. Neil Williams
R. Neil Williams
(Director)
Date: March 14, 2023
101
DESCRIPTION OF CAPITAL STOCK
General
The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the
information that may be important to you. For a complete description of the matters set forth in this “Description of Capital Stock,” you should refer to
our amended and restated certificate of incorporation and amended and restated bylaws, which are included as exhibits to our Annual Report on Form
10-K, and to the applicable provisions of Delaware law.
Our authorized capital stock consists of 1,100,000,000 shares, all with a par value of $0.0001 per share, of which:
• 1,000,000 shares are designated as common stock; and
• 100,000,000 shares are designated as preferred stock.
Common Stock
Voting Rights
Each holder of our common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders,
except as otherwise expressly provided in our amended and restated certificate of incorporation or required by applicable law. Cumulative voting for the
election of directors is not provided for in our amended and restated certificate of incorporation, which means that the holders of a majority of our shares
of common stock can elect all of the directors then standing for election.
In accordance with our amended and restated certificate of incorporation, our board of directors is divided into three classes with staggered three-
year terms. At each annual general meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of
election and qualification until the third annual meeting following election.
Dividends and Distributions
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock
are entitled to receive dividends out of funds legally available at the times and in the amounts that our board of directors may determine.
Liquidation Rights
Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably
among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on
any outstanding shares of preferred stock and payment of other claims of creditors.
The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of
shares of any series of preferred stock that we may designate and issue in the future.
Preemptive or Similar Rights
Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.
Preferred Stock
Our board of directors may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of
100,000,000 shares of preferred stock in one or more series and authorize their issuance. These rights, preferences and privileges could include dividend
rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series
or the designation of such series, any or all of which may be greater than the rights of our common stock. The issuance of our preferred stock could
adversely affect the voting power of holders of our common stock and the likelihood that these holders of common stock will receive dividend payments
and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control
or other corporate action. No shares of preferred stock are currently outstanding, and we have no present plan to issue any shares of preferred stock.
Anti-Takeover Provisions
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
Our amended and restated certificate of incorporation provides for our board of directors to be divided into three classes with staggered three-year
terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their
respective three-year terms.
Our amended and restated bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of
stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our amended and restated bylaws also specify
certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters
before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are
not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own
slate of directors or otherwise attempting to obtain control of the Company.
Because our stockholders do not have cumulative voting rights, our stockholders holding a majority of the voting power of our shares of common
stock outstanding will be able to elect all of our directors. Our amended and restated certificate of incorporation and amended and restated bylaws
provide that all stockholder actions must be effected at a duly called meeting of stockholders and not by consent in writing. A special meeting of
stockholders, other than as required by statute, may be called only by a majority of the total number of authorized directors, the chair of our board of
directors, or our chief executive officer.
Our amended and restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fill vacant
directorships, including newly created seats, unless our board of directors determines by resolution that any such vacancies or newly created
directorships shall be filled by the stockholders and except as otherwise provided by law. In addition, the number of directors constituting our board of
directors is permitted to be fixed exclusively by a resolution adopted by a
majority vote of the authorized number of directors on the board of directors. These provisions would prevent a stockholder from increasing the size of
our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This will make it more
difficult to change the composition of our board of directors and will promote continuity of management.
Our amended and restated certificate of incorporation further provides that the affirmative vote of holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required to amend certain provisions
of our amended and restated certificate of incorporation, including provisions relating to the size of the board, removal of directors, special meetings,
actions by written consent and cumulative voting. The affirmative vote of holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of voting stock, voting as a single class, will be required to amend or repeal our bylaws, although our bylaws
may also be amended by a simple majority vote of the total number of authorized directors.
The foregoing provisions makes it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain
control of our company by replacing our board of directors. Since our board of directors has the power to retain and discharge our officers, these
provisions also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of
undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could
impede the success of any attempt to change the control of our company.
These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to
discourage certain types of transactions that may involve an actual or threatened acquisition of our company. These provisions are also designed to
reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy rights. However, these
provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of deterring hostile takeovers or
delaying changes in control of our company or our management. As a consequence, these provisions also may inhibit fluctuations in the market price of
our stock that could result from actual or rumored takeover attempts.
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the
following exceptions:
•
before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
•
•
•
•
•
•
•
upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting
stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (1) persons who are
directors and also officers and (2) employee stock plans in which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange offer; or
on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the
stockholders, and not by written consent, by the affirmative vote of at least 66 / % of the outstanding voting stock that is not owned by the
interested stockholder.
3
2
In general, Section 203 defines business combination to include the following:
any merger or consolidation involving the corporation and the interested stockholder;
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder;
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the
corporation beneficially owned by the interested stockholder; or
the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the
corporation.
In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates,
beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding
voting stock of the corporation.
We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in
advance. We also anticipate that Section 203 may discourage
attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
Exclusive Forum
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum
for: (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our
directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us or any of our directors, officers or other
employees arising pursuant to any provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our
amended and restated bylaws, (4) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation
or our amended and restated bylaws, or (5) any action asserting a claim against us or any of our directors, officers or other employees that is governed by
the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Securities and Exchange Act of
1934, as amended, or the rules and regulations thereunder. However, this provision applies to claims under the Securities Act of 1933, as amended (the
“Securities Act”) claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a
duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would
enforce such a provision, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and
regulations thereunder.
Our amended and restated certificate of incorporation further provides that the U.S. federal district courts will be the exclusive forum for resolving
any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of
the enforceability of such exclusive forum provision. If a court were to find either exclusive forum provision in our amended and restated certificate of
incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,
which could adversely affect our business and financial condition. For example, the Court of Chancery of the State of Delaware recently determined that
the exclusive forum of provision of federal district courts of the United States of America for resolving any complaint asserting a cause of action arising
under the Securities Act is not enforceable. However, this decision may be reviewed and ultimately overturned by the Delaware Supreme Court. If the
Court of Chancery’s decision were to be overturned, we would enforce the federal district court exclusive forum provision in our amended and restated
certificate of incorporation.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or
our directors, officers or other employees, which may discourage such lawsuits. Our amended and restated certificate of incorporation also provides that
any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented
to these choice of forum provisions.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company. The transfer agent’s address is 6201 15th
Avenue, Brooklyn, New York 11219.
3
Execution Copy
OPORTUN RF, LLC
THIRD AMENDMENT TO INDENTURE
This THIRD AMENDMENT TO INDENTURE, dated as of November 2, 2022 (this “Amendment”), is entered into among
OPORTUN RF, LLC, a special purpose Delaware limited liability company, as issuer (the “ Issuer”), and WILMINGTON TRUST,
NATIONAL ASSOCIATION, a national banking association with trust powers, as indenture trustee (in such capacity, the “ Indenture
Trustee”), as securities intermediary (in such capacity, the “Securities Intermediary”) and as depositary bank (in such capacity, the “Depositary
Bank”).
RECITALS
that certain Indenture, dated as of December 20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Indenture”);
WHEREAS, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have previously entered into
WHEREAS, in accordance with Section 13.2 of the Base Indenture, the Issuer desires to amend the Indenture as provided
herein; and
herein;
WHEREAS, as evidenced by their signature hereto, the Required Noteholders have consented to the amendments provided for
the receipt and adequacy of which are hereby acknowledged, each party hereto agrees as follows:
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration,
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms Not Defined Herein . All capitalized terms used herein that are not defined herein shall have the
meanings assigned to them in, or by reference in, the Indenture.
ARTICLE II
AMENDMENTS TO THE INDENTURE
SECTION 2.01. Amendments. The Indenture is hereby amended to incorporate the changes reflected on the marked pages of the
Indenture attached hereto as Schedule I, with a conformed copy of the amended Indenture attached hereto as Schedule II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties. The Issuer hereby represents and warrants to the Indenture Trustee, the Securities
Intermediary, the Depositary Bank and each of the other Secured Parties that:
4147-1030-9697.5
( a ) Representations and Warranties. Both before and immediately after giving effect to this Amendment, the representations and
warranties made by the Issuer in the Indenture and each of the other Transaction Documents to which it is a party are true and correct as of the
date hereof (unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such
earlier date).
( b ) Enforceability. This Amendment and the Indenture, as amended hereby, constitute the legal, valid and binding obligation of the
Issuer enforceable against the Issuer in accordance with its respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and by general principles of equity.
(c) No Defaults. No Rapid Amortization Event, Event of Default, Servicer Default or Default has occurred and is continuing.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Ratification of Indenture. As amended by this Amendment, the Indenture is in all respects ratified and confirmed and
the Indenture, as amended by this Amendment, shall be read, taken and construed as one and the same instrument.
SECTION 4.02. Counterparts. This Amendment may be executed in any number of counterparts, and by different parties in separate
counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the
same instrument. Each of the parties hereto agrees that the transaction consisting of this Amendment may be conducted by electronic means.
Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Amendment using an electronic signature, it is
signing, adopting, and accepting this Amendment and that signing this Amendment using an electronic signature is the legal equivalent of
having placed its handwritten signature on this Amendment on paper. Each party acknowledges that it is being provided with an electronic or
paper copy of this Amendment in a usable format.
SECTION 4.03. Recitals. The recitals contained in this Amendment shall be taken as the statements of the Issuer, and none of the
Indenture Trustee, the Securities Intermediary or the Depositary Bank assumes any responsibility for their correctness. None of the Indenture
Trustee, the Securities Intermediary or the Depositary Bank makes any representations as to the validity or sufficiency of this Amendment.
SECTION 4.04. Rights of the Indenture Trustee, the Securities Intermediary and the Depositary Bank . The rights, privileges and
immunities afforded to the Indenture Trustee, the Securities Intermediary and the Depositary Bank under the Indenture shall apply hereunder
as if fully set forth herein.
SECTION 4.05. GOVERNING LAW; JURISDICTION . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES HERETO AND
EACH
4147-1030-9697.5
2
SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 4.06. Effectiveness. This Amendment shall become effective as of the date hereof upon:
(a) receipt by the Indenture Trustee of an Issuer Order directing it to execute and deliver this Amendment;
(b) receipt by the Indenture Trustee of an Officer’s Certificate of the Issuer stating that the execution of this Amendment is authorized
and permitted by the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(c) receipt by the Indenture Trustee of an Opinion of Counsel stating that the execution of this Amendment is authorized and
permitted under the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(d) receipt by the Indenture Trustee of evidence of the consent of the Required Noteholders to this Amendment;
(e) receipt by the Indenture Trustee of counterparts of this Amendment, duly executed by each of the parties hereto; and
(f) receipt by the Indenture Trustee of such other instruments, documents, agreements and opinions reasonably requested by the
Indenture Trustee prior to the date hereof.
4147-1030-9697.5
(Signature page follows)
3
IN WITNESS WHEREOF, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have caused
this Amendment to be duly executed by their respective officers as of the day and year first above written.
OPORTUN RF, LLC,
as Issuer
By: /s/ Jonathan Coblentz
Name: Jonathan Coblentz
Title: Treasurer
4147-1030-9697.5
Third Amendment to Indenture
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities Intermediary
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Depositary Bank
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
4147-1030-9697.5
Third Amendment to Indenture
Consented to by the Required Noteholders:
JEFFERIES FUNDING LLC,
as Holder of 100% of the outstanding Notes
By: /s/ Michael Wade
Name: Michael Wade
Title: Managing Director
4147-1030-9697.5
Third Amendment to Indenture
SCHEDULE I
Amendments to Indenture
4147-1030-9697.5
Third Amendment to Indenture
CONFORMED COPY As amended by the Third Amendment to Indenture, dated as of November 2, 2022
4147-1030-9697.5
Third Amendment to Indenture
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4147-1030-9697.5
Third Amendment to Indenture
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE 2
Section 1.1. Definitions 2
Section 1.2. [Reserved] 26
Section 1.3. Cross-References 26
Section 1.4. Accounting and Financial Determinations; No Duplication 27
Section 1.5. Rules of Construction 27
Section 1.6. Other Definitional Provisions. 27
ARTICLE 2. THE SECURITIES 28
Section 2.1. Designation and Terms of Securities 28
Section 2.2. [Reserved] 28
Section 2.3. [Reserved]. 28
Section 2.4. Execution and Authentication. 28
Section 2.5. Authenticating Agent. 29
Section 2.6. Registration of Transfer and Exchange of Securities. 30
Section 2.7. Appointment of Paying Agent 33
Section 2.8. Paying Agent to Hold Money in Trust. 33
Section 2.9. Private Placement Legend 34
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities. 36
Section 2.11. Temporary Notes. 37
Section 2.12. Persons Deemed Owners 38
Section 2.13. Cancellation 38
Section 2.14. Release of Trust Estate 38
Section 2.15. Payment of Principal, Interest and Other Amounts. 39
Section 2.16. Book-Entry Notes. 39
Section 2.17. Notices to Clearing Agency 44
Section 2.18. Definitive Notes. 44
Section 2.19. Global Note 45
Section 2.20. Tax Treatment 4546
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and
Registrar 46
ARTICLE 3. ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES 46
Section 3.1. Issuance. 46
Section 3.2. Certain Fees and Expenses. 47
ARTICLE 4. NOTEHOLDER LISTS AND REPORTS 48
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of
Noteholders and Certificateholders 48
Section 4.2. Preservation of Information; Communications to Noteholders and
Certificateholders. 48
Section 4.3. Reports by Issuer 49
Section 4.4. [Reserved] 49
Section 4.5. Reports and Records for the Indenture Trustee and Instructions. 49
4147-1030-9697.5
Third Amendment to Indenture
“2022-2 Certificates” means the trust certificates issued by the 2022-2 Issuer pursuant to the 2022-2 Trust Agreement, representing the
beneficial interest in the 2022-2 Issuer and assigned CUSIP Number 68377H 104.
“2022-2 Cumulative Default Ratio” means “Cumulative Default Ratio” as defined in the
2022-2 Indenture.
“2022-2 Cumulative Default Ratio Trigger Event” shall have occurred on any Payment Date if the 2022-2 Cumulative Default Ratio for
the immediately preceding 2022-2 Payment Date exceeds the percentage set forth opposite such 2022-2 Payment Date on Schedule 5 hereto.
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust. “ 2022-2 Payment Date” means “Payment
Date” as defined in the 2022-2 Indenture.
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among the
Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the
2022-2 Indenture.
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22, 2022,
among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the February 2023 Payment Date, 0%, and (II)
for any Payment Date on or after the March 2023 Payment Date, (a) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such Payment Date is
greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for such Payment Date
is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 15.0%, 100.0%.
4147-1030-9697.5
Third Amendment to Indenture
same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest
under the UCC or comparable Law of any
“Limited Guaranty” means the Limited Guaranty, dated as of December 20, 2021, between Oportun and the Indenture Trustee, as such
agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“Liquidity Covenant” means that the Seller will have a minimum liquidity of $10,000,000, equal to unrestricted cash or Cash
Equivalents.
“Material Adverse Effect” means any event or condition which would have a material adverse effect on (i) the Underlying Securities or
Underlying Payments, (ii) the condition (financial or otherwise), businesses or properties of the Issuer or the Seller, (iii) the ability of the Issuer
or the Seller to perform its respective obligations under the Transaction Documents or the ability of the Administrator to perform its
obligations under the Administrative Services Agreement or (iv) the interests of the Indenture Trustee or any Secured Party in the Trust Estate
or under the Transaction Documents.
“Minimum Principal Payment Amount” means, for any Payment Date, the “Minimum Principal Payment Amount” specified therefor
on the Amortization Schedule.
“Monthly Period” means the period from and including the first day of a calendar month to and including the last day of such calendar
month; provided, however, that the first Monthly Period shall be the period from and including the Closing Date to and including December
31, 2021.
“Monthly Report” means a report substantially in the form attached as Exhibit D or in such other form as the Administrator may
determine necessary or desirable (with prior consent of the Indenture Trustee); provided, however, that no such other agreed form shall serve to
exclude information expressly required by this Indenture.
“Moody’s” means Moody’s Investors Service, Inc.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA with respect to which the Seller, the
Issuer or any of their respective ERISA Affiliates is making, is obligated to make, or has made or been obligated to make, contributions.
“Note Owner” means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as reflected
on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
“Note Principal Amount” means on any date of determination the then outstanding principal amount of the Notes.
“Note Purchase Agreement” means the agreement by and among the Initial Purchaser, Oportun and the Issuer, dated December 20,
2021, pursuant to which the Initial Purchaser agreed
4143-0949-1521
4147-1030-9697.5
Third Amendment to Indenture
any Class A Deficiency Amount for such Payment Date and (C) any Class A Additional Interest for such Payment Date;
(iv) fourth, to the Class A Noteholders, on a pari passu and pro rata basis, (A) prior to the occurrence of a Rapid Amortization
Event, an amount equal to the sum of (I) the greater of the Scheduled Principal Payment Amount for such Payment Date, (II) the
product of all remaining Available Funds multiplied by the Additional and the Minimum Principal Payment PercentageAmount for such
Payment Date and, (IIIII) following the occurrence of a 2022-2 Cumulative Default Ratio Trigger Event, the 2022-2 Additional
Principal Payment Amount for such Payment Date, and (III) following the application under clauses (I) and (II), the product of all
remaining Available Funds multiplied by the Additional Principal Payment Percentage for such Payment Date, until the outstanding
principal amount of the Class A Notes has been reduced to zero; and (B) following the occurrence of a Rapid Amortization Event, all
remaining Available Funds until the outstanding principal amount of the Class A Notes has been reduced to zero;
( v ) fifth, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis,
any unreimbursed fees, expenses and indemnity amounts payable thereto (including due to the limitations set forth in the definition of
Trustee Fees and Expenses);
(vi) sixth, to the Class A Noteholders, on a pari passu and pro rata basis any other amounts (excluding the Note Principal
Amount) payable thereto on such Payment Date pursuant to the Transaction Documents; and
(vii) seventh, the balance, if any, shall be distributed to the Certificateholders.
Section 5.16. Failure to Make a Deposit or Payment. The Indenture Trustee shall not have any liability for any failure or delay in
making the payments or deposits described herein resulting from a failure or delay by the Issuer or the Administrator to make, or give
instructions to make, such payment or deposit in accordance with the terms herein. If the Issuer or the Administrator fails to make, or give
instructions to make, any payment, deposit or withdrawal required to be made or given by the Issuer or the Administrator at the time specified
in this Indenture (including applicable grace periods), the Indenture Trustee shall make such payment, deposit or withdrawal from the
applicable Trust Account without instruction from the Issuer or the Administrator. The Indenture Trustee shall be required to make any such
payment, deposit or withdrawal hereunder only to the extent that the Indenture Trustee has sufficient information to allow it to determine the
amount thereof. the Issuer or the Administrator shall, upon reasonable request of the Indenture Trustee, promptly provide the Indenture Trustee
with all information necessary and in its possession to allow the Indenture Trustee to make such payment, deposit or withdrawal. Such funds or
the proceeds of such withdrawal shall be applied by the Indenture Trustee in the manner in which such payment or deposit should have been
made (or instructed to be made) by the Issuer or the Administrator.
4143-0949-1521
4147-1030-9697.5
Third Amendment to Indenture
been made to continue the perfected interest of the Indenture Trustee in the Trust Estate in respect of such change and (ii) copies of all such
required filings with the filing information duly noted thereon by the office in which such filings were made.
(k) Tax Matters . The Issuer will not take any action that could cause, and will not omit to take any action, which omission
could cause, the Issuer to become taxable as a corporation for U.S. federal income tax purposes.
(l) Accounts. The Issuer shall not maintain any bank accounts other than the Trust Accounts; provided, however, that the
Issuer may maintain a general bank account to, among other things, receive and hold funds distributed to it, and to pay ordinary-course
operating expenses, as applicable. The Issuer shall not add any additional Trust Accounts unless the Indenture Trustee (subject to Section 15.1
hereto) shall have consented thereto and received a copy of any documentation with respect thereto. The Issuer shall not terminate any Trust
Accounts or close any Trust Accounts unless the Indenture Trustee shall have received at least thirty (30) days’ prior notice of such termination
and (subject to Section 15.1 hereto) shall have consented thereto.
Section 8.4. Further Instruments and Acts. The Issuer will execute and deliver such further instruments, furnish such other
information and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
Section 8.5. [Reserved].
Section 8.6. Perfection Representations. The parties hereto agree that the Perfection Representations shall be a part of this
Indenture for all purposes.
ARTICLE 9.
RAPID AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Rapid Amortization Events. A “ Rapid Amortization Event,” wherever used herein, means any one of the following
events):
(a) default in the payment of any interest on the Notes on any Payment Date, and such default shall continue (and shall not
have been waived by the Required Noteholders) for a period of three (3) Business Days after receipt of notice thereof from the Indenture
Trustee or the Required Noteholders;
(b) default in the payment of the principal of or any installment of the principal of the Notes when the same becomes due and
payable, and such default shall continue (and shall not have been waived by the Required Noteholders) for a period of three (3) Business Days
after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(c) commencing with the three (3) consecutive Payment Dates ending with the March 2023 Payment Date, the Three-Month
Average Underlying Loss Percentage shall have been greater than 13.0% on three (3) consecutive Payment Dates;
4143-0949-1521
4147-1030-9697.5
Third Amendment to Indenture
4147-1030-9697.5
Third Amendment to Indenture
Schedule 1.1
4143-0949-1521
SCHEDULE II
Conformed Copy of Amended Indenture
4143-0949-1521
CONFORMED COPY
As amended by the
Third Amendment to Indenture,
dated as of November 2, 2022
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4143-0949-1521
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions
Section 1.2. [Reserved]
Section 1.3. Cross-References
Section 1.4. Accounting and Financial Determinations; No Duplication
Section 1.5. Rules of Construction
Section 1.6. Other Definitional Provisions.
ARTICLE 2. THE SECURITIES
Section 2.1. Designation and Terms of Securities
Section 2.2. [Reserved]
Section 2.3. [Reserved].
Section 2.4. Execution and Authentication.
Section 2.5. Authenticating Agent.
Section 2.6. Registration of Transfer and Exchange of Securities.
Section 2.7. Appointment of Paying Agent
Section 2.8. Paying Agent to Hold Money in Trust.
Section 2.9. Private Placement Legend
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities.
Section 2.11. Temporary Notes.
Section 2.12. Persons Deemed Owners
Section 2.13. Cancellation
Section 2.14. Release of Trust Estate
Section 2.15. Payment of Principal, Interest and Other Amounts.
Section 2.16. Book-Entry Notes.
Section 2.17. Notices to Clearing Agency
Section 2.18. Definitive Notes.
Section 2.19. Global Note
Section 2.20. Tax Treatment
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and Registrar
ARTICLE 3. ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
Section 3.1. Issuance.
Section 3.2. Certain Fees and Expenses.
ARTICLE 4. NOTEHOLDER LISTS AND REPORTS
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders
Section 4.2. Preservation of Information; Communications to Noteholders and Certificateholders.
Section 4.3. Reports by Issuer
Section 4.4. [Reserved]
-i-
4143-0949-1521
2
2
26
26
27
27
27
28
28
28
28
28
29
30
33
33
34
36
37
38
38
38
39
39
44
44
45
46
46
46
46
47
48
48
48
49
49
TABLE OF CONTENTS
(continued)
Page
Section 4.5. Reports and Records for the Indenture Trustee and Instructions.
ARTICLE 5. ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
Section 5.1. Rights of Noteholders and Certificateholders
Section 5.2. Collection of Money
Section 5.3. Establishment of Accounts.
Section 5.4. Payments and Allocations.
Section 5.5. [Reserved]
Section 5.6. [Reserved]
Section 5.7. General Provisions Regarding Accounts
Section 5.8. [Reserved].
Section 5.9. [Reserved].
Section 5.10. [Reserved].
Section 5.11. [Reserved].
Section 5.12. Determination of Monthly Interest.
Section 5.13. Benchmark Replacement.
Section 5.14. [Reserved].
Section 5.15. Monthly Payments.
Section 5.16. Failure to Make a Deposit or Payment.
ARTICLE 6. DISTRIBUTIONS AND REPORTS
Section 6.1. Distributions.
Section 6.2. Monthly Report.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Section 7.1. Representations and Warranties of the Issuer.
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer.
ARTICLE 8. COVENANTS
Section 8.1. Money for Payments To Be Held in Trust
Section 8.2. Affirmative Covenants of Issuer
Section 8.3. Negative Covenants
Section 8.4. Further Instruments and Acts
Section 8.6. Perfection Representations
ARTICLE 9. RAPID AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Rapid Amortization Events.
ARTICLE 10. REMEDIES
Section 10.1. Events of Default
Section 10.2. Rights of the Indenture Trustee Upon Events of Default.
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
Section 10.4. Remedies
-ii-
4143-0949-1521
49
50
50
50
50
52
53
53
53
53
53
53
53
53
54
55
55
56
57
57
57
58
58
62
62
62
62
66
69
69
69
69
70
70
71
72
74
TABLE OF CONTENTS
(continued)
Page
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities
Section 10.6. Waiver of Past Events
Section 10.7. Limitation on Suits
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
Section 10.9. Restoration of Rights and Remedies
Section 10.10. The Indenture Trustee May File Proofs of Claim
Section 10.11. Priorities
Section 10.12. Undertaking for Costs
Section 10.13. Rights and Remedies Cumulative
Section 10.14. Delay or Omission Not Waiver
Section 10.15. Control by Noteholders
Section 10.16. Waiver of Stay or Extension Laws
Section 10.17. Action on Securities
Section 10.18. Performance and Enforcement of Certain Obligations.
Section 10.19. Reassignment of Surplus
ARTICLE 11. THE INDENTURE TRUSTEE
Section 11.1. Duties of the Indenture Trustee.
Section 11.2. Rights of the Indenture Trustee
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities
Section 11.5. Notice of Defaults
Section 11.6. Compensation.
Section 11.7. Replacement of the Indenture Trustee.
Section 11.8. Successor Indenture Trustee by Merger, etc.
Section 11.9. Eligibility: Disqualification
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
Section 11.11. [Reserved]
Section 11.12. Taxes
Section 11.13. [Reserved]
Section 11.14. Suits for Enforcement
Section 11.15. Reports by Indenture Trustee to Holders
Section 11.16. Representations and Warranties of Indenture Trustee
Section 11.17. The Issuer Indemnification of the Indenture Trustee
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer
Section 11.19. [Reserved].
Section 11.20. Maintenance of Office or Agency
Section 11.21. Concerning the Rights of the Indenture Trustee
Section 11.22. Direction to the Indenture Trustee
-iii-
4143-0949-1521
75
75
76
76
77
77
78
78
78
78
79
79
79
80
80
80
80
83
87
87
88
88
88
90
90
91
92
92
92
92
92
92
93
93
93
93
94
94
TABLE OF CONTENTS
(continued)
Page
ARTICLE 12. DISCHARGE OF INDENTURE
Section 12.1. Satisfaction and Discharge of Indenture
Section 12.2. Application of Issuer Money
Section 12.3. Repayment of Moneys Held by Paying Agent
Section 12.4. [Reserved].
Section 12.5. Final Payment.
Section 12.6. Termination Rights of Issuer
Section 12.7. Repayment to the Issuer
ARTICLE 13. AMENDMENTS
Section 13.1. Supplemental Indentures without Consent of the Noteholders
Section 13.2. Supplemental Indentures with Consent of Noteholders
Section 13.3. Execution of Supplemental Indentures
Section 13.4. Effect of Supplemental Indenture
Section 13.5. [Reserved]
Section 13.6. [Reserved]
Section 13.7. [Reserved].
Section 13.8. Revocation and Effect of Consents.
Section 13.9. Notation on or Exchange of Securities Following Amendment.
Section 13.10. The Indenture Trustee to Sign Amendments, etc.
ARTICLE 14. REDEMPTION AND REFINANCING OF NOTES
Section 14.1. Redemption and Refinancing
Section 14.2. Form of Redemption Notice
Section 14.3. Notes Payable on Redemption Date
ARTICLE 15. MISCELLANEOUS
Section 15.1. Compliance Certificates and Opinions, etc
Section 15.2. Form of Documents Delivered to Indenture Trustee
Section 15.3. Acts of Noteholders and Certificateholders.
Section 15.4. Notices
Section 15.5. Notices to Noteholders and Certificateholders; Waiver
Section 15.6. Alternate Payment and Notice Provisions
Section 15.7. [Reserved]
Section 15.8. Effect of Headings and Table of Contents
Section 15.9. Successors and Assigns
Section 15.10. Separability of Provisions
Section 15.11. Benefits of Indenture
Section 15.12. Legal Holidays
Section 15.13. GOVERNING LAW; JURISDICTION
Section 15.14. Counterparts; Electronic Execution
Section 15.15. Recording of Indenture
Section 15.16. Issuer Obligation
Section 15.17. No Bankruptcy Petition Against the Issuer
-iv-
4143-0949-1521
94
94
94
95
95
95
96
96
96
96
97
99
99
99
99
99
99
100
100
100
100
101
101
102
102
103
104
105
105
106
106
106
106
106
106
106
107
107
107
107
108
TABLE OF CONTENTS
(continued)
Section 15.18. No Joint Venture
Section 15.19. Rule 144A Information
Section 15.20. No Waiver; Cumulative Remedies
Section 15.21. Third-Party Beneficiaries
Section 15.22. Merger and Integration
Section 15.23. Rules by the Indenture Trustee
Section 15.24. Duplicate Originals
Section 15.25. Waiver of Trial by Jury
Section 15.26. No Impairment
-v-
4143-0949-1521
Page
108
108
108
108
109
109
109
109
109
TABLE OF CONTENTS
(continued)
Page
Exhibits and Schedules:
Exhibit A: Form of Release and Reconveyance of Trust Estate
Exhibit B: [Reserved]
Exhibit C: Form of Class A Restricted Global Note
Exhibit D: Form of Monthly Report
Exhibit E: Form of Certificate
Schedule 1 Amortization Schedule
Schedule 2 Custody Account Allocations
Schedule 3 Perfection Representations, Warranties and Covenants
Schedule 4 List of Proceedings
Schedule 5 2022-2 Additional Principal Payment Amounts
-vi-
4143-0949-1521
INDENTURE, dated as of December 20, 2021, between OPORTUN RF, LLC, a Delaware limited liability company, as issuer
(the “Issuer”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association with trust powers, as Indenture
Trustee, as Securities Intermediary and as Depositary Bank.
W I T N E S S E T H :
provided in this Indenture; and
WHEREAS, the Issuer has duly executed and delivered this Indenture to provide for the issuance of Securities, issuable as
WHEREAS, all things necessary to make this Indenture a legal, valid and binding agreement of the Issuer, enforceable in
accordance with its terms, have been done, and the Issuer proposes to do all the things necessary to make the Securities, when executed by the
Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the legal, valid and binding
obligations of the Issuer as hereinafter provided.
covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
NOW, THEREFORE, for and in consideration of the premises and the receipt of the Securities by the Holders, it is mutually
GRANTING CLAUSE
The Issuer hereby grants to the Indenture Trustee at the Closing Date, for the benefit of the Indenture Trustee, the Noteholders,
the Certificateholders and any other Person to which any Secured Obligations are payable (the “Secured Parties”), to secure the Secured
Obligations, a continuing Lien on and security interest in all of the Issuer’s right, title and interest in, to and under the following property
whether now owned or hereafter acquired, now existing or hereafter created and wherever located: (a) all Underlying Securities, and any and
all monies due or to become due thereunder; (b) the Payment Account, each other Securities Account, and any other account maintained by the
Indenture Trustee pursuant hereto (each such account, a “Trust Account ”), all monies from time to time deposited therein and all money,
instruments, investment property and other property from time to time credited thereto or on deposit therein; (c) all certificates and instruments,
if any, representing or evidencing any or all of the Trust Accounts or the funds on deposit therein from time to time; (d) all investments made at
any time and from time to time with moneys in the Trust Accounts; (e) the Purchase Agreements; (f) all accounts, chattel paper, commercial
tort claims, deposit accounts, documents, general intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit,
money, and oil, gas and other minerals, (g) all additional property that may from time to time hereafter be subjected to the grant and pledge
made by the Issuer or by anyone on its behalf; (h) all present and future claims, demands, causes and choses in action and all payments on or
under the foregoing; and (i) all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of
all of the foregoing and the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property, rights to
payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing (collectively, the “Trust Estate”).
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in
respect of, the Secured Obligations, equally and ratably without prejudice, priority or distinction except as set forth herein, and to secure
compliance with the provisions of this Indenture, all as provided in this Indenture.
4143-0949-1521
The Issuer hereby assigns to the Indenture Trustee all of the Issuer’s power to authorize an amendment to the financing
statement filed with the Delaware Secretary of State relating to the security interest granted to the Issuer by the Seller pursuant to each
Purchase Agreement; provided, however, that the Indenture Trustee shall be entitled to all the protections of Article 11, including Sections
11.1(g) and 11.2(k), in connection therewith, and the obligations of the Issuer under Sections 8.2(i) and 8.3(j) shall remain unaffected.
The Indenture Trustee, for the benefit of the Secured Parties, hereby acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and the Lien on the Trust Estate conveyed by the Issuer pursuant to the Grant,
declares that it shall maintain such right, title and interest, upon the trust set forth, for the benefit of all Secured Parties, subject to Sections 11.1
and 11.2, and agrees to perform its duties required in this Indenture in accordance with the terms of this Indenture.
DESIGNATION
(a) There are hereby created notes and subordinate residual certificates to be issued pursuant to this Indenture and such notes
and subordinate residual certificates shall be substantially in the form of Exhibit C and E, respectively, hereto, executed by or on behalf of the
Issuer and authenticated by the Indenture Trustee and designated generally Asset Backed Notes, Class A, which notes shall include any
Additional Notes (the “Class A Notes ” or the “Notes”), and Asset Backed Certificates (the “Certificates” and, together with the Notes, the
“Securities”)). The Class A Notes shall be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof,
and the Certificates shall be issued in minimum percentage interests of 5% with no minimum incremental percentage interests in excess thereof.
(b) The Certificates shall be subordinate to the Class A Notes to the extent described herein.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions. Certain capitalized terms used herein (including the preamble and the recitals hereto) shall have the
following meanings:
“2019-A Certificates” means the residual certificates issued by the 2019-A Issuer under the 2019-A Indenture and assigned
CUSIP Number 68377F 108.
“2019-A Indenture” means the Base Indenture as supplemented by the Series 2019-A Supplement, each dated as of August 1,
2019, between the 2019-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2019-A Issuer” means Oportun Funding XIII, LLC, a Delaware special purpose limited liability company.
“2019-A Transaction Documents” means the “Transaction Documents” as defined in the 2019-A Indenture.
“2021-A Certificates” means the residual certificates issued by the 2021-A Issuer under the 2021-A Indenture and assigned
CUSIP Number 68377B 107.
2
4143-0949-1521
“2021-A Indenture” means the Base Indenture as supplemented by the Series 2021-A Supplement, each dated as of March 8,
2021, between the 2021-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2021-A Issuer” means Oportun Funding XIV, LLC, a Delaware special purpose limited liability company.
“2021-A Transaction Documents” means the “Transaction Documents” as defined in the 2021-A Indenture.
representing the beneficial interest in the 2021-B Issuer and assigned CUSIP Number 68377G AE6.
“2021-B Certificates” means the trust certificates issued by the 2021-B Issuer pursuant to the 2021-B Trust Agreement,
“2021-B Indenture” means the Indenture, dated as of May 10, 2021, between the 2021-B Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2021-B Issuer” means Oportun Issuance Trust 2021-B, a Delaware statutory trust.
“2021-B Transaction Documents” means the “Transaction Documents” as defined in the 2021-B Indenture.
“2021-B Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-B Issuer, dated as of May
10, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2021-C Issuer and assigned CUSIP Number 68377W 101.
“2021-C Certificates” means the trust certificates issued by the 2021-C Issuer pursuant to the 2021-C Trust Agreement,
“2021-C Indenture” means the Indenture, dated as of October 28, 2021, between the 2021-C Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2021-C Issuer” means Oportun Issuance Trust 2021-C, a Delaware statutory trust.
“2021-C Transaction Documents” means the “Transaction Documents” as defined in the 2021-C Indenture.
“2021-C Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-C Issuer, dated as of
October 28, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing,
LLC, as administrator, as amended, restated, modified or supplemented from time to time.
“2022-A Certificates” means the trust certificates issued by the 2022-A Issuer pursuant to the 2022-A Trust Agreement,
representing the beneficial interest in the 2022-A Issuer and assigned CUSIP Number 68378N AE0.
3
4143-0949-1521
CUSIP Number 68378N AD2.
“2022-A Class D Notes ” means the Class D notes issued by the 2022-A Issuer pursuant to the 2022-A Indenture and assigned
“2022-A Indenture” means the Indenture, dated as of May 23, 2022, between the 2022-A Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2022-A Issuer” means Oportun Issuance Trust 2022-A, a Delaware statutory trust.
“2022-A Purchase Agreement ” means the Security Purchase Agreement (2022-A), dated as of the 2022-A Purchase Date,
among the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-A Class D Notes and the 2022-A Certificates, as such
agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“2022-A Purchase Date” means May 24, 2022.
“2022-A Transaction Documents” means the “Transaction Documents” as defined in the 2022-A Indenture.
“2022-A Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2022-A Issuer, dated as of May
23, 2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“2022-2 Additional Principal Payment Amount” means, (i) for any Payment Date on or after the occurrence of a 2022-2
Cumulative Default Ratio Trigger Event, the “2022-2 Additional Principal Payment Amount” specified therefor on Schedule 5 hereto, and (ii)
otherwise, zero.
representing the beneficial interest in the 2022-2 Issuer and assigned CUSIP Number 68377H 104.
“2022-2 Certificates” means the trust certificates issued by the 2022-2 Issuer pursuant to the 2022-2 Trust Agreement,
“2022-2 Cumulative Default Ratio” means “Cumulative Default Ratio” as defined in the 2022-2 Indenture.
“2022-2 Cumulative Default Ratio Trigger Event” shall have occurred on any Payment Date if the 2022-2 Cumulative Default
Ratio for the immediately preceding 2022-2 Payment Date exceeds the percentage set forth opposite such 2022-2 Payment Date on Schedule 5
hereto.
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust.
“2022-2 Payment Date” means “Payment Date” as defined in the 2022-2 Indenture.
4
4143-0949-1521
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among
the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the 2022-2 Indenture.
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22,
2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the February 2023 Payment
Date, 0%, and (II) for any Payment Date on or after the March 2023 Payment Date, (a) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for
such Payment Date is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is greater than 15.0%, 100.0%.
“Adjusted Leverage Ratio” means, on any date of determination, the ratio of (i) Adjusted Liabilities to (ii) Tangible Net Worth.
“Adjusted Leverage Ratio Covenant” means that the Parent will have a maximum Adjusted Leverage Ratio of 3.5:1.
“Adjusted Liabilities” means, on any date of determination, the excess of total Liabilities over the amount of any asset-backed
securities that would appear as liabilities on the balance sheet of the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
“Administration Fee” means the fee payable to the Administrator pursuant to the Administrative Services Agreement.
Date, between the Issuer and the Administrator, as amended, supplemented or otherwise modified from time to time.
“Administrative Services Agreement” means the Administrative Services and Premises Agreement, dated as of the Closing
“Administrator” means Oportun, as administrator of the Issuer pursuant to the Administrative Services Agreement.
“Administrator Default” has the meaning specified in the Administrative Services Agreement.
statement or any similar instrument filed against such Person’s assets or properties), other than a Permitted Encumbrance.
“Adverse Claim” means a Lien on any Person’s assets or properties in favor of any other Person (including any UCC financing
5
4143-0949-1521
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of
voting stock, by contract or otherwise.
“Agent” means any Transfer Agent and Registrar or Paying Agent.
“Alternative Rate” means, for any day, the sum of a per annum rate equal to the sum of (i) the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such
successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective)” and (ii) 0.50%. If on any relevant day such rate is not
yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any
such successor, the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day
the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic
mean as determined by the Calculation Agent of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New
York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent.
“Amortization Schedule” means the schedule of Payment Dates and corresponding Scheduled Note Principal Amounts attached
hereto as Schedule 1, as amended as of the 2022-2 Purchase Date and as otherwise amended with the prior written consent of the Noteholders.
“Applicable Margin” shall have the meaning set forth in the Fee Letter.
“Applicants” has the meaning specified in Section 4.2(b).
“Available Funds” means, with respect to any Monthly Period and the Payment Date related thereto, the sum of the following,
without duplication: (a) any Underlying Payments received in respect of the Underlying Securities on the Underlying Payment Date
immediately following such Monthly Period and deposited into the Payment Account on such Underlying Payment Date; and (b) any
Investment Earnings received with respect to the Trust Estate.
“Available Tenor ” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any
tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component
thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining
any frequency of making payments of interest calculated pursuant to this Indenture as of such date.
“Bankruptcy Code” means the United States Bankruptcy Code, Title 11, United States, as amended.
“Benchmark” means, effective as of May 24, 2022, Term SOFR; provided that if a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred with respect to the then-current Benchmark, then “Benchmark” means the applicable Benchmark
Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of Section 5.13.
6
4143-0949-1521
determined by the Required Noteholders, in consultation with the Issuer, for the applicable Benchmark Replacement Date:
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be
(1) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; or
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Required Noteholders and the Issuer as the
replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or
(ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current
Benchmark for dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment.
Replacement will be deemed to be the Floor for the purposes of this Indenture and the other Transaction Documents.
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark
The Required Noteholders shall use commercially reasonable efforts to satisfy any applicable IRS guidance, including Proposed
Treasury Regulation 1.1001-6 and any future guidance, to the effect that a Benchmark Replacement will not result in a deemed exchange for
U.S. federal income Tax purposes of any Class A Note hereunder.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an
Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark
Replacement:
below that can be determined by the Required Noteholders:
(1) for purposes of clause (1) of the definition of “Benchmark Replacement,” the first alternative set forth in the order
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a
positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that
has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the
applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; and
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such
Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction
referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable
Corresponding Tenor; and
(2) for purposes of clause (2) of the definition of “Benchmark Replacement,” the spread adjustment, or method for
calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the
Required Noteholders and the Issuer for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
Benchmark with the applicable Unadjusted Benchmark Replacement
7
4143-0949-1521
by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market
convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of
such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such
time;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such
Benchmark Replacement Adjustment from time to time as selected by the Required Noteholders in their reasonable discretion.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the
public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the
published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such
Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark
(or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the
administrator of such Benchmark (or component thereof) to be no longer representative; provided that such non-representativeness will
be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of
such Benchmark (or component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but
earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to
the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause
(1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current
Available Tenors of such Benchmark (or the published component used in the calculation thereof).
Benchmark:
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the
published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component
thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official
with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the
administrator for such Benchmark (or such
8
4143-0949-1521
component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such
component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component
thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or
such component thereof) are no longer, or as of a specified future date will no longer be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if
a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such
Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date
pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 5.13 and (y) ending at the time that a
Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in
accordance with Section 5.13.
“Benefit Plan Investor” mean an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, a “plan” as described in Section 4975 of the Code, which is subject to Section 4975 of the Code, or an entity deemed to hold plan
assets of any of the foregoing.
“Book-Entry Notes” means Notes in which beneficial interests are owned and transferred through book entries by a Clearing
Agency as described in Section 2.16; provided that after the occurrence of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Notes are issued to the Note Owners, such Definitive Notes shall replace Book-Entry Notes.
“Business Day” means any day that DTC is open for business at its office in New York City and any day other than a Saturday,
Sunday or other day on which banking institutions or trust companies in the States of California, Florida, Illinois, Missouri, New York or Texas
are authorized or obligated by Law to be closed.
“Calculation Agent” means the party designated as such by the Issuer from time to time, with the written consent of the
Required Noteholders; initially, the Administrator. The compensation payable to the Administrator for the services performed by the
Calculation Agent hereunder shall be included in the Administration Fee.
“Capitalized Lease” of a Person means any lease of property by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
“Cash Equivalents” means (a) securities with maturities of one hundred twenty (120) days or less from the date of acquisition
issued or fully guaranteed or insured by the United
9
4143-0949-1521
States government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of one hundred twenty (120)
days or less from the date of acquisition and overnight bank deposits of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of
not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the United States government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor’s or P-1 or the equivalent thereof by Moody’s and
in either case maturing within ninety (90) days after the day of acquisition, (e) securities with maturities of ninety (90) days or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by Standard & Poor’s or A by
Moody’s, (f) securities with maturities of ninety (90) days or less from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (b) of this definition or, (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.
“Certificateholder” means a Holder of a Certificate.
“Certificates” has the meaning specified in paragraph (a) of the Designation.
“Class A Additional Interest” has the meaning specified in Section 5.12(a).
“Class A Deficiency Amount” has the meaning specified in Section 5.12(a).
“Class A Monthly Interest” has the meaning specified in Section 5.12(a).
“Class A Note Rate” means, with respect to any Interest Period, a variable rate per annum equal to the sum of (i) the Benchmark
applicable to such Interest Period (or if the Alternative Rate applies pursuant to Section 5.13, the Alternative Rate) plus (ii) the Applicable
Margin.
“Class A Noteholder” means a Holder of a Class A Note.
“Class A Notes” has the meaning specified in paragraph (a) of the Designation.
“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act or any
successor provision thereto.
time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to
“Closing Date” means December 20, 2021.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and Treasury Regulations promulgated
“Commission” means the U.S. Securities and Exchange Commission, and its successors.
thereunder.
10
4143-0949-1521
“Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational
changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of
“Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or
operational matters) that the Required Noteholders, in consultation with the Issuer, decide may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration thereof in a manner substantially consistent with market
practice (or, if the Required Noteholders decide that adoption of any portion of such market practice is not administratively feasible or if the
Required Noteholders determine that no market practice for the administration of such Benchmark Replacement exists, in such other manner of
administration as the Required Noteholders, in consultation with the Issuer, decide is reasonably necessary in connection with the
administration of this Indenture and the other Transaction Documents).
“Consolidated Parent” means initially, Oportun Financial Corporation, a Delaware corporation, and any successor to Oportun
Financial Corporation as the indirect or direct parent of Oportun, the financial statements of which are for financial reporting purposes
consolidated with Oportun in accordance with GAAP, or if there is none, then Oportun.
“Contingent Liability” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other
liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or
other distributions upon the shares of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to
any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
“Contractual Obligation” means, with respect to any Person, any provision of any security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject.
“Corporate Trust Office” means the principal office of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of this Indenture is located at 1100 N. Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration.
interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an
“Credit Risk Retention Rules” means Regulation RR (17 C.F.R. Part 246), as such rule may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the Department of Treasury, the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Federal Housing Finance Agency, the Securities and Exchange Commission and the Department of
Housing and Urban Development in the adopting release (79 F.R. 77601 et seq.) or by the staff of any such agency, or as may be provided by
any such agency or its staff from time to time, in each case, as effective from time to time.
11
4143-0949-1521
“Custody Account” means each of the First Priority Custody Account and the Second Priority Custody Account.
Trust, National Association, as custodian, as amended, supplemented or otherwise modified from time to time.
“Custody Agreement” means the Custody Agreement, dated as of December 20, 2021, between the Issuer and Wilmington
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being
established by the Required Noteholders in accordance with the conventions for this rate selected or recommended by the Relevant
Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Required Noteholders decide that any such
convention is not administratively feasible, then the Required Noteholders may establish another convention in their reasonable discretion.
Administrator Default or a Rapid Amortization Event.
“Default” means any occurrence that is, or with notice or lapse of time or both would become, an Event of Default, an
“Definitive Notes” has the meaning specified in Section 2.16(i).
“Depository” means the Clearing Agency.
“Depository Agreement” means the agreement among the Issuer and the Clearing Agency.
“Determination Date” means the third Business Day prior to each Underlying Payment Date.
“Dollars” and the symbol “$” mean the lawful currency of the United States.
“DTC” means The Depository Trust Company.
thereunder.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated
“ERISA Affiliate ” means, with respect to any Person, (i) any corporation which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as such Person; (ii) any trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with such Person; or (iii) any member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as such Person.
“ERISA Event” means any of the following: (i) the failure to satisfy the minimum funding standard under Section 302 of
ERISA or Section 412 of the Code with respect to any Pension Plan; (ii) the filing by the Pension Benefit Guaranty Corporation or a plan
administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or an event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or grounds to appoint a trustee to administer any Pension Plan; (iii) the complete
withdrawal or partial withdrawal by any Person or any of its ERISA Affiliates from any Multiemployer Plan; (iv) any “reportable event” as
defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Pension Plan (other than an event for which the 30-day
notice period is waived), (v) the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the termination of any Pension Plan
(vi) the receipt by the Issuer, the Seller or any ERISA Affiliate of any notice concerning a determination that a
12
4143-0949-1521
Multiemployer Plan is, or is expected to be insolvent within the meaning of Title IV of ERISA; or (vii) the imposition of any liability under
Title IV of ERISA, other than for Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon
any Person or any of its ERISA Affiliates with respect to a Pension Plan.
“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if:
(a) a Proceeding shall be commenced, without the application or consent of such Person, before any Governmental Authority,
seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or adjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any Law relating to bankruptcy, insolvency, reorganization, winding up or composition
or adjustment of debts, and in the case of any Person, such Proceeding shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy
Laws or other similar Laws now or hereafter in effect; or
(b) such Person shall (i) consent to the institution of (except as described in the proviso to clause (a) above) any Proceeding or
petition described in clause (a) of this definition, or (ii) commence a voluntary Proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar Law now or hereafter in effect, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial
part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its
debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Section 10.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FATCA” means the Foreign Account Tax Compliance Act provisions, sections 1471 through to 1474 of the Code (including
any regulations or official interpretations issued with respect thereof or agreements thereunder and any amended or successor provisions).
“FATCA Withholding Tax” means any withholding or deduction required pursuant to FATCA.
principal functions.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its
“Fee Letter” shall mean that fee letter by and between Jefferies Funding LLC and the Issuer, dated December 20, 2021.
“Financial Covenants” means each of the Leverage Ratio Covenant, the Adjusted Leverage Ratio Covenant, the Tangible Net
Worth Covenant and the Liquidity Covenant.
“First Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
13
4143-0949-1521
“Fiscal Year” means any period of twelve consecutive calendar months ending on December 31.
“Fitch” means Fitch, Inc.
“Floor” means a rate of interest equal to 0.00%.
“Flow-through Entity” has the meaning specified in Section 2.6(e)(iii).
“GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to time supplemented and amended, and with respect to determinations
or calculations to be made by a Person, applied on a basis consistent with the most recent audited financial statements of Consolidated Parent
before the Closing Date.
“Global Note” has the meaning specified in Section 2.19.
“Governmental Authority” means any government or political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
“Grant” means the Issuer’s grant of a Lien on the Trust Estate as set forth in the Granting Clause of this Indenture.
“Holder” means the Person in whose name a Note or Certificate is registered in the Register.
“Indebtedness” means, with respect to any Person, such Person’s (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on
terms customary in the trade, (iii) obligations, whether or not assumed, secured by Liens on or payable out of the proceeds or production from,
property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments,
(v) Capitalized Lease obligations and (vi) obligations of another Person of a type described in clauses (i) through (v) above, for which such
Person is obligated pursuant to a guaranty, put or similar arrangement.
“Indenture” means this Indenture dated as of the Closing Date, between the Issuer and the Indenture Trustee, Securities
Intermediary and Depositary Bank, as amended, restated, modified or supplemented from time to time.
“Indenture Termination Date” has the meaning specified in Section 12.1.
“Indenture Trustee” means initially Wilmington Trust, National Association, acting in such capacity under this Indenture, and its
successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any
successor trustee appointed in accordance with the provisions of this Indenture.
“Independent” means, when used with respect to any specified Person, that such Person (a) is in fact independent of the Issuer,
any other obligor upon the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or
14
4143-0949-1521
any material indirect financial interest in the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar functions.
“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of Section 15.1, prepared by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall
state that the signer has read the definition of “Independent” in this Indenture and that the signer is Independent within the meaning thereof.
“Initial Purchase Agreement” means the Certificate Purchase Agreement, dated as of the Closing Date, among the Seller and the
Issuer, relating to the purchase by the Issuer of the 2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates and the 2021-C
Certificates, as such agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“Initial Purchaser” means Jefferies Funding LLC.
“Interest Period” means, with respect to any Payment Date, the period from and including the Payment Date immediately
preceding such Payment Date (or, in the case of the first Payment Date, from and including the Closing Date) to but excluding such Payment
Date.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
the Trust Accounts.
“Investment Earnings” means all interest and earnings (net of losses and investment expenses) accrued on funds on deposit in
“Issuer” has the meaning specified in the preamble of this Indenture.
“Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Issuer, dated as of
December 20, 2021, as further amended, supplemented or otherwise modified from time to time.
Responsible Officers and delivered to the Indenture Trustee.
“Issuer Order” and “Issuer Request” means a written order or request signed in the name of the Issuer by any one of its
decree or award of any Governmental Authority.
“Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ,
“Legal Final Payment Date” means the latest Payment Date listed on the Amortization Schedule.
“Leverage Ratio” means, on any date of determination, the ratio of (i) Liabilities to (ii) Tangible Net Worth.
“Leverage Ratio Covenant” means that the Parent will have a maximum Leverage Ratio of 11.5:1.
15
4143-0949-1521
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Liabilities” means, on any date of determination, the total liabilities which would appear on the balance sheet of the Parent and
“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC or comparable Law of
any
as such agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“Limited Guaranty” means the Limited Guaranty, dated as of December 20, 2021, between Oportun and the Indenture Trustee,
Equivalents.
“Liquidity Covenant” means that the Seller will have a minimum liquidity of $10,000,000, equal to unrestricted cash or Cash
“Material Adverse Effect” means any event or condition which would have a material adverse effect on (i) the Underlying
Securities or Underlying Payments, (ii) the condition (financial or otherwise), businesses or properties of the Issuer or the Seller, (iii) the ability
of the Issuer or the Seller to perform its respective obligations under the Transaction Documents or the ability of the Administrator to perform
its obligations under the Administrative Services Agreement or (iv) the interests of the Indenture Trustee or any Secured Party in the Trust
Estate or under the Transaction Documents.
therefor on the Amortization Schedule.
“Minimum Principal Payment Amount” means, for any Payment Date, the “Minimum Principal Payment Amount” specified
“Monthly Period” means the period from and including the first day of a calendar month to and including the last day of such
calendar month; provided, however, that the first Monthly Period shall be the period from and including the Closing Date to and including
December 31, 2021.
“Monthly Report” means a report substantially in the form attached as Exhibit D or in such other form as the Administrator may
determine necessary or desirable (with prior consent of the Indenture Trustee); provided, however, that no such other agreed form shall serve to
exclude information expressly required by this Indenture.
“Moody’s” means Moody’s Investors Service, Inc.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA with respect to which the
Seller, the Issuer or any of their respective ERISA Affiliates is making, is obligated to make, or has made or been obligated to make,
contributions.
“Note Owner” means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as
an indirect participant, in accordance with the rules of such Clearing Agency).
“Note Principal Amount” means on any date of determination the then outstanding principal amount of the Notes.
16
4143-0949-1521
“Note Purchase Agreement” means the agreement by and among the Initial Purchaser, Oportun and the Issuer, dated December
20, 2021, pursuant to which the Initial Purchaser agreed to purchase an interest in the Class A Notes from the Issuer, subject to the terms and
conditions set forth therein, as amended, supplemented or otherwise modified from time to time.
“Note Rate” means the Class A Note Rate.
“Noteholder” means with respect to any Note, the holder of record of such Note.
“Notes” has the meaning specified in paragraph (a) of the Designation.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Officer’s Certificate” means a certificate signed by any Responsible Officer of the Person providing the certificate.
“Opinion of Counsel” means one or more written opinions of counsel to the Issuer or the Seller who (except in the case of
opinions regarding matters of organizational standing, power and authority, conflict with organizational documents, conflict with agreements
other than Transaction Documents, qualification to do business, licensure and litigation or other Proceedings) shall be external counsel,
satisfactory to the Indenture Trustee, which opinions shall comply with any applicable requirements of Section 15.1, and shall be in form and
substance satisfactory to the Indenture Trustee, and shall be addressed to the Indenture Trustee. An Opinion of Counsel may, to the extent same
is based on any factual matter, rely on an Officer’s Certificate as to the truth of such factual matter.
“Oportun” means Oportun, Inc., a Delaware corporation.
“Parent” means Oportun Financial Corporation.
“Paying Agent” means any paying agent appointed pursuant to Section 2.7 and shall initially be the Indenture Trustee.
“Payment Account” means the account established as such for the benefit of the Secured Parties pursuant to Section 5.3(c).
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on
nd
January 12, 2022.
“Pension Plan” means an “employee pension benefit plan” as described in Section 3(2) of ERISA (excluding a Multiemployer
Plan) that is subject to Title IV of ERISA or Section 302 of ERISA or 412 of the Code, and in respect of which the Issuer, the Seller or any
ERISA Affiliate thereof is, or at any time during the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of
ERISA, or with respect to which the Issuer, the Seller or any of their respective ERISA Affiliates has any liability, contingent or otherwise.
“Perfection Representations” means the representations, warranties and covenants set forth in Schedule 3 attached hereto.
17
4143-0949-1521
“Periodic Term SOFR Determination Day” has the meaning specified in in the definition of “Term SOFR.”
“Permitted Encumbrance” means (a) with respect to the Issuer, any item described in clause (i), (iv) or (vi) of the following, and
(b) with respect to the Seller, any item described in clauses (i) through (vi) of the following:
(i) Liens for taxes and assessments that are not yet due and payable or that are being contested in good faith and for which
reserves have been established, if required in accordance with GAAP;
(ii) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Seller shall at any time in good faith be prosecuting an appeal or proceeding for a review and with
respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP;
(iii) Liens incidental to the conduct of business or the ownership of properties and assets (including mechanics’, carriers’,
repairers’, warehousemen’s and statutory landlords’ liens and liens to secure the performance of leases) and Liens to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in connection
with the borrowing of money, provided in each case, the obligation secured is not overdue, or, if overdue, is being contested in good
faith by appropriate actions or Proceedings and with respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(iv) Liens in favor of the Indenture Trustee, or otherwise created by the Issuer, the Seller or the Indenture Trustee pursuant to
the Transaction Documents;
(v) Liens that, in the aggregate do not exceed $250,000 (such amount not to include Permitted Encumbrances under clauses (i)
through (iv) or (vi)) and which, individually or in the aggregate, do not materially interfere with the rights under the Transaction
Documents of the Indenture Trustee or any Noteholder or Certificateholder in any of the Trust Estate; and
(vi) any Lien created in favor of the Issuer or the Seller in connection with the purchase of the Underlying Securities by the
Issuer or the Seller and covering such Underlying Securities.
or registered form and that evidence:
“Permitted Investments” means book-entry securities, negotiable instruments or securities represented by instruments in bearer
(a) direct obligations of, and obligations fully guaranteed as to the full and timely payment by, the United States;
(b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under
the Laws of the United States or any state thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to
supervision and examination by federal or state banking or depository institution authorities (including depository receipts issued by any such
institution or trust company as custodian with respect to any obligation referred to in clause (a) above or a portion of such obligation for the
benefit of the holders of such depository receipts); provided that at the time of the investment or contractual commitment to invest therein
(which shall be deemed to be made again each time funds are
18
4143-0949-1521
reinvested following each Payment Date), the commercial paper or other short-term senior unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a person other than such depository institution or trust company) of such depository
institution or trust company shall have a credit rating from a Rating Agency in the highest investment category granted thereby;
“F2” or the equivalent thereof from Moody’s or Standard & Poor’s; or
(c) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Fitch of
(d) only to the extent permitted by Rule 3a-7 under the Investment Company Act, investments in money market funds having
a rating from Fitch of “AA” or, to the extent not rated by Fitch, rated in the highest rating category by Moody’s, Standard & Poor’s or another
Rating Agency.
Permitted Investments may be purchased by or through the Indenture Trustee or any of its Affiliates.
organization, enterprise, government or any department or agency of any government.
“Person” means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated
“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.
Purchase Agreement.
“Purchase Agreement” means each of the Initial Purchase Agreement, the 2022-A Purchase Agreement and the 2022-2
“QIB” has the meaning specified in Section 2.16(a)(i).
“Qualified Institution” means a depository institution or trust company:
regarded as “investment grade” by at least one Rating Agency, if the deposits are to be held in the account for 30 days or less, or
(a) whose commercial paper, short-term unsecured debt obligations or other short-term deposits have a rating commonly
(b) whose long-term unsecured debt obligations have a rating commonly regarded as “investment grade” by at least one
Rating Agency, if the deposits are to be held in the account more than 30 days.
“Rapid Amortization Event” has the meaning specified in Section 9.1.
“Rating Agency” means any nationally recognized statistical rating organization.
“Record Date” means, with respect to any Payment Date, the last Business Day of the preceding Monthly Period.
“Records” means all documents, books, records and other information in physical or electronic format (including, without
limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) maintained with respect to
the Underlying Securities.
pursuant to Section 14.1.
“Redemption Date” means in the case of a redemption of the Notes, the Payment Date specified by Oportun or the Issuer
19
4143-0949-1521
“Redemption Price” means an amount as set forth in Section 14.1(b) for the redemption of the Notes.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 5:00
p.m. (New York City time) on each Periodic Term SOFR Determination Day, and (2) if such Benchmark is not Term SOFR, the time
determined by the Required Noteholders in their reasonable discretion.
“Register” has the meaning specified in Section 2.6(a).
“Registered Certificates” has the meaning specified in Section 2.1.
“Registered Notes” has the meaning specified in Section 2.1.
convened by the Federal Reserve Board or the NYFRB, or any successor thereto.
“Relevant Governmental Body” means the Federal Reserve Board or the NYFRB, or a committee officially endorsed or
Certificates outstanding.
“Required Certificateholders” means the holders of Certificates representing a percentage interest in excess of 50% of the
the aggregate principal balance of the Class A Notes outstanding (or, if the Notes have been paid in full, the Required Certificateholders).
“Required Noteholders” means the holders of the Class A Notes outstanding, voting together, representing in excess of 50% of
binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Requirements of Law” means, as to any Person, the organizational documents of such Person and any Law applicable to or
“Responsible Officer” means (i) with respect to any Person, the member, the Chairman, the President, the Controller, any Vice
President, the Secretary, the Treasurer, or any other officer of such Person or of a direct or indirect managing member of such Person, who
customarily performs functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter
any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and
(ii) with respect to the Indenture Trustee, in any of its capacities hereunder, a Trust Officer.
“Restricted Global Notes” has the meaning specified in Section 2.16(a)(i).
“Retained Notes” means any Notes, or interests therein, beneficially owned by the Issuer or an entity which, for U.S. federal
income tax purposes, is considered the same Person as the Issuer, until such time as such Notes are the subject of an opinion pursuant to
Section 2.6(d) hereof.
“Rule 144A” has the meaning specified in Section 2.16(a)(i).
on the Amortization Schedule.
“Scheduled Note Principal Amount” means, for any Payment Date, the “Scheduled Note Principal Amount” specified therefor
“Scheduled Principal Payment Amount” means, for any Payment Date, an amount equal to the excess of (a) the Note Principal
Amount on such Payment Date over (b) the Scheduled Note Principal Amount for such Payment Date.
20
4143-0949-1521
“Second Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
“Secured Obligations” means (i) all principal and interest, at any time and from time to time, owing by the Issuer on the Notes
(including any Note held by the Seller, the Parent or any Affiliate of any of the foregoing), (ii) all amounts distributable to the
Certificateholders and (iii) all costs, fees, expenses, indemnity and other amounts owing or payable by, or obligations of, the Issuer to any
Person (other than any Affiliate of the Issuer) under the Indenture or the other Transaction Documents.
“Secured Parties” has the meaning specified in the Granting Clause of this Indenture.
“Securities” has the meaning specified in paragraph (a) of the Designation.
Priority Custody Account.
“Securities Account” means each of (i) the Payment Account, (ii) the First Priority Custody Account, and (iii) the Second
“Securities Act” means the Securities Act of 1933, as amended.
Association, acting in such capacity under this Indenture.
“Securities Intermediary” has the meaning specified in Section 5.3(e) and shall initially be Wilmington Trust, National
“Seller” means Oportun.
“Similar Law” means applicable Law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.
Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor
“Solvent” means with respect to any Person that as of the date of determination both (A)(i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of liabilities (including Contingent Liabilities) of such Person and (z) not less than
the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not
unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person
is “solvent” within the meaning given that term and similar terms under applicable Laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any Contingent Liability at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing
21
4143-0949-1521
at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Standard & Poor’s” means S&P Global Ratings.
“Subsidiary” of a Person means any other Person more than 50% of the outstanding voting interests of which shall at any time
be owned or controlled, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or any similar business
organization which is so owned or controlled.
“Supplement” means a supplement to this Indenture complying with the terms of Article 13 of this Indenture.
“Tangible Net Worth ” means, on any date of determination, the total shareholders’ equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury stock) which would appear on the balance sheet of the Parent and its Subsidiaries
determined on a consolidated basis in accordance with GAAP, less the sum of (a) all notes receivable from officers and employees of the
Parent and its Subsidiaries and from affiliates of the Parent, and (b) the aggregate book value of all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, patents, trademarks, trade names, copyrights, and franchises.
“Tangible Net Worth Covenant” means that the Parent will have a minimum Tangible Net Worth of $100,000,000.
“Tax Information” means information and/or properly completed and signed tax certifications and/or documentation sufficient
to eliminate the imposition of or to determine the amount of any withholding of tax, including FATCA Withholding Tax.
“Tax Opinion” means with respect to any action or event, an Opinion of Counsel to the effect that, for United States federal
income tax purposes, (a) such action or event will not adversely affect the tax characterization of the Notes issued to investors as debt, and (b)
such action or event will not cause the Issuer to be classified as an association or publicly traded partnership, in each case, taxable as a
corporation.
“Term SOFR” means the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such
day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such
Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on
any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term
SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR
will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as
such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to
such Periodic Term SOFR Determination Day; provided that if Term SOFR as so determined would be less than 0%, such rate shall be deemed
to be 0% for the purposes of this Indenture.
the Term SOFR Reference Rate selected by the Required Noteholders and the Issuer).
“Term SOFR Administrator ” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of
22
4143-0949-1521
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
owing to the Noteholders, are paid in full, (b) the Legal Final Payment Date and (c) the Indenture Termination Date.
“Termination Date” means the earliest to occur of (a) the Payment Date on which the Notes, plus all other amounts due and
“Three-Month Average Underlying Loss Percentage ” means, for any Payment Date, the weighted average of the Underlying
Monthly Loss Percentages over the previous three (3) Monthly Periods for all Underlying Securities that were outstanding during such
Monthly Periods.
“Transaction Documents” means, collectively, this Indenture, the Notes, the Purchase Agreements, the Note Purchase
Agreement, the Limited Guaranty, the Administrative Services Agreement, the Custody Agreement and any agreements of the Issuer relating
to the issuance or the purchase of any of the Notes.
“Transfer” has the meaning specified in Section 2.6(e).
National Association is acting as Indenture Trustee, be the Indenture Trustee.
“Transfer Agent and Registrar ” has the meaning specified in Section 2.6 and shall initially, and so long as Wilmington Trust,
and control of the Indenture Trustee.
“Trust Account” has the meaning specified in the Granting Clause to this Indenture, which accounts are under the sole dominion
“Trust Estate” has the meaning specified in the Granting Clause of this Indenture.
“Trust Officer” means any officer within the Corporate Trust Office (or any successor group of the Indenture Trustee),
including any Vice President, any Director, any Managing Director, any Assistant Vice President or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any individual who at the time shall be an above-designated officer and is
directly responsible for the day-to-day administration of the transactions contemplated herein.
“Trustee Fees and Expenses” means, for any Payment Date, the amount of accrued and unpaid fees, indemnity amounts and
reasonable out-of-pocket expenses, not in excess of $150,000 per calendar year for the Indenture Trustee (including in its capacity as Agent),
the Securities Intermediary and the Depositary Bank (or, if an Event of Default or other Rapid Amortization Event has occurred and is
continuing, without limit).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the
Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire
day for purposes of trading in United States government securities.
and in effect in such jurisdiction.
“UCC” means, with respect to any jurisdiction, the Uniform Commercial Code as the same may, from time to time, be enacted
Replacement Adjustment.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark
23
4143-0949-1521
2022-A Indenture or the 2022-2 Indenture, as applicable.
“Underlying Indenture” means the 2019-A Indenture, the 2021-A Indenture, the 2021-B Indenture, the 2021-C Indenture, the
the 2022-2 Issuer, as applicable.
“Underlying Issuer” means the 2019-A Issuer, the 2021-A Issuer, the 2021-B Issuer, the 2021-C Issuer, the 2022-A Issuer or
applicable Underlying Indenture.
“Underlying Monthly Loss Percentage” means, for any Underlying Issuer, the “Monthly Loss Percentage” as defined in the
“Underlying Payment Date” means with respect to any Underlying Security, means the eighth (8th) day of each calendar month,
or if such eighth (8th) day is not a Business Day, the next succeeding Business Day.
Underlying Securities in accordance with the applicable Underlying Transaction Documents.
“Underlying Payments” means, with respect to any Underlying Securities, any payments or distributions made in respect of such
2021-C Certificates, the 2022-A Certificates and the 2022-2 Certificates.
“Underlying Securities” means, collectively, the 2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates, the
“Underlying Transaction Documents” means the 2019-A Transaction Documents, the 2021-A Transaction Documents, the
2021-B Transaction Documents, the 2021-C Transaction Documents, the 2022-A Transaction Documents and the 2022-2 Transaction
Documents as applicable.
“U.S.” or “United States” means the United States of America and its territories.
telecopier device.
“written” or “in writing” means any form of written communication, including, without limitation, by means of e-mail, telex or
Section 1.2. [Reserved].
Section 1.3. Cross-References. Unless otherwise specified, references in this Indenture and in each other Transaction Document to
any Article or Section are references to such Article or Section of this Indenture or such other Transaction Document, as the case may be, and,
unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or
definition.
Section 1.4. Accounting and Financial Determinations; No Duplication. Where the character or amount of any asset or liability or
item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this
Indenture, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in this Indenture, in
accordance with GAAP. When used herein, the term “financial statement” shall include the notes and schedules thereto. All accounting
determinations and computations hereunder or under any other Transaction Documents shall be made without duplication.
Section 1.5. Rules of Construction. In this Indenture, unless the context otherwise requires:
(i) “or” is not exclusive;
24
4143-0949-1521
(ii) the singular includes the plural and vice versa;
(iii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Indenture, and reference to any Person in a particular capacity only refers to such Person in such capacity;
(iv) reference to any gender includes the other gender;
(v) reference to any Requirement of Law means such Requirement of Law as amended, modified, codified or reenacted, in
whole or in part, and in effect from time to time;
(vi) “including” (and with correlative meaning “include”) means including without limiting the generality of any description
preceding such term; and
(vii) with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but
excluding.”
Section 1.6. Other Definitional Provisions.
(a) All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. Capitalized terms used but not defined herein shall have the respective meaning
given to such term in the Servicing Agreement.
(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this Indenture; and Section, subsection, Schedule and Exhibit references contained
in this Indenture are references to Sections, subsections, Schedules and Exhibits in or to this Indenture unless otherwise specified.
(c) Terms used herein that are defined in the New York Uniform Commercial Code and not otherwise defined herein shall
have the meanings set forth in the New York Uniform Commercial Code, unless the context requires otherwise. Any reference herein to a
“beneficial interest” in a security also shall mean, unless the context requires otherwise, a security entitlement with respect to such security,
and any reference herein to a “beneficial owner” or “beneficial holder” of a security also shall mean, unless the context requires otherwise, the
holder of a security entitlement with respect to such security. Any reference herein to money or other property that is to be deposited in or is on
deposit in a securities account shall also mean that such money or other property is to be credited to, or is credited to, such securities account.
ARTICLE 2.
THE SECURITIES
Section 2.1. Designation and Terms of Securities. Subject to Sections 2.16 and 2.19, the Notes shall be issued in fully registered
form (the “Registered Notes”), the Certificates shall be issued in definitive, fully registered form (the “Registered Certificates”), and Registered
Notes and Registered Certificates shall be substantially in the form of exhibits with respect thereto attached hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such restrictions, legends or endorsements placed thereon and
25
4143-0949-1521
shall bear, upon their face, the designation for such series to which they belong so selected by the Issuer, all as determined by the Responsible
Officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the Security.
Section 2.2. [Reserved].
Section 2.3. [Reserved].
Section 2.4. Execution and Authentication.
(a) Each Security shall be executed by manual or facsimile signature by the Issuer. Securities bearing the manual or facsimile
signature of the individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Issuer shall not be
rendered invalid, notwithstanding that such individual has ceased to be so authorized prior to the authentication and delivery of such Securities
or does not hold such office at the date of such Securities. No Securities shall be entitled to any benefit under this Indenture, or be valid for any
purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein, duly executed by or
on behalf of the Indenture Trustee by the manual signature of a duly authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.
(b) The Issuer shall execute and the Indenture Trustee shall authenticate and deliver the Securities having the terms specified
herein, upon the receipt of an Issuer Order, to the purchasers thereof, the underwriters for sale or to the Issuer for initial retention by it. The
Issuer shall execute and the Indenture Trustee shall authenticate and deliver each Global Note that is issued upon original issuance thereof,
upon the receipt of an Issuer Order against payment of the purchase price therefor. The Issuer shall execute and the Indenture Trustee shall
authenticate Book-Entry Notes that are issued upon original issuance thereof, upon the receipt of an Issuer Order, to a Clearing Agency or its
nominee as provided in Section 2.16 against payment of the purchase price thereof.
(c) All Securities shall be dated and issued as of the date of their authentication.
Section 2.5. Authenticating Agent.
(a) The Indenture Trustee may appoint one or more authenticating agents with respect to the Securities which shall be
authorized to act on behalf of the Indenture Trustee in authenticating the Securities in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Securities. Whenever reference is made in this Indenture to the authentication of Securities by the
Indenture Trustee or the Indenture Trustee’s certificate of authentication, such reference shall be deemed to include authentication on behalf of
the Indenture Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Indenture Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the Issuer.
(b) Any institution succeeding to the corporate agency business of an authenticating agent shall continue to be an
authenticating agent without the execution or filing of any paper or any further act on the part of the Indenture Trustee or such authenticating
agent.
Issuer. The Indenture Trustee may at any time
(c) An authenticating agent may at any time resign by giving written notice of resignation to the Indenture Trustee and to the
26
4143-0949-1521
terminate the agency of an authenticating agent by giving notice of termination to such authenticating agent and to the Issuer. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time an authenticating agent shall cease to be acceptable to the
Indenture Trustee or the Issuer, the Indenture Trustee promptly may appoint a successor authenticating agent. Any successor authenticating
agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an authenticating agent.
(d) The Issuer agrees to pay each authenticating agent from time to time reasonable compensation for its services under this
Section 2.5.
Trustee’s certificate of authentication, an alternate certificate of authentication in substantially the following form:
(e) Pursuant to an appointment made under this Section 2.5, the Securities may have endorsed thereon, in lieu of the Indenture
This is one of the [notes/certificates] described in the Indenture.
[Name of Authenticating Agent],
as Authenticating Agent
for the Indenture Trustee,
By:
Responsible Officer
Section 2.6. Registration of Transfer and Exchange of Securities.
(a) (i) The Indenture Trustee shall cause to be kept at the office or agency to be maintained by a transfer agent and registrar (the
“Transfer Agent and Registrar”), in accordance with the provisions of Section 2.6(c), a register (the “Register”) in which, subject to such
reasonable regulations as it may prescribe, the Transfer Agent and Registrar shall provide for the registration of the Securities and
registrations of transfers and exchanges of the Securities as herein provided. The Indenture Trustee is hereby initially appointed Transfer
Agent and Registrar for the purposes of registering the Securities and transfers and exchanges of the Securities as herein provided. If a
Person other than the Indenture Trustee is appointed by the Issuer as Transfer Agent and Registrar, the Issuer will give the Indenture
Trustee prompt written notice of the appointment of such Transfer Agent and Registrar and of the location, and any change in the
location, of the Register, and the Indenture Trustee shall have the right to inspect the Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Transfer Agent and Registrar by
a Responsible Officer thereof as to the names and addresses of the Holders of the Securities and the principal amounts or par values and
number of such Securities. If any form of Note is issued as a Global Note, the Indenture Trustee may appoint a co-transfer agent and co-
registrar in a European city. Any reference in this Indenture to the Transfer Agent and Registrar shall include any co-transfer agent and
co-registrar unless the context otherwise requires. The Indenture Trustee shall be permitted to resign as Transfer Agent and Registrar
upon thirty (30) days’ written notice to Administrator and the Issuer. In the event that the Indenture Trustee shall no longer be the
Transfer Agent and Registrar, the Issuer shall appoint a successor Transfer Agent and Registrar.
(ii) Upon surrender for registration of transfer of any Security at any office or agency of the Transfer Agent and Registrar, if
the requirements of Section 8-401(a) of
27
4143-0949-1521
the UCC are met, the Issuer shall execute, subject to the provisions of Section 2.6(b), and the Indenture Trustee shall authenticate and
(unless the Transfer Agent and Registrar is different than the Indenture Trustee, in which case the Transfer Agent and Registrar shall)
deliver and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more
new Securities in authorized denominations of like aggregate principal amount or aggregate par value, as applicable.
(iii) All Securities issued upon any registration of transfer or exchange of Securities shall be valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
(iv) At the option of any Holder of Registered Notes, Registered Notes may be exchanged for other Registered Notes in
authorized denominations of like aggregate principal amounts or aggregate par values in the manner specified herein, upon surrender of
the Registered Notes to be exchanged at any office or agency of the Transfer Agent and Registrar maintained for such purpose. At the
option of any Holder of Registered Certificates, Registered Certificates may be exchanged for other Registered Certificates of like
percentage interests in the manner specified herein, upon surrender of the Registered Certificates to be exchanged at any office or
agency of the Transfer Agent and Registrar maintained for such purpose.
(v) Whenever any Securities are so surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are met, the
Issuer shall execute and the Indenture Trustee shall authenticate and (unless the Transfer Agent and Registrar is different than the
Indenture Trustee, in which case the Transfer Agent and Registrar shall) deliver and the Noteholders shall obtain from the Indenture
Trustee, the Securities that the Noteholder making the exchange is entitled to receive. Every Security presented or surrendered for
registration of transfer or exchange shall be accompanied by a written instrument of transfer in a form satisfactory to the Issuer duly
executed by the Noteholder thereof or its attorney-in-fact duly authorized in writing.
(vi) The preceding provisions of this Section 2.6 notwithstanding, the Indenture Trustee or the Transfer Agent and Registrar, as
the case may be, shall not be required to register the exchange of any Global Note for a Definitive Note or the transfer of or exchange
any Security for a period of five (5) Business Days preceding the due date for any payment with respect to the Securities or during the
period beginning on any Record Date and ending on the next following Payment Date.
(vii) No service charge shall be made for any registration of transfer or exchange of Securities, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
(viii) All Securities surrendered for registration of transfer and exchange shall be cancelled by the Transfer Agent and Registrar
and disposed of. The Indenture Trustee shall cancel and destroy any Global Note upon its exchange in full for Definitive Notes and shall
deliver a certificate of destruction to the Issuer. Such certificate shall also state that a certificate or certificates of each Clearing Agency
to the effect referred to in Section 2.19 was received with respect to each portion of the Global Note exchanged for Definitive Notes.
28
4143-0949-1521
(ix) Upon written request, the Issuer shall deliver to the Indenture Trustee or the Transfer Agent and Registrar, as applicable,
Registered Notes and Registered Certificates in such amounts and at such times as are necessary to enable the Indenture Trustee to fulfill
its responsibilities under this Indenture and the Securities.
(x) [Reserved].
(xi) Notwithstanding any other provision of this Section 2.6, the typewritten Note or Notes representing Book-Entry Notes
may be transferred, in whole but not in part, only to another nominee of the Clearing Agency for such Notes, or to a successor Clearing
Agency for such Notes selected or approved by the Issuer or to a nominee of such successor Clearing Agency, only if in accordance with
this Section 2.6.
(xii) By its acceptance of a Class A Note, each Noteholder and Note Owner shall be deemed to have represented and warranted
that, with respect to the Class A Notes, either (i) it is not a Benefit Plan Investor or a governmental or other plan subject to Similar Law,
or (ii) (a) the purchase and holding of the Class A Note (or any interest therein) will not give rise to a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (b) it acknowledges and agrees that the
Class A Notes, are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law at any
time that the Class A Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated below
investment grade.
(b) Registration of transfer of Registered Notes containing a legend relating to the restrictions on transfer of such Registered
Notes (which legend is set forth in Section 2.16(d) of this Indenture relating to such Notes) shall be effected only if the conditions set forth in
Section 2.6 have been satisfied.
Whenever a Registered Note containing the legend set forth in Section 2.16(d) is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall promptly seek instructions from the Issuer regarding such transfer. The
Transfer Agent and Registrar and the Indenture Trustee shall be entitled to receive written instructions signed by a Responsible Officer of the
Issuer prior to registering any such transfer or authenticating new Registered Notes, as the case may be. The Issuer hereby agrees to indemnify
the Transfer Agent and Registrar and the Indenture Trustee and to hold each of them harmless against any loss, liability or expense incurred
without negligence or willful misconduct on their part arising out of or in connection with actions taken or omitted by them in reliance on any
such written instructions furnished pursuant to this Section 2.6(b).
surrendered for registration of transfer or exchange.
(c) The Transfer Agent and Registrar will maintain an office or offices or an agency or agencies where Securities may be
(d) Any Retained Notes may not be transferred to another Person for United States federal income tax purposes unless the
transferor shall cause an Opinion of Counsel to be delivered to the Seller and the Trustee at such time stating that, although not free from doubt,
such Notes will be characterized as debt for United States federal income tax purposes. In addition, if for tax or other reasons it may be
necessary to track such Notes (e.g., if the Notes have original issue discount), tracking conditions such as requiring that such Notes be in
definitive registered form may be required by the Issuer as a condition to such transfer.
(e) Notwithstanding anything to the contrary in this Indenture, no interest in the Certificates may be directly or indirectly sold,
transferred, assigned, exchanged, participated or otherwise conveyed, pledged, hypothecated or rehypothecated or made the subject of a
29
4143-0949-1521
security interest (each such transaction for purposes of this Section 2.6(e), a “Transfer”) except to a Person who is a “United States person” for
United Stated federal income tax purposes and only upon the prior delivery of a Tax Opinion to the Indenture Trustee with respect to such
Transfer, and any Transfer in violation of these requirements shall be null and void ab initio.
Section 2.7. Appointment of Paying Agent.
(a) The Paying Agent shall make payments to the Secured Parties from the appropriate account or accounts maintained for the
benefit of the Secured Parties as specified in this Indenture pursuant to Articles 5 and 6. Any Paying Agent shall have the revocable power to
withdraw funds from such appropriate account or accounts for the purpose of making distributions referred to above. The Indenture Trustee (or
the Issuer or Oportun if the Indenture Trustee is the Paying Agent) may revoke such power and remove the Paying Agent, if the Paying Agent
fails to perform its obligations under this Indenture in any material respect or for other good cause. The Paying Agent shall initially be the
Indenture Trustee. The Indenture Trustee shall be permitted to resign as Paying Agent upon thirty (30) days’ written notice to the Issuer with a
copy to Oportun. In the event that the Indenture Trustee shall no longer be the Paying Agent, the Issuer or Oportun shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company).
(b) The Issuer shall cause each Paying Agent (other than the Indenture Trustee) to execute and deliver to the Indenture Trustee
an instrument in which such Paying Agent shall agree with the Indenture Trustee that such Paying Agent will hold all sums, if any, held by it
for payment to the Secured Parties in trust for the benefit of the Secured Parties entitled thereto until such sums shall be paid to such Secured
Parties and shall agree, and if the Indenture Trustee is the Paying Agent it hereby agrees, that it shall comply with all requirements of the Code
regarding the withholding of payments in respect of federal income taxes due from Note Owners or other Secured Parties (including in respect
of FATCA and any applicable tax reporting requirements).
Section 2.8. Paying Agent to Hold Money in Trust.
(a) The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee
an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with respect to the Secured Obligations in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided herein and pay such sums
to such Persons as provided herein;
(ii) give the Indenture Trustee written notice of any default by the Issuer (or any other obligor under the Secured Obligations)
of which it (or, in the case of the Indenture Trustee, a Trust Officer) has actual knowledge in the making of any payment required to be
made with respect to the Securities;
(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the
payment of the Secured Obligations if at any
30
4143-0949-1521
time it ceases to meet the standards required to be met by an Indenture Trustee hereunder; and
(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Secured
Obligations of any applicable withholding taxes imposed thereon, including FATCA Withholding Tax (including obtaining and
retaining from Persons entitled to payments with respect to the Securities any Tax Information and making any withholdings with
respect to the Securities as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate
Governmental Authority), comply with respect to any applicable reporting requirements in connection with any payments made by it on
any Secured Obligations and any withholding of taxes therefrom, and, upon request, provide any Tax Information to the Issuer.
(b) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, cause to be delivered an Issuer Order directing any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to
such money.
(c) Subject to applicable Laws with respect to escheat of funds, any money held by the Indenture Trustee, any Paying Agent or
any Clearing Agency in trust for the payment of any amount due with respect to any Secured Obligation and remaining unclaimed for two
years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Order; and the
holder of such Secured Obligation shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee, such Paying Agent or such Clearing Agency with respect
to such trust money shall thereupon cease; provided, however, that the Indenture Trustee, such Paying Agent or such Clearing Agency, before
being required to make any such repayment, may at the expense of the Issuer cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general circulation in New York City and, if the related Notes have been
listed on the Luxembourg Stock Exchange, and if the Luxembourg Stock Exchange so requires, in a newspaper customarily published on each
Luxembourg business day and of general circulation in Luxembourg City, Luxembourg, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment.
Section 2.9. Private Placement Legend.
(a) In addition to any legend required by Section 2.16, each Class A Note shall bear a legend in substantially the following
form:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE
31
4143-0949-1521
OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN
INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE
RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY FIDUCIARY
ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT THAT
EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS
SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING
(EACH OF THE FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN
32
4143-0949-1521
SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE (“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN)
WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS
NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT
TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR
APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW INVESTMENT GRADE.
(b) Each Certificate shall bear a legend in substantially the following form:
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE
MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN
INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S
33
4143-0949-1521
CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE
FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND
WARRANT THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A
“PLAN” AS DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
WHICH IS SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE
FOREGOING, OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY
SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities.
(a) If (i) any mutilated Security is surrendered to the Transfer Agent and Registrar, or the Transfer Agent and Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Transfer Agent and
Registrar, the Indenture Trustee, and the Issuer such security or indemnity as may, in their sole discretion, be required by them to hold the
Transfer Agent and Registrar, the Indenture Trustee, and the Issuer harmless then, in the absence of written notice to the Indenture Trustee that
such Security has been acquired by a protected purchaser, and provided that the requirements of Section 8-405 of the UCC (which generally
permit the Issuer to impose reasonable requirements) are met, then the Issuer shall execute and the Indenture Trustee shall, upon receipt of an
Issuer Order, authenticate and (unless the Transfer Agent and Registrar is different from the Indenture Trustee, in which case the Transfer
Agent and Registrar shall) deliver (in compliance with applicable Law), in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Security, a replacement Security of like tenor and aggregate principal balance or aggregate par value; provided, however, that if any such
destroyed, lost or stolen Security, but not a mutilated Security, shall have become or within seven (7) days shall be due and payable or shall
have been
34
4143-0949-1521
called for redemption, instead of issuing a replacement Security, the Issuer may pay such destroyed, lost or stolen Security when so due or
payable without surrender thereof.
If, after the delivery of such replacement Security or payment of a destroyed, lost or stolen Security pursuant to the proviso to
the preceding sentence, a protected purchaser of the original Security in lieu of which such replacement Security was issued presents for
payment such original Security, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Security (or such payment)
from the Person to whom it was delivered or any Person taking such replacement Security from such Person to whom such replacement
Security was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(b) Upon the issuance of any replacement Security under this Section 2.10, the Transfer Agent and Registrar or the Indenture
Trustee may require the payment by the Holder of such Security of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Transfer Agent
and Registrar) connected therewith.
(c) Every replacement Security issued pursuant to this Section 2.10 in replacement of any mutilated, destroyed, lost or stolen
Security shall constitute an original additional Contractual Obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all
other Security of like kind duly issued hereunder.
with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
(d) The provisions of this Section 2.10 are exclusive and shall preclude (to the extent lawful) all other rights and remedies
Section 2.11. Temporary Notes.
(a) Pending the preparation of Definitive Notes, the Issuer may request and the Indenture Trustee, upon receipt of an Issuer
Order, shall authenticate and deliver temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have
variations that are not inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their
execution of such Notes.
(b) If temporary Notes are issued pursuant to Section 2.11(a) above, the Issuer will cause Definitive Notes to be prepared
without unreasonable delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 8.2(b), without charge to the
Noteholder. Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute and at the request of the Issuer the
Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.12. Persons Deemed Owners. Prior to due presentation of a Security for registration of transfer, the Issuer, the Indenture
Trustee, the Paying Agent, the Transfer Agent and Registrar and any agent of any of them may treat a Person in whose name any Security is
registered (as of any date of determination) as the owner of the related Security for the purpose of receiving payments of principal and interest,
if any, on such Security and for all other purposes whatsoever whether or not such Security be overdue, and neither the Issuer, the
35
4143-0949-1521
Indenture Trustee, the Paying Agent, the Transfer Agent and Registrar nor any agent of any of them shall be affected by any notice to the
contrary; provided, however, that in determining whether the requisite number of Holders of Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned by any of the Issuer, the Seller, the Parent or any Affiliate
controlled by or controlling Oportun shall be disregarded and deemed not to be outstanding, except that, in determining whether the Indenture
Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a
Trust Officer in the Corporate Trust Office of the Indenture Trustee actually knows to be so owned shall be so disregarded. The foregoing
proviso shall not apply if there are no Holders other than the Issuer or its Affiliates.
Section 2.13. Cancellation. All Securities surrendered for payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled
by the Indenture Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities may be held or disposed of by the Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Securities have not been previously disposed of by the Indenture Trustee. The
Registrar and Paying Agent shall forward to the Indenture Trustee any Securities surrendered to them for registration of transfer, exchange or
payment.
Section 2.14. Release of Trust Estate.
(a) The Indenture Trustee shall (a) in connection any redemption of the Securities, release the Trust Estate from the Lien
created by this Indenture upon receipt of an Officer’s Certificate of the Issuer certifying that (i) the Redemption Price and all other amounts due
and owing on the Redemption Date have been deposited into a Trust Account that is within the sole control of the Indenture Trustee, (ii) the
distribution on the Certificates if and as required by Section 14.1(c) has been made in full, and (iii) such release is authorized and permitted
under the Transaction Documents and (b) on or after the Indenture Termination Date, release any remaining portion of the Trust Estate from
the Lien created by this Indenture, including any funds then on deposit in any Trust Account upon receipt of an Issuer Order accompanied by
an Officer’s Certificate of the Issuer meeting the applicable requirements of Section 15.1.
(b) On the 2022-2 Purchase Date, concurrently with the inclusion of the 2022-2 Certificates in the Trust Estate and the
transfer by the Issuer of the 2022-A Class D Notes, the Lien created by this Indenture in respect of the 2022-A Class D Notes, together with all
monies due or to become due thereunder and all proceeds of every kind and nature whatsoever in respect of the foregoing, shall be
automatically released and the Indenture Trustee shall be deemed to have released such Lien, without the execution or filing of any instrument
or paper or the performance of any further act, and the 2022-A Class D Notes shall no longer be included in the Trust Estate.
Section 2.15. Payment of Principal, Interest and Other Amounts.
accordance with Section 8.1.
(a) The principal of each of the Notes shall be payable at the times and in the amounts set forth in Section 5.15 and in
36
4143-0949-1521
(b) Each of the Notes shall accrue interest as provided in Section 5.12 and such interest shall be payable at the times and in the
amounts set forth in Section 5.15 and in accordance with Section 8.1. The payments of amounts payable with respect to the Certificates shall be
made at the times and in the amounts set forth in Section 5.15 and in accordance with Section 8.1.
(c) Any installment of interest, principal or other amounts, if any, payable on any Security which is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Security is registered at the close of
business on any Record Date with respect to a Payment Date for such Security and such Person shall be entitled to receive the principal, interest
or other amounts payable on such Payment Date notwithstanding the cancellation of such Security upon any registration of transfer, exchange
or substitution of such Security subsequent to such Record Date, by wire transfer in immediately available funds to the account designated by
the Holder of such Security, except that, unless Definitive Notes have been issued pursuant to Section 2.18, with respect to Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable
with respect to such Note on a Payment Date or on the Legal Final Payment Date (and except for the Redemption Price for any Note called for
redemption pursuant to Section 14.1) which shall be payable as provided herein; except that, any interest payable at maturity shall be paid to
the Person to whom the principal of such Note is payable. The funds represented by any such checks returned undelivered shall be held in
accordance with Section 2.8.
Section 2.16. Book-Entry Notes.
purposes of this Indenture, the term “Global Notes” refers to the Restricted Global Notes, as defined below.
(a) The Notes shall be delivered as Registered Notes representing Book-Entry Notes as provided in subsection (a)(i). For
(i) Restricted Global Notes. The Notes to be sold will be issued in book-entry form and represented by one or more permanent
global Notes in fully registered form without interest coupons (the “Restricted Global Notes”), substantially in the form attached hereto
as Exhibit C, and will be either (x) retained by the Issuer or an Affiliate thereof or (y) offered and sold, only (1) by the Issuer to an
institutional “accredited investor” within the meaning of Regulation D under the Securities Act in reliance on an exemption from the
registration requirements of the Securities Act and (2) thereafter only to a Person that is a qualified institutional buyer (“QIB”) as
defined in Rule 144A under the Securities Act (“ Rule 144A”) in accordance with subsection (c) hereof, and shall be deposited with a
custodian for, and registered in the name of a nominee of DTC, duly executed by the Issuer and authenticated by the Indenture Trustee
as provided in this Indenture for credit to the accounts of the subscribers at DTC. The initial principal amount of the Restricted Global
Notes may from time to time be increased or decreased by adjustments made on the records of the custodian for DTC, DTC or its
nominee, as the case may be, as hereinafter provided.
$1,000 in excess thereof.
(b) The Class A Notes will be issuable and transferable in minimum denominations of $100,000 and in integral multiples of
(c) The Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Notes may not be exchanged for Definitive Notes except in the limited circumstances
described in Section 2.18 of this Indenture. Beneficial interests in the Global Notes may be transferred only (i) to a Person that is a QIB in a
transaction meeting the requirements of Rule
37
4143-0949-1521
144A and whom the transferor has notified that it may be relying on the exemption from the registration requirements of the Securities Act
provided by Rule 144A, in compliance with the Indenture and all applicable securities Laws of any state of the United States or any other
applicable jurisdiction, subject to any Requirement of Law that the disposition of the seller’s property or the property of an investment account
or accounts be at all times within the seller’s or account’s control. Each transferee of a beneficial interest in a Global Note shall be deemed to
have made the acknowledgments, representations and agreements set forth in subsection (d) hereof. Any such transfer shall also be made in
accordance with the following provisions:
( i ) Transfer of Interests Within a Global Note. Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note in accordance with the transfer restrictions set forth in the
foregoing paragraph of this subsection 2.16(c) and the transferee shall be deemed to have made the representations contained in
subsection 2.16(d).
agreed that:
(d) Each transferee of a beneficial interest in a Global Note or of any Definitive Notes shall be deemed to have represented and
(i) it (A) is a QIB, (B) is aware that the sale to it is being made in reliance on Rule 144A and (C) is acquiring the Notes for its
own account or for the account of a QIB;
(ii) the Notes have not been and will not be registered under the Securities Act, and that, if in the future it decides to offer,
resell, pledge or otherwise transfer such Notes, such Notes may be offered, sold, pledged or otherwise transferred only to a Person that is
a QIB in a transaction meeting the requirements of Rule 144A and whom the transferor has notified that it may be relying on the
exemption from the registration requirements of the Securities Act provided by Rule 144A, in compliance with the Indenture and all
applicable securities Laws of any state of the United States or any other jurisdiction, subject to any Requirement of Law that the
disposition of the seller’s property or the property of an investment account or accounts be at all times within the seller’s or account’s
control and it will notify any transferee of the resale restrictions set forth above;
(iii) the following legend will be placed on the Class A Notes unless the Issuer determines otherwise in compliance with
applicable Law:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS
NOTE MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN
TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE
AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY
38
4143-0949-1521
TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND
ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO
REPRESENT AND WARRANT THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION 4975
OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO
APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE (“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST
HEREIN) WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT ACKNOWLEDGES
AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN INVESTORS OR
GOVERNMENTAL OR OTHER PLANS SUBJECT TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS
BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES OR
IS RATED BELOW INVESTMENT GRADE.
(iv) [Reserved].
(v) (A) in the case of Global Notes, the foregoing restrictions apply to holders of beneficial interests in such Notes
(notwithstanding any limitations on such transfer restrictions in any agreement between the Issuer, the Indenture Trustee and the holder
of a Global Note) as well as to Holders of such Notes and the transfer of any beneficial interest in such a Global Note will be subject to
the restrictions and certification requirements set forth herein and (B) in the case of Definitive Notes, the transfer of any such Notes will
be subject to the restrictions and certification requirements set forth herein.
(vi) the Indenture Trustee, the Issuer, the Initial Purchasers or placement agents for the Notes and their Affiliates and others
will rely upon the truth and accuracy of the foregoing representations and agreements and agrees that if any of the representations or
agreements deemed to have been made by its purchase of such Notes cease to be accurate and complete, it will promptly notify the
Issuer and the Initial Purchasers or placement agents for the Notes in writing;
(vii) if it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it has sole investment discretion with
respect to each such account and it has full power to make the foregoing representations and agreements with respect to each such
account; and
39
4143-0949-1521
(viii) with respect to the Class A Notes, either (A) it is not a Benefit Plan Investor or a governmental or other plan subject to
Similar Law, or (B) (1) the purchase and holding of the Note (or any interest therein) will not give rise to a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (2) it acknowledges and agrees
that the Class A Notes, are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law
at any time that the Class A Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated
below investment grade.
In addition, such transferee shall be responsible for providing additional information or certification, as reasonably requested by
the Indenture Trustee or the Issuer, to support the truth and accuracy of the foregoing representations and agreements, it being understood that
such additional information is not intended to create additional restrictions on the transfer of the Notes.
(e) For each of the Notes to be issued in registered form, the Issuer shall duly execute, and the Indenture Trustee shall, in
accordance with Section 2.4 hereof, authenticate and deliver initially, one or more Global Notes that shall be registered on the Register in the
name of a Clearing Agency or such Clearing Agency’s nominee. Each Global Note registered in the name of DTC or its nominee shall bear a
legend substantially to the following effect:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”), A NEW YORK CORPORATION, TO OPORTUN RF, LLC OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. (“ CEDE”) OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE, HAS AN INTEREST HEREIN.
So long as the Clearing Agency or its nominee is the registered owner or holder of a Global Note, the Clearing Agency or its
nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for purposes of this
Indenture and such Notes. Members of, or participants in, the Clearing Agency shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Clearing Agency, and the Clearing Agency may be treated by the Issuer, the Administrator, the
Indenture Trustee, any Agent and any agent of such entities as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Administrator, the Indenture Trustee, any Agent and any agent of
such entities from giving effect to any written certification, proxy or other authorization furnished by the Clearing Agency or impair, as
between the Clearing Agency and its agent members, the operation of customary practices governing the exercise of the rights of a holder of
any Note.
(f) [Reserved].
(g) Title to the Notes shall pass only by registration in the Register maintained by the Transfer Agent and Registrar pursuant to
Section 2.6.
specified amount of outstanding Notes from time to
(h) Any typewritten Note or Notes representing Book-Entry Notes shall provide that they represent the aggregate or a
40
4143-0949-1521
time endorsed thereon and may also provide that the aggregate amount of outstanding Notes represented thereby may from time to time be
increased or reduced to reflect exchanges. Any endorsement of a typewritten Note or Notes representing Book-Entry Notes to reflect the
amount, or any increase or decrease in the amount, or changes in the rights of Note Owners represented thereby, shall be made in such manner
and by such Person or Persons as shall be specified therein or in the Issuer Order to be delivered to the Indenture Trustee pursuant to
Section 2.4(b). The Indenture Trustee shall deliver and redeliver any typewritten Note or Notes representing Book-Entry Notes in the manner
and upon instructions given by the Person or Persons specified therein or in the applicable Issuer Order. Any instructions by the Issuer with
respect to endorsement or delivery or redelivery of a typewritten Note or Notes representing the Book-Entry Notes shall be in writing but need
not comply with Section 13.3 hereof and need not be accompanied by an Opinion of Counsel.
Book-Entry Notes pursuant to Section 2.18:
(i) Unless and until definitive, fully registered Notes (“Definitive Notes”) have been issued to Note Owners initially issued as
(i) the provisions of this Section 2.16 shall be in full force and effect with respect to each of the Notes;
(ii) the Issuer, the Seller the Paying Agent, the Transfer Agent and Registrar and the Indenture Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes of this Indenture (including the making of payments on the
Notes and the giving of instructions or directions hereunder) as the authorized representatives of such Note Owners;
(iii) to the extent that the provisions of this Section 2.16 conflict with any other provisions of this Indenture, the provisions of
this Section 2.16 shall control;
(iv) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of such
Notes evidencing a specified percentage of the outstanding principal amount of such Notes, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or their related
Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in such Notes and
has delivered such instructions to the Indenture Trustee;
(v) the rights of Note Owners shall be exercised only through the Clearing Agency and their related Clearing Agency
Participants and shall be limited to those established by Law and agreements between such Note Owners and the related Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes are issued
pursuant to Section 2.18, the applicable Clearing Agencies or Foreign Clearing Agencies will make book-entry transfers among their
related Clearing Agency Participants and receive and transmit payments of principal and interest on such Notes to such Clearing Agency
Participants; and
(vi) Note Owners may receive copies of any reports sent to Noteholders pursuant to this Indenture, upon written request,
together with a certification that they are Note Owners and payments of reproduction and postage expenses associated with the
distribution of such reports, from the Indenture Trustee at the Corporate Trust Office.
Section 2.17. Notices to Clearing Agency. Whenever notice or other communication to the Noteholders is required under this
Indenture, unless and until Definitive
41
4143-0949-1521
Notes shall have been issued to Note Owners pursuant to Section 2.18, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the applicable Clearing Agency for distribution to the Holders of the Notes.
Section 2.18. Definitive Notes.
(a) Conditions for Exchange. If with respect to any of the Book-Entry Notes (i) (A) the Issuer advises the Indenture Trustee in
writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities under the applicable Depository
Agreement and (B) the Issuer is not able to locate a qualified successor, (ii) to the extent permitted by Law, the Issuer, at its option, advises the
Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency with respect to any of the Notes or
(iii) after the occurrence of an Event of Default, Note Owners representing beneficial interests aggregating not less than a majority of the
portion of outstanding principal amount of the Notes advise the Indenture Trustee and the applicable Clearing Agency through the applicable
Clearing Agency Participants in writing that the continuation of a book-entry system through the applicable Clearing Agency is no longer in
the best interests of the Note Owners, the Indenture Trustee shall notify all Note Owners, through the applicable Clearing Agency Participants,
of the occurrence of any such event and of the availability of Definitive Notes to Note Owners. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the applicable Clearing Agency, accompanied by registration instructions
from the applicable Clearing Agency for registration, the Indenture Trustee shall issue the Definitive Notes. Neither the Issuer nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Notes and upon the issuance of any Notes in definitive form in accordance with this
Indenture, all references herein to obligations imposed upon or to be performed by the applicable Clearing Agency shall be deemed to be
imposed upon and performed by the Indenture Trustee, to the extent applicable with respect to such Definitive Notes, and the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders hereunder.
( b ) Transfer of Definitive Notes. Subject to the terms of this Indenture, the holder of any Definitive Note may transfer the
same in whole or in part, in an amount equivalent to an authorized denomination, by surrendering at the Corporate Trust Office, such Note with
the form of transfer endorsed on it duly completed and executed by, or accompanied by a written instrument of transfer in form satisfactory to
the Issuer and the Transfer Agent and Registrar by, the holder thereof and, if applicable, accompanied by a certificate substantially in the form
of Exhibit B. In exchange for any Definitive Note properly presented for transfer, the Issuer shall execute and the Indenture Trustee shall
promptly authenticate and deliver or cause to be executed, authenticated and delivered in compliance with applicable Law, to the transferee at
such office, or send by mail (at the risk of the transferee) to such address as the transferee may request, Definitive Notes for the same aggregate
principal amount as was transferred. In the case of the transfer of any Definitive Note in part, the Issuer shall execute and the Indenture Trustee
shall promptly authenticate and deliver or cause to be authenticated and delivered to the transferor at such office, or send by mail (at the risk of
the transferor) to such address as the transferor may request, Definitive Notes for the aggregate principal amount that was not transferred. No
transfer of any Definitive Note shall be made unless the request for such transfer is made by the Holder at such office. Neither the Issuer nor
the Indenture Trustee shall be liable for any delay in delivery of transfer instructions and each may conclusively rely on, and shall be protected
in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
Section 2.19. Global Note. As specified in Section 2.16, (i) the Notes may be initially issued in the form of a single temporary
global note (the “Global Note”) in registered
42
4143-0949-1521
form, without interest coupons, in the denomination of the initial aggregate principal amount of the Notes, substantially in the form of Exhibit
C. The provisions of this Section 2.19 shall apply to such Global Note. The Global Note will be authenticated by the Indenture Trustee upon
the same conditions, in substantially the same manner and with the same effect as the Definitive Notes. The Global Note may be exchanged in
the manner described herein.
Section 2.20. Tax Treatment . The Notes have been (or will be) issued with the intention that, the Notes will qualify under
applicable tax Law as debt for U.S. federal income tax purposes and any entity acquiring any direct or indirect interest in any Note by
acceptance of its Notes (or, in the case of a Note Owner, by virtue of such Note Owner’s acquisition of a beneficial interest therein) agrees to
treat the Notes (or beneficial interests therein) for purposes of federal, state and local income and franchise taxes and any other tax imposed on
or measured by income, as debt. Each Noteholder agrees that it will cause any Note Owner acquiring an interest in a Note through it to comply
with this Indenture as to treatment as debt for such tax purposes. Notwithstanding the foregoing, to the extent the Issuer is treated as a
partnership for federal, state or local income or franchise purposes and a Noteholder (or Note Owner, as applicable) is treated as a partner in
such partnership, the Noteholders (and Note Owners, as applicable) agree that any tax, penalty, interest or other obligation imposed under the
Code with respect to the income tax items arising from such partnership shall be the sole obligation of the Noteholder (or Note Owner, as
applicable) to whom such items are allocated and not of such partnership.
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and Registrar. Notwithstanding anything contained herein to
the contrary, neither the Indenture Trustee nor the Transfer Agent and Registrar shall be responsible for ascertaining whether any transfer of a
Security complies with the terms of this Indenture, the registration provision of or exemptions from the Securities Act, applicable state
securities Laws, ERISA or the Investment Company Act; provided that if a transfer certificate or opinion is specifically required by the express
terms of this Indenture to be delivered to the Indenture Trustee or the Transfer Agent and Registrar in connection with a transfer, the Indenture
Trustee or the Transfer Agent and Registrar, as the case may be, shall be under a duty to receive the same.
ARTICLE 3.
ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
Section 3.1. Issuance.
(a) Subject to satisfaction of the conditions precedent set forth in subsection (b) of this Section 3.1, on the Closing Date, the
Issuer will issue, (i) in accordance with Section 2.16 hereof, the initial Class A Notes in the aggregate initial principal amount equal to
$116,000,000 and (ii) the Certificates constituting a subordinate residual interest in the Issuer.
the following conditions with respect to such initial issuance:
(b) The Securities issued on the Closing Date pursuant to subsection (a) above will be issued only upon satisfaction of each of
(i) the amount of each Class A Note shall be equal to or greater than $100,000 (and in integral multiples of $1,000 in excess
thereof), and the percentage interest of each Certificate shall be equal to or greater than 5% (with no minimum incremental percentage
interests in excess thereof);
(ii) such issuance and the application of the proceeds thereof shall not result in the occurrence of (1) an Administrator Default,
a Rapid Amortization Event or an
43
4143-0949-1521
Event of Default, or (2) an event or occurrence, which, with the passing of time or the giving of notice thereof, or both, would become
an Administrator Default, a Rapid Amortization Event or an Event of Default; and
(iii) all required consents have been obtained and all other conditions precedent to the purchase of the Notes under the Note
Purchase Agreement shall have been satisfied.
accordance with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $20,907,000:
(c) Subject to satisfaction of the following conditions precedent, on the 2022-A Purchase Date, the Issuer will issue, in
(i) such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
(ii) the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the
accuracy of certain representations and warranties contained in the Note Purchase Agreement; and
(iii) the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law,
Investment Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
accordance with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $9,060,000:
(d) Subject to satisfaction of the following conditions precedent, on the 2022-2 Purchase Date, the Issuer will issue, in
(i) such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
(ii) the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the
accuracy of certain representations and warranties contained in the Note Purchase Agreement; and
(iii) the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law,
Investment Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
shall, or shall cause the Transfer Agent and Registrar to, indicate in the Register the amount thereof.
(e) Upon receipt of the proceeds of any issuance under this Section 3.1 by or on behalf of the Issuer, the Indenture Trustee
Section 3.2. Certain Fees and Expenses. The Trustee Fees and Expenses, the Administration Fee and other fees, expenses and
indemnity amounts owed to the Indenture Trustee, Securities Intermediary and Depositary Bank, shall be paid by the cash flows from the Trust
Estate and in no event shall the Indenture Trustee be liable therefor. The foregoing amounts shall be payable to the Indenture Trustee,
Securities Intermediary and Depositary Bank, as applicable, solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 5.15(a)(i), (a)(ii) and (a)(viii), as applicable.
44
4143-0949-1521
ARTICLE 4.
NOTEHOLDER LISTS AND REPORTS
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders . The Issuer will
furnish or cause the Transfer Agent and Registrar to furnish to the Indenture Trustee (a) not more than five (5) days after each Record Date a
list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders and Certificateholders as of
such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Transfer Agent and Registrar, no such list shall be required to be furnished. The Issuer will
furnish or cause to be furnished by the Transfer Agent and Registrar to the Paying Agent (if not the Indenture Trustee) such list for payment of
distributions to Noteholders and Certificateholders.
Section 4.2. Preservation of Information; Communications to Noteholders and Certificateholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the
Noteholders and Certificateholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 4.1 and the names
and addresses of Noteholders and Certificateholders received by the Indenture Trustee in its capacity as Transfer Agent and Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such Section 4.1 upon receipt of a new list so furnished.
(b) Noteholders and Certificateholders may communicate with other Noteholders and Certificateholders with respect to their
rights under this Indenture or under the Securities. If holders of Securities evidencing in aggregate not less than (i) 20% of the outstanding
principal balance of the Notes or (ii) a percentage interest in the Certificates of at least 15% (the “Applicants”) apply in writing to the Indenture
Trustee, and furnish to the Indenture Trustee reasonable proof that each such Applicant has owned a Security for a period of at least 6 months
preceding the date of such application, and if such application states that the Applicants desire to communicate with other Noteholders or
Certificateholders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the communication
which such Applicants propose to transmit, then the Indenture Trustee, after having been indemnified by such Applicants for its costs and
expenses, shall within five (5) Business Days after the receipt of such application afford or shall cause the Transfer Agent and Registrar to
afford such Applicants access during normal business hours to the most recent list of Noteholders and Certificateholders held by the Indenture
Trustee and shall give the Issuer notice that such request has been made within five (5) Business Days after the receipt of such application.
Such list shall be as of the most recent Record Date, but in no event more than forty-five (45) days prior to the date of receipt of such
Applicants’ request.
(c) Every Noteholder and Certificateholder, by receiving and holding a Security, agrees with the Issuer and the Indenture
Trustee that neither the Issuer, the Indenture Trustee, the Transfer Agent and Registrar, nor any of their respective agents shall be held
accountable by reason of the disclosure of any such information as to the names and addresses of the Noteholders and Certificateholders in
accordance with this Section 4.2, regardless of the source from which such information was obtained.
Section 4.3. Reports by Issuer.
45
4143-0949-1521
(a) (i) The Issuer or the Administrator shall deliver to the Indenture Trustee, on the date, if any, the Issuer is required to file
the same with the Commission, electronic copies of the annual reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) the Issuer or the Administrator shall file with the Indenture Trustee and the Commission in accordance with rules and
regulations prescribed from time to time by the Commission such additional information, documents and reports, if any, with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and
regulations;
(iii) the Issuer or the Administrator shall supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail or
make available on via a website to all Noteholders and Certificateholders) such summaries of any information, documents and reports
required to be filed by the Issuer (if any) pursuant to clauses (i) and (ii) of this Section 4.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission; and
(iv) the Administrator shall prepare and distribute any other reports required to be prepared by the Administrator under any
Transaction Documents.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.
Section 4.4. [Reserved].
Section 4.5. Reports and Records for the Indenture Trustee and Instructions.
(a) On each Determination Date the Administrator shall forward to the Indenture Trustee a Monthly Report prepared by the
Administrator.
(b) On each Payment Date, the Indenture Trustee or the Paying Agent shall make available in the same manner as the Monthly
Report to each Noteholder and Certificateholder of record of the outstanding Notes or Certificates, the Monthly Report with respect to such
Notes or Certificates.
ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
ARTICLE 5.
Section 5.1. Rights of Noteholders and Certificateholders. The Securities shall be secured by the entire Trust Estate, including the
right to receive the Underlying Payments and other amounts at the times and in the amounts specified in this Article 5 to be deposited in the
Trust Accounts or to be paid to the Noteholders or Certificateholders of such Notes or Certificates, as applicable. In no event shall the grant of
a security interest in the entire Trust Estate be deemed to entitle any Noteholder to receive Underlying Payments or other proceeds of the Trust
Estate in excess of the amounts described in Article 5.
Section 5.2. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or
delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money
and
46
4143-0949-1521
other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may, but shall not be
obligated to, take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and
any right to proceed thereafter as provided in Article 9.
Section 5.3. Establishment of Accounts.
(a) Securities Accounts. Each Securities Account shall be a securities account established and maintained with the Securities
Intermediary. The Indenture Trustee shall be the entitlement holder of each Securities Account
(b) [Reserved].
( c ) The Payment Account. The Indenture Trustee, for the benefit of the Secured Parties, shall establish and maintain in the
State of New York or in the city in which the Corporate Trust Office is located, with a Qualified Institution, in the name of the Issuer for the
benefit of the Indenture Trustee on behalf of the Secured Parties, a non-interest bearing segregated trust account (the “Payment Account”)
bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Secured Parties. The Indenture
Trustee shall be the entitlement holder of the Payment Account, and shall possess all right, title and interest in all moneys, instruments,
securities and other property on deposit from time to time in the Payment Account and the proceeds thereof for the benefit of the Secured
Parties. The Payment Account will be established with the Securities Intermediary. Funds on deposit in the Payment Account that are not both
deposited and to be withdrawn within two Business Days shall be invested in Permitted Investments, in accordance with a direction from the
Issuer pursuant to Section 5.3(e)
(d) [Reserved].
(e) Administration of the Securities Accounts.
(i) Funds on deposit in the Payment Account that are not both deposited and to be withdrawn on the same date shall be invested
in Permitted Investments. Any such investment shall mature and such funds shall be available for withdrawal on or prior to the day
immediately preceding the Payment Date on which such funds are to be allocated or applied hereunder.
(ii) Wilmington Trust, National Association is hereby appointed as the initial securities intermediary hereunder (the “ Securities
Intermediary”) and accepts such appointment. The Securities Intermediary represents, warrants, and covenants, and the parties hereto
agree, that at all times prior to the termination of this Indenture: (i) the Securities Intermediary shall be a bank that in the ordinary
course of its business maintains securities accounts for others and is acting in that capacity hereunder; (ii) each Securities Account shall
be an account maintained with the Securities Intermediary to which financial assets may be credited and the Securities Intermediary
shall treat the Indenture Trustee as entitled to exercise the rights that comprise such financial assets; (iii) each item of property credited
to a Securities Account shall be treated as a financial asset; (iv) the Securities Intermediary shall comply with entitlement orders
originated by the Indenture Trustee without further consent by the Issuer or any other Person; (v) the Securities Intermediary waives any
Lien on each Securities Account and all property
47
4143-0949-1521
credited to or on deposit in any Securities Account, and (vi) the Securities Intermediary agrees that its jurisdiction for purposes of
Section 8-110 and Section 9-305(a)(3) of the UCC shall be New York.
(iii) The Securities Intermediary shall maintain for the benefit of the Secured Parties, possession or control of each other
Permitted Investment (including any negotiable instruments, if any, evidencing such Permitted Investments) not credited to or deposited
in a Trust Account (other than such as are described in clause (b) of the definition thereof); provided that no Permitted Investment shall
be disposed of prior to its maturity date if such disposition would result in a loss.
(iv) Nothing herein shall impose upon the Securities Intermediary any duties or obligations other than those expressly set forth
herein and those applicable to a securities intermediary under the UCC. The Securities Intermediary shall be entitled to all of the
protections available to a securities intermediary under the UCC.
(v) At the end of each month, all interest and earnings (net of losses and investment expenses) on funds on deposit in the
Payment Account shall be treated as Investment Earnings. If at the end of a month losses and investment expenses on funds on deposit
in the Payment Account exceed interest and earnings on such funds during such month, losses and expenses to the extent of such excess
will be allocated among the Noteholders and the Issuer as provided in Section 5.15. Subject to the restrictions set forth above, the Issuer,
or a Person designated in writing by the Issuer, of which the Indenture Trustee shall have received written notification thereof, shall have
the authority to instruct the Indenture Trustee with respect to the investment of funds on deposit in the Payment Account.
Notwithstanding anything herein to the contrary, if the Issuer (or its designee) has not provided such direction, the funds in the Payment
Account will remain uninvested. Neither the Indenture Trustee nor the Securities Intermediary shall have any responsibility or liability
for any loss which may result from any investment or sale of investment made pursuant to this Indenture. Wilmington Trust, National
Association (in any capacity hereunder) is hereby authorized, in making or disposing of any investment permitted by this Indenture, to
deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of
Wilmington Trust, National Association (acting in any capacity hereunder) or for any third person or dealing as principal for its own
account. The parties to the Transaction Documents acknowledge that Wilmington Trust, National Association (individually and in any
capacity hereunder) is not providing investment supervision, recommendations, or advice.
(f) Wilmington Trust, National Association shall be the depositary bank hereunder with respect to certain deposit accounts,
which shall be non-interest bearing trust accounts, as may be established from time to time (the “Depositary Bank”). For the avoidance of
doubt, there currently is no such deposit account established hereunder.
(g) Qualified Institution. If, at any time, the institution holding any account established pursuant to this Section 5.3 ceases to
be a Qualified Institution, the Indenture Trustee shall, within ten (10) Business Days, establish a new account or accounts, as the case may be,
meeting the conditions specified above with a Qualified Institution, and shall transfer any cash or any investments to such new account or
accounts, as the case may be.
(h) Each of the Securities Intermediary and the Depositary Bank shall be entitled to all the same rights, privileges, protections,
immunities and indemnities as are contained in Article 11 of this Indenture, all of which are incorporated into this Section 5.3 mutatis
mutandis, in addition to any such rights, privileges, protections, immunities and
48
4143-0949-1521
indemnities contained in this Section 5.3; provided, however; that nothing contained in this Section 5.3 or in Article 11 shall (i) relieve the
Securities Intermediary of the obligation to comply with entitlement orders as provided in Section 5.3(e) or (ii) relieve the Depositary Bank of
the obligation to comply with instructions directing disposition of the funds as provided in Section 5.3(f).
Section 5.4. Payments and Allocations.
( a ) Underlying Payments in General. Until this Indenture is terminated pursuant to Section 12.1, the Issuer shall cause all
Underlying Payments due and to become due, as the case may be, to be transferred to the Payment Account as promptly as possible after the
date of receipt of such Underlying Payments (but in no event later than the Business Day of such receipt). All monies, instruments, cash and
other proceeds received in respect of the Trust Estate pursuant to this Indenture shall be deposited in the Payment Account as specified herein
and shall be applied as provided in this Article 5 and Article 6.
(b) [Reserved].
(c) [Reserved].
(d) [Reserved].
(e) Disqualification of Institution Maintaining Payment Account. Upon and after the establishment of a new Payment Account
with a Qualified Institution, Oportun shall deposit or cause to be deposited all Underlying Payments as set forth in Section 5.3(a) into the new
Payment Account, and in no such event shall deposit or cause to be deposited any Underlying Payments thereafter into any account established,
held or maintained with the institution formerly maintaining the Payment Account (unless it later becomes a Qualified Institution or qualified
corporate trust department maintaining the Payment Account). Any new Payment Account shall be subject to an account control agreement in
favor of the Indenture Trustee, on behalf of each Secured Party.
Section 5.5. [Reserved].
Section 5.6. [Reserved].
Section 5.7. General Provisions Regarding Accounts. Subject to Section 11.1(c), the Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Estate resulting from any loss on any Permitted Investment included therein except for
losses attributable to the Indenture Trustee’s failure to make payments on such Permitted Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with their terms.
Section 5.8. [Reserved].
Section 5.9. [Reserved].
Section 5.10. [Reserved].
Section 5.11. [Reserved].
Section 5.12. Determination of Monthly Interest.
49
4143-0949-1521
(a) The amount of monthly interest payable on the Class A Notes on each Payment Date will be determined as of each
Determination Date and will be an amount equal to the product of (i) a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360, times (ii) the Class A Note Rate, times (iii) the daily average outstanding principal
balance of the Class A Notes during the related Interest Period (after giving effect to any payments of principal on the immediately preceding
Payment Date) (the “Class A Monthly Interest ”); provided, however, that the Class A Monthly Interest due and payable on the August 2022
Payment Date shall be $964,161.27.
In addition to the Class A Monthly Interest, an amount equal to the sum of (i) the amount of any unpaid Class A Deficiency
Amount, as defined below, plus (ii) an amount equal to the product (such product being herein called the “Class A Additional Interest ”) of (A)
a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, times (B) a
rate equal to the Class A Note Rate, times (C) any Class A Deficiency Amount, as defined below (or the portion thereof which has not
theretofore been paid to the Class A Noteholders), will also be payable to the Class A Noteholders on each Payment Date. The “Class A
Deficiency Amount” payable on each such Payment Date, as determined on the applicable Determination Date, shall be equal to the excess, if
any, of (x) the sum of (i) the Class A Monthly Interest and the Class A Additional Interest, in each case for the Interest Period ended
immediately prior to the preceding Payment Date, plus (ii) any Class A Deficiency Amount for the preceding period, over (y) the amount
actually paid in respect thereof on the preceding Payment Date; provided, however, that the Class A Deficiency Amount on the first
Determination Date shall be zero.
(b) Upon the occurrence of a Benchmark Transition Event, Section 5.13(a) provides the mechanisms for determining an
alternative rate of interest. The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee
and the Paying Agent), pursuant to Section 5.13(e), of any change to the reference rate upon which the interest rate on Class A Notes is based.
The Noteholders, the Indenture Trustee and the Paying Agent do not warrant or accept any responsibility for, and shall not have any liability
with respect to, the administration, submission, performance or any other matter related to Term SOFR or with respect to any alternative or
successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate
implemented pursuant to Section 5.13(a), and (ii) the implementation of any Conforming Changes pursuant to Section 5.13(b), including
without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to,
or produce the same value or economic equivalence of, Term SOFR or have the same volume or liquidity as did the London interbank offered
rate prior to its discontinuance or unavailability. The Noteholders, the Indenture Trustee, the Paying Agent and their respective affiliates and/or
other related entities may engage in transactions that affect the calculation of any successor or alternative rate (including any Benchmark
Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Issuer. The Required Noteholders may select
information sources or services in their reasonable discretion to ascertain any Benchmark or any component thereof, in each case pursuant to
the terms of this Indenture, and shall have no liability to the Issuer, any Noteholder or any other person or entity for damages of any kind,
including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or
otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such
information source or service.
Section 5.13. Benchmark Replacement.
and its related Benchmark Replacement
(a) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event
50
4143-0949-1521
Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement
is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such
Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of such
Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this
Indenture or any other Transaction Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the
definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark
for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City
time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Noteholders (with a copy to the
Indenture Trustee and Paying Agent) without any amendment to, or further action or consent of any other party to, this Indenture or any other
Loan Document so long as the Issuer has not received, by such time, written notice of objection to such Benchmark Replacement from
Noteholders comprising the Required Noteholders.
(b) In connection with the implementation of a Benchmark Replacement, the Required Noteholders will have the right to
make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any
amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this
Indenture or any other Transaction Document; provided that no such amendment may adversely affect the rights, duties, immunities,
protections or indemnification rights of the Indenture Trustee, Paying Agent, Registrar, Depositary Bank or Securities Intermediary without its
written consent.
(c) The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee and
the Paying Agent) of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the
effectiveness of any Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by any Noteholder (or group of Noteholders) pursuant to this Section 5.13, including any
determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any
decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its
or their sole discretion and without consent from any other party to this Indenture or any other Transaction Document, except, in each case, as
expressly required pursuant to this Section 5.13.
(d) During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an
Available Tenor but a Benchmark Transition Event with respect to such Benchmark has not occurred, the Class A Note Rate shall be
determined by the Calculation Agent by reference to the Alternative Rate and communicated to the Administrator and the Issuer, by facsimile
or e-mail.
Section 5.14. [Reserved].
Section 5.15. Monthly Payments.
Underlying Payments received in respect of the Underlying Securities on such Underlying Payment Date.
(a) On each Underlying Payment Date, the Issuer will deposit, or cause to be deposited, into the Payment Account all
(b) On each Payment Date, the Indenture Trustee, acting in accordance with instructions provided by the Administrator in the
form of the Monthly Report for such Payment
51
4143-0949-1521
Date, shall apply Available Funds on deposit in the Payment Account for payment to the following Persons in the following priority to the
extent of funds available therefor:
(i) first, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis, an
amount equal to the Trustee Fees and Expenses for such Payment Date (plus any Trustee Fees and Expenses due but not paid on any
prior Payment Date);
(ii) second, to the Administrator, an amount equal to the Administration Fee for such Payment Date (plus any Administration
Fee due but not paid on any prior Payment Date);
(iii) third, to the Class A Noteholders, on a pari passu and pro rata basis, an amount equal to the sum of (A) the Class A
Monthly Interest for such Payment Date, (B) any Class A Deficiency Amount for such Payment Date and (C) any Class A Additional
Interest for such Payment Date;
(iv) fourth, to the Class A Noteholders, on a pari passu and pro rata basis, (A) prior to the occurrence of a Rapid Amortization
Event, an amount equal to the sum of (I) the greater of the Scheduled Principal Payment Amount for such Payment Date and the
Minimum Principal Payment Amount for such Payment Date, (II) following the occurrence of a 2022-2 Cumulative Default Ratio
Trigger Event, the 2022-2 Additional Principal Payment Amount for such Payment Date and (III) following the application under
clauses (I) and (II), the product of all remaining Available Funds multiplied by the Additional Principal Payment Percentage for such
Payment Date, until the outstanding principal amount of the Class A Notes has been reduced to zero; and (B) following the occurrence
of a Rapid Amortization Event, all remaining Available Funds until the outstanding principal amount of the Class A Notes has been
reduced to zero;
(v) fifth, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis, any
unreimbursed fees, expenses and indemnity amounts payable thereto (including due to the limitations set forth in the definition of
Trustee Fees and Expenses);
( v i ) sixth, to the Class A Noteholders, on a pari passu and pro rata basis any other amounts (excluding the Note Principal
Amount) payable thereto on such Payment Date pursuant to the Transaction Documents; and
(vii) seventh, the balance, if any, shall be distributed to the Certificateholders.
Section 5.16. Failure to Make a Deposit or Payment. The Indenture Trustee shall not have any liability for any failure or delay in
making the payments or deposits described herein resulting from a failure or delay by the Issuer or the Administrator to make, or give
instructions to make, such payment or deposit in accordance with the terms herein. If the Issuer or the Administrator fails to make, or give
instructions to make, any payment, deposit or withdrawal required to be made or given by the Issuer or the Administrator at the time specified
in this Indenture (including applicable grace periods), the Indenture Trustee shall make such payment, deposit or withdrawal from the
applicable Trust Account without instruction from the Issuer or the Administrator. The Indenture Trustee shall be required to make any such
payment, deposit or withdrawal hereunder only to the extent that the Indenture Trustee has sufficient information to allow it to determine the
amount thereof. the Issuer or the Administrator shall, upon reasonable request of the Indenture Trustee, promptly provide the Indenture Trustee
with all information necessary and in its possession to allow the Indenture Trustee to make such payment, deposit or withdrawal. Such funds or
the proceeds of such withdrawal shall be applied
52
4143-0949-1521
by the Indenture Trustee in the manner in which such payment or deposit should have been made (or instructed to be made) by the Issuer or the
Administrator.
ARTICLE 6.
DISTRIBUTIONS AND REPORTS
Section 6.1. Distributions.
(a) On each Payment Date, the Indenture Trustee shall distribute (in accordance with the Monthly Report delivered by the
Administrator on or before the related Underlying Payment Date pursuant to subsection 2.09(a) of the Servicing Agreement) to each
Noteholder of record on the immediately preceding Record Date (other than as provided in Section 12.5 respecting a final distribution), such
Noteholder’s pro rata share (based on the Note Principal Amount held by such Noteholder) of the amounts on deposit in the Payment Account
that are payable to the Noteholders pursuant to Section 5.15 by wire transfer to an account designated by such Noteholders, except that, with
respect to Notes registered in the name of the nominee of a Clearing Agency, such distribution shall be made in immediately available funds.
(b) Notwithstanding anything to the contrary contained in this Indenture, if the amount distributable in respect of principal on
the Notes on any Payment Date is less than one dollar, then no such distribution of principal need be made on such Payment Date to the
Noteholders.
Section 6.2. Monthly Report.
(a) On or before each Payment Date, the Indenture Trustee shall make available electronically to each Noteholder and
Certificateholder, the Monthly Report prepared by the Administrator and delivered to the Indenture Trustee on the preceding Determination
Date and setting forth, among other things, the following information:
(i) the amount of Underlying Payments received on the related Underlying Payment Date;
(ii) the amount of Available Funds on deposit in the Payment Account on the related Underlying Payment Date;
(iii) the amount of Trustee Fees and Expenses, Administration Fee, Class A Monthly Interest, Class A Deficiency Amounts
and Additional Interest, respectively;
(iv) the total amount to be distributed to the Class A Noteholders on such Payment Date; and
(v) the outstanding principal balance of the Class A Notes as of the end of the day on the Payment Date.
On or before each Payment Date, to the extent the Administrator provides such information to the Indenture Trustee, the Indenture Trustee will
make available the Monthly Report via the Indenture Trustee’s Internet website and, with the consent or at the direction of the Issuer, such
other information regarding the Securities and/or the Underlying Securities as the Indenture Trustee may have in its possession, but only with
the use of a password provided by the Indenture Trustee; provided, however, the Indenture Trustee shall have no obligation to provide such
information described in this Section 6.2 until it has received the requisite information from the Issuer or the Administrator and the applicable
Noteholder or Certificateholder has completed
53
4143-0949-1521
the information necessary to obtain a password from the Indenture Trustee. The Indenture Trustee will make no representation or warranties as
to the accuracy or completeness of such documents and will assume no responsibility therefor.
(b) The Indenture Trustee’s internet website shall be initially located at “www.wilmingtontrustconnect.com” or at such other
address as shall be specified by the Indenture Trustee from time to time in writing to the Noteholders and Certificateholders. In connection with
providing access to the Indenture Trustee’s internet website, the Indenture Trustee may require registration and the acceptance of a disclaimer.
The Indenture Trustee shall not be liable for information disseminated in accordance with this Indenture.
(c) Annual Tax Statement. To the extent required by the Code or the Treasury regulations thereunder, on or before January 31
of each calendar year, the Indenture Trustee shall distribute to each Person who at any time during the preceding calendar year was a
Noteholder or a Certificateholder, a statement prepared by the Administrator containing the information required to be contained in the regular
monthly report to Noteholders and Certificateholders, as set forth in subclauses (v) and (vi) above, aggregated for such calendar year, and a
statement prepared by Oportun or the Issuer with such other customary information (consistent with the treatment of the Notes as debt and the
Certificates as equity for tax purposes) required by applicable tax Law to be distributed to the Noteholders. Such obligations of the Indenture
Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Indenture
Trustee pursuant to any requirements of the Code as from time to time in effect.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Section 7.1. Representations and Warranties of the Issuer. The Issuer hereby represents and warrants to the Indenture Trustee and
each of the Secured Parties that:
( a ) Organization and Good Standing, etc. The Issuer has been duly organized and is validly existing and in good standing
under the Laws of the State of Delaware, with power and authority to own its properties and to conduct its respective businesses as such
properties are presently owned and such business is presently conducted. The Issuer is not organized under the Laws of any other jurisdiction
or Governmental Authority. The Issuer is duly licensed or qualified to do business as a foreign entity in good standing in the jurisdiction where
its principal place of business and chief executive office is located and in each other jurisdiction in which the failure to be so licensed or
qualified would be reasonably likely to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization . The Issuer has (a) all necessary power, authority and legal right to (i) execute,
deliver and perform its obligations under this Indenture and each of the other Transaction Documents to which it is a party and (b) duly
authorized, by all necessary action, the execution, delivery and performance of this Indenture and the other Transaction Documents to which it
is a party and the borrowing, and the granting of security therefor, on the terms and conditions provided herein.
(c) No Violation. The consummation of the transactions contemplated by this Indenture and the other Transaction Documents
and the fulfillment of the terms hereof will not (a) conflict with, result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, (i) the organizational documents of the Issuer or (ii) any indenture, loan agreement,
pooling and servicing agreement, receivables purchase agreement, mortgage, deed of trust, or other agreement or instrument to which the
54
4143-0949-1521
Issuer is a party or by which it or its properties is bound, (b) result in or require the creation or imposition of any Adverse Claim upon its
properties pursuant to the terms of any such indenture, loan agreement, pooling and servicing agreement, receivables purchase agreement,
mortgage, deed of trust, or other agreement or instrument, other than pursuant to the terms of the Transaction Documents, or (c) violate any
Law applicable to the Issuer or of any Governmental Authority having jurisdiction over the Issuer or any of its respective properties.
( d ) Validity and Binding Nature . This Indenture is, and the other Transaction Documents to which it is a party when duly
executed and delivered by the Issuer and the other parties thereto will be, the legal, valid and binding obligation of the Issuer enforceable in
accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Law affecting creditors’ rights generally and by general principles of equity.
(e) Government Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority required for the due execution, delivery or performance by the Issuer of any Transaction Document to which it is a party remains
unobtained or unfiled, except for the filing of the UCC financing statements.
(f) [Reserved].
(g) Margin Regulations. The Issuer is not engaged in the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds with respect to the sale of the Notes, directly or indirectly, will be used for a purpose that violates, or would be
inconsistent with, Regulations T, U and X promulgated by the Federal Reserve Board from time to time.
(h) Perfection.
(i) On and after the Closing Date and each Payment Date, the Issuer shall be the owner of all of the Underlying Securities and
proceeds with respect thereto, free and clear of all Adverse Claims. Within the time required pursuant to the Perfection Representations,
all financing statements and other documents required to be recorded or filed in order to perfect and protect the assets of the Trust Estate
against all creditors (other than Secured Parties) of, and purchasers (other than Secured Parties) from, the Issuer and the Seller will have
been duly filed in each filing office necessary for such purpose, and all filing fees and taxes, if any, payable in connection with such
filings shall have been paid in full;
(ii) the Indenture constitutes a valid grant of a security interest to the Indenture Trustee for the benefit of the Secured Parties in
all right, title and interest of the Issuer in the Underlying Securities and all other assets of the Trust Estate, now existing or hereafter
created or acquired. Accordingly, to the extent the UCC applies with respect to the perfection of such security interest, upon the filing of
any financing statements described in Article 8 of the Indenture and the execution of the Transaction Documents, the Indenture Trustee
shall have a first priority perfected security interest in such property and the proceeds thereof (to the extent provided in Section 9-315),
subject to Permitted Encumbrances and, to the extent the UCC does not apply to the perfection of such security interest, all notices,
filings and other actions required by all applicable Law have been taken to perfect and protect such security interest or lien against and
prior to all Adverse Claims with respect to the Underlying Securities and all other assets of the Trust Estate. Except as otherwise
specifically provided in the Transaction Documents, neither the Issuer nor any Person claiming through or under the Issuer has any
claim to or interest in the Payment Account; and
55
4143-0949-1521
(iii) immediately prior to, and after giving effect to, the initial purchase of the Notes, the Issuer will be Solvent.
( i ) Offices. The principal place of business and chief executive office of the Issuer is located at the address referred to in
Section 15.4 (or at such other locations, notified to the Indenture Trustee in jurisdictions where all action required thereby has been taken and
completed).
( j ) Tax Status. The Issuer has filed all tax returns (federal, state and local) required to be filed by it and has paid or made
adequate provision for the payment of all taxes (including all state franchise taxes), assessments and other governmental charges that have
become due and payable (including for such purposes, the setting aside of appropriate reserves for taxes, assessments and other governmental
charges being contested in good faith).
subject to Section 13 or 14 of the Exchange Act.
(k) Use of Proceeds. No proceeds of any Notes will be used by the Issuer to acquire any security in any transaction which is
(l) Compliance with Applicable Laws; Licenses, etc.
(i) The Issuer is in compliance with the requirements of all applicable Laws of all Governmental Authorities, a breach of any of
which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect.
(ii) The Issuer has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of its business, which violation or failure to obtain would be reasonably likely to have a
Material Adverse Effect.
(m) No Proceedings. Except as described in Schedule 4:
(i) there is no order, judgment, decree, injunction, stipulation or consent order of or with any court or other government
authority to which the Issuer is subject, and there is no action, suit, arbitration, regulatory proceeding or investigation pending, or, to the
knowledge of the Issuer, threatened, before or by any Governmental Authority, against the Issuer that, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect; and
(ii) there is no action, suit, proceeding, arbitration, regulatory or governmental investigation, pending or, to the knowledge of
the Issuer, threatened, before or by any Governmental Authority (A) asserting the invalidity of this Indenture, the Securities or any other
Transaction Document, (B) seeking to prevent the issuance of the Securities pursuant hereto or the consummation of any of the other
transactions contemplated by this Indenture or any other Transaction Document or (C) seeking to adversely affect the federal income tax
attributes of the Issuer.
( n ) Investment Company Act; Covered Fund. The Issuer is not an “investment company” within the meaning of the
Investment Company Act and the Issuer relies on the exception from the definition of “investment company” set forth in Rule 3a-7 under the
Investment Company Act, although other exceptions or exclusions may be available to the Issuer. The Issuer is not a “covered fund” as defined
in the final regulations issued December 10, 2013 implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act), as amended.
(o) [Reserved].
56
4143-0949-1521
(p) [Reserved].
(q) ERISA. (i) Each of the Issuer the Seller and their respective ERISA Affiliates is in compliance in all material respects with
ERISA unless any failure to so comply could not reasonably be expected to have a Material Adverse Effect and (ii) no Lien exists in favor of
the Pension Benefit Guaranty Corporation on any of the Underlying Securities. No ERISA Event has occurred with respect to any Pension Plan
that could reasonably be expected to have a Material Adverse Effect.
( r ) Accuracy of Information. All information heretofore furnished by, or on behalf of, the Issuer to the Indenture Trustee or
any of the Noteholders in connection with any Transaction Document, or any transaction contemplated thereby, was, at the time it was
furnished, true and accurate in every material respect (without omission of any information necessary to prevent such information from being
materially misleading).
(i) financial condition, business, operations or prospects or (ii) ability to perform its obligations under any Transaction Document.
( s ) No Material Adverse Change. Since September 30, 2021 there has been no material adverse change in the Issuer’s
( t ) Subsidiaries. The Issuer has no Subsidiaries and does not own or hold, directly or indirectly, any equity interest in any
Person, other than Permitted Investments; provided that, for the avoidance of doubt, this clause (t) shall not prohibit the Issuer from owning
any Underlying Security.
(u) Securities. The Securities have been duly and validly authorized, and, when executed and authenticated in accordance with
the terms of the Indenture, and delivered to and paid for in accordance with the Note Purchase Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Indenture.
( v ) Sales by the Seller. Each sale of Underlying Securities by the Seller to the Issuer shall have been effected under, and in
accordance with the terms of, the applicable Purchase Agreement, including the payment by the Issuer to the Seller of an amount equal to the
purchase price therefor as described in such Purchase Agreement, and each such sale shall have been made for “reasonably equivalent value”
(as such term is used under Section 548 of the Federal Bankruptcy Code) and not for or on account of “antecedent debt” (as such term is used
under Section 547 of the Federal Bankruptcy Code) owed by the Issuer to such Seller.
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer. On the Closing Date and on each Business Day
thereafter, the Issuer shall be deemed to have certified that all representations and warranties described in Section 7.1 hereof are true and
correct on and as of such day as though made on and as of such day (except to the extent they relate to an earlier or later date, and then as of
such earlier or later date).
ARTICLE 8.
COVENANTS
Section 8.1. Money for Payments To Be Held in Trust . At all times from the date hereof to the Indenture Termination Date, unless
the Required Noteholders shall otherwise consent in writing, all payments of amounts due and payable with respect to any Securities that are to
be made from amounts withdrawn from the applicable Payment Account shall be made on behalf of the Issuer by the Indenture Trustee or by
another Paying Agent, and no amounts so withdrawn from such Payment Account for payments of such Securities shall be paid over to the
Issuer except as provided in this Indenture.
57
4143-0949-1521
Section 8.2. Affirmative Covenants of Issuer. At all times from the date hereof to the Indenture Termination Date, unless the
Required Noteholders shall otherwise consent in writing, the Issuer shall:
( a ) Payment of Notes. Duly and punctually pay or cause to be paid principal of (and premium, if any), interest and other
amounts on and with respect to the Notes pursuant to the provisions of this Indenture. Principal, interest and other amounts shall be considered
paid on the date due if the Indenture Trustee or the Paying Agent holds on that date money designated for and sufficient to pay all principal,
interest and other amounts then due. Amounts properly withheld under the Code by any Person from a payment to any Noteholder or
Certificateholder of interest, principal and/or other amounts shall be considered as having been paid by the Issuer to such Noteholder or
Certificateholder for all purposes of this Indenture.
(b) Maintenance of Office or Agency. Maintain an office or agency (which may be an office of the Indenture Trustee, Transfer
Agent and Registrar or co-registrar) where Securities may be surrendered for registration of transfer or exchange, and where, at any time when
the Issuer is obligated to make a payment of principal and premium upon the Notes, the Notes may be surrendered for payment. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer will give prompt written notice to the
Indenture Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any
such required office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such presentations and surrenders may be
made at the Corporate Trust Office of the Indenture Trustee , and the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such presentations and surrenders.
The Issuer may also from time to time designate one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the
Indenture Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Issuer hereby designates the Corporate Trust Office of the Indenture Trustee as one such office or agency of the Issuer.
(c) Compliance with Laws, etc. Comply in all material respects with all applicable Laws.
( d ) Preservation of Existence. Preserve and maintain its existence rights, franchises and privileges in the jurisdiction of its
incorporation or organization, and qualify and remain qualified in good standing as a foreign entity in the jurisdiction where its principal place
of business and its chief executive office are located and in each other jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualifications would have a Material Adverse Effect.
(e) Custody of Underlying Securities. Unless otherwise consented to by the Required Noteholders, deposit and maintain in the
Custody Accounts the percentage interests of each Underlying Security specified on Schedule 2 hereto, in each case until the final distribution
is made on such Underlying Security or such Underlying Security is released from the Lien of this Indenture.
(f) [Reserved].
(g) Reporting Requirements of The Issuer. Until the Indenture Termination Date, furnish to the Indenture Trustee:
58
4143-0949-1521
( i ) Financial Statements. In each case solely to the extent such information is not made available publicly on the Parent’s
website or through the Parent’s filings with the Commission:
(A) as soon as available, and in any event within one hundred twenty (120) days after the end of each Fiscal Year of the
Issuer, a copy of the annual unaudited report for such Fiscal Year of the Issuer including a copy of the balance sheet of the Issuer,
in each case, as at the end of such Fiscal Year, together with the related statements of earnings and cash flows for such Fiscal
Year;
(B) as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of
Consolidated Parent, a balance sheet of Consolidated Parent as of the end of such year and statements of income and retained
earnings and of source and application of funds of Consolidated Parent, for the period commencing at the end of the previous
Fiscal Year and ending with the end of such year, in each case setting forth comparative figures for the previous Fiscal Year,
certified without material qualification by Deloitte & Touche LLP or other nationally recognized independent public accountants
with expertise in the preparation of such reports, together with a certificate of such accounting firm stating that in the course of
the regular audit of the business of Consolidated Parent, which audit was conducted in accordance with GAAP (as then in effect),
such accounting firm has obtained no knowledge that an Event of Default, Default or Rapid Amortization Event has occurred and
is continuing, or if, in the opinion of such accounting firm, such an Event of Default, Default or Rapid Amortization Event has
occurred and is continuing, a statement as to the nature thereof; and
(C) as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter, quarterly
balance sheets and quarterly statements of source and application of funds and quarterly statements of income and retained
earnings of Consolidated Parent, certified by a Responsible Officer of Consolidated Parent (which certification shall state that
such balance sheets and statements fairly present the financial condition and results of operations for such fiscal quarter, subject
to year-end audit adjustments), delivery of which balance sheets and statements shall be accompanied by an Officer’s Certificate
of the Issuer to the effect that no Event of Default, Default or Rapid Amortization Event has occurred and is continuing.
For so long as Consolidated Parent is subject to the reporting requirements of Section 13(a) of the Exchange Act, its filing of the annual
and quarterly reports required under the Exchange Act, on a timely basis, shall be deemed compliance with this Section 8.2(g)(i).
(ii) Notice of Default, Event of Default or Rapid Amortization Event. Immediately, and in any event within one (1) Business
Day after the Issuer obtains knowledge of the occurrence of each Default, Event of Default or Rapid Amortization Event a statement of a
Responsible Officer of the Issuer setting forth details of such Default, Event of Default or Rapid Amortization Event and the action
which the Issuer proposes to take with respect thereto;
(iii) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any ERISA Event
which either (i) the Issuer, the Seller or any of their respective ERISA Affiliates files under ERISA with the Internal Revenue Service,
the Pension Benefit Guaranty Corporation or the U.S. Department of
59
4143-0949-1521
Labor or (ii) the Issuer, the Seller or any of their respective ERISA Affiliates receives from the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor. The Issuer shall give the Indenture Trustee and each Noteholder prompt
written notice of any event that could result in the imposition of a Lien on the assets of the Issuer or any of its ERISA Affiliates under
Section 430(k) of the Code or Section 303(k) or 4068 of ERISA; and
(iv) If a Responsible Officer of the Issuer shall have actual knowledge of the occurrence of an Administrator Default, notice
thereof to the Indenture Trustee, which notice shall specify the action, if any, the Issuer is taking in respect of such default. If an
Administrator Default shall arise from the failure of the Administrator to perform any of its duties or obligations under the
Administrative Services Agreement, the issuer shall take all reasonable steps available to it to remedy such failure, including any action
reasonably requested by the Indenture Trustee.
(v) On or before April 1, 2022 and on or before April 1 of each year thereafter, an Officer’s Certificate of the Issuer stating, as
to the Responsible Officer signing such Officer’s Certificate, that:
(A) a review of the activities of the Issuer during such year and of performance under this Indenture has been made
under such Responsible Officer’s supervision; and
(B) to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout such year, or, if there has been a Default, Event of Default or Rapid
Amortization Event specifying each such Default, Event of Default or Rapid Amortization Event known to such Responsible
Officer and the nature and status thereof.
(h) [Reserved].
(i) Protection of Trust Estate. At its expense, perform all acts and execute all documents necessary and desirable at any time to
evidence, perfect, maintain and enforce the title or the security interest of the Indenture Trustee in the Trust Estate and the priority thereof. The
Issuer will prepare, deliver and authorize the filing of financing statements relating to or covering the Trust Estate sold to the Issuer and
subsequently conveyed to the Indenture Trustee (which financing statements may cover “all assets” of the Issuer).
( j ) Inspection of Records. Permit the Indenture Trustee, any one or more of the Notice Persons or their duly authorized
representatives, attorneys or auditors to inspect the Records at such times as such Person may reasonably request. Upon instructions from the
Indenture Trustee, the Required Noteholders or their duly authorized representatives, attorneys or auditors, the Issuer shall release any
document related to the Underlying Securities to such Person.
( k ) Furnishing of Information. Provide such cooperation, information and assistance, and prepare and supply the Indenture
Trustee with such data regarding the performance by the Issuer and Administrator of their respective obligations under the Transaction
Documents, as may be reasonably requested by the Indenture Trustee or any Notice Person from time to time.
(l) [Reserved].
60
4143-0949-1521
(m) [Reserved].
(n) Enforcement of Transaction Documents. Use commercially reasonable efforts to enforce all rights held by it under any of
the Transaction Documents, shall not amend, supplement or otherwise modify any of the Transaction Documents and shall not waive any
breach of any covenant contained thereunder without the prior written consent of the Required Noteholders. The Issuer shall take all actions
necessary and desirable to enforce the Issuer’s rights and remedies under the Transaction Documents. The Issuer agrees that it will not waive
timely performance or observance by the Administrator or the Seller of their respective duties under the Transaction Documents if the effect
thereof would adversely affect any of the Secured Parties.
( o ) Separate Legal Entity. The Issuer hereby acknowledges that the Indenture Trustee and the Noteholders are entering into
the transactions contemplated by this Indenture and the other Transaction Documents in reliance upon the Issuer’s identity as a legal entity
separate from any other Person. Therefore, from and after the date hereof, the Issuer shall take all reasonable steps to continue the Issuer’s
identity as a separate legal entity and to make it apparent to third Persons that the Issuer is an entity with assets and liabilities distinct from
those of any other Person, and is not a division of any other Person. Without limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth herein, the Issuer shall take such actions as shall be required in order to remain in compliance with
Section 9(j)(iv) of the Issuer LLC Agreement.
(p) [Reserved].
otherwise required by the relevant Governmental Authority, the Issuer will treat the Notes as debt.
( q ) Income Tax Characterization . For purposes of U.S. federal income, state and local income and franchise taxes, unless
Section 8.3. Negative Covenants. So long as any Securities are outstanding, the Issuer shall not, unless the Required Noteholders
shall otherwise consent in writing:
(a) Sales, Liens, etc. Except pursuant to, or as contemplated by, the Transaction Documents, the Issuer shall not sell, transfer,
exchange, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or, for a period in excess of
thirty (30) days, involuntarily any Adverse Claims upon or with respect to any of its assets, including, without limitation, the Trust Estate, any
interest therein or any right to receive any amount from or in respect thereof.
(b) Claims, Deductions. Claim any credit on, or make any deduction from the principal or interest payable in respect of, the
Securities (other than amounts properly withheld from such payments under the Code or other applicable Law) or assert any claim against any
present or former Noteholder or Certificateholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate.
(c) Mergers, Acquisitions, Sales, Subsidiaries, etc. The Issuer shall not:
(i) be a party to any merger or consolidation, or directly or indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, except for Permitted Investments, or
sell, transfer, assign, convey or lease any of its property and assets (or any interest therein) other than pursuant to, or as contemplated by,
this Indenture or the other Transaction Documents;
61
4143-0949-1521
(ii) make, incur or suffer to exist an investment in, equity contribution to, loan or advance to, or payment obligation in respect
of the deferred purchase price of property from, any other Person, except for Permitted Investments or pursuant to the Transaction
Documents;
(iii) create any direct or indirect Subsidiary or otherwise acquire direct or indirect ownership of any equity interests in any other
Person other than pursuant to the Transaction Documents; or
(iv) enter into any transaction with any Affiliate except for the transactions contemplated by the Transaction Documents
and other transactions upon fair and reasonable terms materially no less favorable to the Issuer than would be obtained in a comparable
arm’s length transaction with a Person not an Affiliate.
Material Adverse Effect.
( d ) Change in Business Policy. The Issuer shall not make any change in the character of its business which would have a
( e ) Other Debt. Except as provided for herein, the Issuer shall not create, incur, assume or suffer to exist any Indebtedness
whether current or funded, other than (i) the Notes, (ii) Indebtedness of the Issuer representing fees, expenses and indemnities arising
hereunder or under any Purchase Agreement for the purchase price of the applicable Underlying Securities under any such Purchase
Agreement and (iii) other Indebtedness permitted pursuant to Section 8.3(h).
LLC Agreement unless the Required Noteholders have agreed to such amendment.
( f ) Certificate of Formation and Issuer LLC Agreement. The Issuer shall not amend its certificate of formation or the Issuer
( g ) Financing Statements. The Issuer shall not authorize the filing of any financing statement (or similar statement or
instrument of registration under the Laws of any jurisdiction) or statements relating to the Trust Estate other than the financing statements
authorized and filed in connection with and pursuant to the Transaction Documents.
( h ) Business Restrictions. The Issuer shall not (i) engage in any business or transactions, or be a party to any documents,
agreements or instruments, other than the Transaction Documents or those incidental to the purposes thereof, or (ii) make any expenditure for
any assets (other than the Trust Estate) if such expenditure, when added to other such expenditures made during the same calendar year would,
in the aggregate, exceed Ten Thousand Dollars ($10,000); provided, however, that the foregoing will not restrict the Issuer’s ability to pay
servicing compensation as provided herein and, so long as no Default, Event of Default or Rapid Amortization Event shall have occurred and
be continuing, the Issuer’s ability to make payments or distributions legally made to the Issuer’s members.
(i) ERISA Matters.
(i) To the extent applicable, the Issuer will not (A) engage or permit any of its respective ERISA Affiliates, in each case over
which the Issuer has control, to engage in any prohibited transaction (as defined in Section 4975 of the Code and Section 406 of ERISA)
for which an exemption is not available or has not previously been obtained from the U.S. Department of Labor; (B) fail to make, or
permit the Seller, or any of its ERISA Affiliates, in each case over which the Issuer has control, to fail to make, any payments to any
Multiemployer Plan that the Issuer, the Seller or any of their respective ERISA Affiliates is required to make under the agreement
relating to such Multiemployer Plan or any Law pertaining thereto; (C) terminate, or permit the Seller,
62
4143-0949-1521
or any of its ERISA Affiliates, in each case over which the Issuer has control, to terminate, any Pension Plan so as to result in any
liability to the Issuer, the Seller or any of their ERISA Affiliates; or (D) permit to exist any occurrence of any reportable event described
in Title IV of ERISA with respect to a Pension Plan, if such prohibited transactions, failures to make payment, terminations and
reportable events described in clauses (A), (B), (C) and (D) above would in the aggregate have a Material Adverse Effect.
(ii) The Issuer will not permit to exist any failure to satisfy the minimum funding standard (as described in Section 302 of
ERISA and Section 412 of the Code) with respect to any Pension Plan.
(iii) The Issuer will not cause or permit, nor permit any of its ERISA Affiliates over which the Issuer has control, to cause or
permit, the occurrence of an ERISA Event with respect to any Pension Plans that could result in a Material Adverse Effect.
( j ) Name; Jurisdiction of Organization. The Issuer will not change its name or its jurisdiction of organization (within the
meaning of the applicable UCC) without prior written notice to the Indenture Trustee. Prior to or upon a change of its name, the Issuer will
make all filings (including filings of financing statements on form UCC-1) and recordings necessary to maintain the perfection of the interest
of the Indenture Trustee in the Trust Estate pursuant to this Indenture. The Issuer further agrees that it will not become or seek to become
organized under the Laws of more than one jurisdiction. In the event that the Issuer desires to so change its jurisdiction of organization or
change its name, the Issuer will make any required filings and prior to actually making such change the Issuer will deliver to the Indenture
Trustee (i) an Officer’s Certificate and an Opinion of Counsel confirming that all required filings have been made to continue the perfected
interest of the Indenture Trustee in the Trust Estate in respect of such change and (ii) copies of all such required filings with the filing
information duly noted thereon by the office in which such filings were made.
could cause, the Issuer to become taxable as a corporation for U.S. federal income tax purposes.
( k ) Tax Matters. The Issuer will not take any action that could cause, and will not omit to take any action, which omission
( l ) Accounts. The Issuer shall not maintain any bank accounts other than the Trust Accounts; provided, however, that the
Issuer may maintain a general bank account to, among other things, receive and hold funds distributed to it, and to pay ordinary-course
operating expenses, as applicable. The Issuer shall not add any additional Trust Accounts unless the Indenture Trustee (subject to Section 15.1
hereto) shall have consented thereto and received a copy of any documentation with respect thereto. The Issuer shall not terminate any Trust
Accounts or close any Trust Accounts unless the Indenture Trustee shall have received at least thirty (30) days’ prior notice of such termination
and (subject to Section 15.1 hereto) shall have consented thereto.
Section 8.4. Further Instruments and Acts. The Issuer will execute and deliver such further instruments, furnish such other
information and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
Section 8.5. [Reserved].
Section 8.6. Perfection Representations. The parties hereto agree that the Perfection Representations shall be a part of this
Indenture for all purposes.
63
4143-0949-1521
ARTICLE 9.
RAPID AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Rapid Amortization Events. A “Rapid Amortization Event,” wherever used herein, means any one of the following
events:
(a) default in the payment of any interest on the Notes on any Payment Date, and such default shall continue (and shall not
have been waived by the Required Noteholders) for a period of three (3) Business Days after receipt of notice thereof from the Indenture
Trustee or the Required Noteholders;
(b) default in the payment of the principal of or any installment of the principal of the Notes when the same becomes due and
payable, and such default shall continue (and shall not have been waived by the Required Noteholders) for a period of three (3) Business Days
after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(c) commencing with the three (3) consecutive Payment Dates ending with the March 2023 Payment Date, the Three-Month
Average Underlying Loss Percentage shall have been greater than 13.0% on three (3) consecutive Payment Dates;
(d) a “Rapid Amortization Event” (as defined in the applicable Underlying Indenture) shall have occurred with respect to any
Underlying Issuer;
(e) the failure of the Issuer to maintain any Financial Covenant;
unremedied for a period of three (3) days after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(f) the failure of the Issuer to provide, or cause to be provided, the Monthly Report when due, which failure shall continue
(g) a failure on the part of the Seller duly to observe or perform any other covenants or agreements of the Seller set forth in
any Purchase Agreement or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as
reasonably determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on which
notice of such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Seller by the Indenture
Trustee, or to the Seller and the Indenture Trustee by the Required Noteholders;
(h) any representation, warranty or certification made by the Seller in any Purchase Agreement, in the other Transaction
Documents or in any certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such
inaccuracy has a material adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues
unremedied for a period of thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring
the same to be remedied, shall have been given by registered or certified mail to the Seller by the Indenture Trustee, or to the Seller and the
Indenture Trustee by the Required Noteholders; or
(i) the occurrence of an Administrator Default that continues unremedied for a period of three (3) days after receipt of notice
thereof from the Indenture Trustee or the Required Noteholders;
(j) the occurrence of an Event of Default;
64
4143-0949-1521
The Required Noteholders may waive any Rapid Amortization Event and its consequences.
ARTICLE 10.
REMEDIES
Section 10.1. Events of Default. An “Event of Default,” wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(i) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer, the Seller, or
any substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other
similar Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Issuer or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty (60) consecutive days;
(ii) the commencement by the Issuer or the Seller of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar Law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such Law, or the consent by the Issuer to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by
the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of any of the foregoing;
(iii) a failure on the part of the Issuer duly to observe or perform any other covenants or agreements of the Issuer set forth in
this Indenture or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as
reasonably determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on
which notice of such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Issuer by the
Indenture Trustee, or to the Issuer and the Indenture Trustee by the Required Noteholders;
(iv) any representation, warranty or certification made by the Issuer in this Indenture, in the other Transaction Documents or in
any certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such inaccuracy has a
material adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues unremedied for
a period of thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring the same
to be remedied, shall have been given by registered or certified mail to the Issuer by the Indenture Trustee, or to the Issuer and the
Indenture Trustee by the Required Noteholders;
(v) the Indenture Trustee shall cease to have a first-priority perfected security interest in all or a material portion of the Trust
Estate;
65
4143-0949-1521
(vi) the Issuer shall have become subject to regulation by the Securities and Exchange Commission as an “investment
company” under the Investment Company Act;
(vii) the Issuer shall become taxable as an association or a publicly traded partnership taxable as a corporation for U.S. federal
income tax purposes; or
(viii) a lien shall be filed pursuant to Section 430 or Section 6321 of the Code with regard to the Issuer and such lien shall not
have been released within thirty (30) days.
Section 10.2. Rights of the Indenture Trustee Upon Events of Default.
(a) If and whenever an Event of Default (other than in clause (i) and (ii) of Section 10.1) shall have occurred and be
continuing, the Indenture Trustee may, and at the written direction of the Required Noteholders shall, cause (x) the principal amount of all
Notes outstanding to be immediately due and payable at par, together with interest thereon and (y) all remaining amounts payable on the
Certificates to be immediately due and payable. If an Event of Default with respect to the Issuer specified in clause (i) or (ii) of Section 10.1
shall occur, all unpaid principal of and accrued interest on all the Notes outstanding and all remaining amounts payable shall ipso facto become
and be immediately due and payable without any declaration or other act on the part of the Indenture Trustee or any Noteholder or
Certificateholder. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may exercise from time to time any rights
and remedies available to it under applicable Law and Section 10.4. Any amounts obtained by the Indenture Trustee on account of or as a result
of the exercise by the Indenture Trustee of any right shall be held by the Indenture Trustee as additional collateral for the repayment of the
Secured Obligations and shall be applied in accordance with Article 5 hereof.
(b) If an Event of Default shall have occurred and be continuing, then at any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article 10 provided, the Required Noteholders, by written notice to the Issuer and the Indenture Trustee, may rescind and
annul such declaration and its consequences if:
(i) the Issuer has paid to or deposited with the Indenture Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or
upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and
(B) all sums paid by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements of the
Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal of the Notes and amounts payable on the Certificates that
have become due solely by such acceleration, have been cured or waived as provided in Section 10.6.
No such rescission shall affect any subsequent default or impair any right consequent thereto.
66
4143-0949-1521
(c) Additional Remedies. In addition to any rights and remedies now or hereafter granted hereunder or under applicable Law
with respect to the Trust Estate, the Indenture Trustee shall have all of the rights and remedies of a secured party under the UCC as enacted in
any applicable jurisdiction.
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five (5) days, or (ii) default is made in the payment of the principal of any Note when the
same becomes due and payable on the Legal Final Payment Date, the Issuer will pay to it, for the benefit of the Noteholders and
Certificateholders, the whole amount then due and payable on the Notes and Certificates for principal, interest and other amounts, with interest
upon the overdue principal, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of
interest, at the applicable Note Rate and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Indenture Trustee may (in its discretion) and, at the written direction of
the Required Noteholders, shall proceed to protect and enforce its rights and the rights of the Secured Parties by such appropriate Proceedings
to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by Law; provided, however, that the Indenture Trustee shall sell or otherwise liquidate the Trust Estate or any portion thereof only
in accordance with Section 10.4(d) and Section 10.5.
(c) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any
provision of this Indenture), the Indenture Trustee shall be held to represent all the Secured Parties, and it shall not be necessary to make any
such Person a party to any such Proceedings.
(d) In case there shall be pending, relative to the Issuer or any other obligor upon the Securities or any Person having or
claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or other similar Law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator
or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of
any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the principal or other amount of any Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in
respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred,
67
4143-0949-1521
and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, bad faith or
willful misconduct) and of the Secured Parties allowed in such Proceedings;
(ii) unless prohibited by applicable Law, to vote on behalf of the Secured Parties in any election of a trustee, a standby trustee
or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Secured Parties and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee or the Secured Parties allowed in any judicial Proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Secured
Parties to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly
to such Secured Parties, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence, bad faith or willful
misconduct.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept
or adopt on behalf of any Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the
rights of any Secured Party or to authorize the Indenture Trustee to vote in respect of the claim of any Secured Party in any such Proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture or under any of the Securities may be enforced by the
Indenture Trustee without the possession of any of the Securities or the production thereof in any Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for the Secured Parties.
Section 10.4. Remedies. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may and, at the
written direction of the Required Noteholders, shall do one or more of the following:
(a) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable under
the Transaction Documents, enforce any judgment obtained, and collect from the Issuer and any other obligor under the Transaction
Documents moneys adjudged due;
(b) subject to Section 10.5, institute Proceedings from time to time for the complete or partial foreclosure of this Indenture
with respect to the Trust Estate;
68
4143-0949-1521
(c) subject to the limitations set forth in clause (d) below and Section 10.5, exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Secured Parties; and
(d) subject to Section 10.5, sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by Law; provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default unless:
(i) the Holders of 100% of the outstanding Notes direct such sale and liquidation,
(ii) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then
due and unpaid with respect to all outstanding Notes for principal and interest and any other amounts due Noteholders, or
(iii) the Indenture Trustee determines that the proceeds of the Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on all outstanding Notes as such amounts would have become due if such Notes had not been
declared due and payable and the Required Noteholders direct such sale and liquidation.
In determining such sufficiency or insufficiency with respect to clauses (d)(ii) and (d)(iii), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Underlying Securities in the Trust Estate for such purpose.
The Indenture Trustee may maintain a Proceeding even if it does not possess any of the Notes or does not produce any of them
in the Proceeding, and any such Proceeding instituted by the Indenture Trustee shall be in its own name as trustee. All remedies are cumulative
to the extent permitted by Law.
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities . Notwithstanding any other provision of this
Indenture, if any remedies available under this Article X are to be exercised against the Trust Estate consisting of the Underlying Securities,
such remedies shall be exercised first against the Underlying Securities in the First Priority Custody Account and shall only by exercised
against the Underlying Securities in the Second Priority Custody Account if the proceeds of exercising remedies against the Underlying
Securities in the First Priority Custody Account are insufficient to discharge in full all amounts then due and unpaid with respect to all
outstanding Notes for principal and interest and any other amounts due Noteholders (such sufficiency being determined in accordance with
Section 10.4(d)). For the avoidance of doubt, the agreement to exercise any such remedies against the Underlying Securities in accordance with
this Section 10.5, shall in no way mitigate, minimize, waive and/or otherwise affect the remedies available under this Article X.
Section 10.6. Waiver of Past Events. If an Event of Default shall have occurred and be continuing, prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 10.2(a), the Required Noteholders may waive any past Default or Event of
Default and its consequences except a Default in payment of principal of any of the Notes. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Holders of the Securities shall be restored to their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent thereto.
69
4143-0949-1521
Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any
Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
Section 10.7. Limitation on Suits. No Noteholder or Certificateholder have any right to institute any Proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Noteholder or Certificateholder previously has given written notice to the Indenture Trustee of a continuing Event of
Default;
(ii) the Holders of not less than 25% of the outstanding principal amount of all Notes (or, if all Notes have been paid in full,
Certificateholders representing 25% of the Certificates) have made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Noteholder has offered and provided to the Indenture Trustee indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to
institute such Proceedings; and
(v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60) day
period by the Required Noteholders;
it being understood and intended that no one or more Noteholder or Certificateholder shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Noteholder or Certificateholder or to
obtain or to seek to obtain priority or preference over any other Noteholder or Certificateholder or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of
Secured Parties, each representing less than the Required Noteholders, the Indenture Trustee shall proceed in accordance with the request of
the greater majority of the outstanding principal amount or par value of the Notes, as determined by reference to such requests.
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
(a) Notwithstanding any other provision of this Indenture except as provided in Section 10.8(b) and (c), the right of any
Noteholder or Certificateholder to receive payment of principal, interest or other amounts, if any, on the Securities, on or after the respective
due dates expressed in the Securities or in this Indenture (or, in the case of redemption, on or after the Redemption Date), or to bring suit for
the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Noteholder or Certificateholder .
(b) Promptly upon request, each Noteholder or Certificateholder shall provide to the Indenture Trustee and/or the Issuer (or
other person responsible for withholding of taxes,
70
4143-0949-1521
including but not limited to FATCA Withholding Tax, or delivery of information under FATCA) with the Tax Information.
(c) The Paying Agent shall (or if the Indenture Trustee is not the Paying Agent, the Indenture Trustee shall cause the Paying
Agent to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee that
such Paying Agent shall) comply with the provisions of this Indenture applicable to it, comply with all requirements of the Code with respect to
the withholding from any payments to Noteholders or Certificateholders, including FATCA Withholding Tax (including obtaining and
retaining from Persons entitled to payments with respect to the Notes or Certificates any Tax Information and making any withholdings with
respect to the Notes or Certificates as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate
Governmental Authority), comply with respect to any applicable reporting requirements in connection with any payments to Noteholders or
Certificateholders, and, upon request, provide any Tax Information to the Issuer.
Section 10.9. Restoration of Rights and Remedies. If any Noteholder or Certificateholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined
adversely to the Indenture Trustee or to such Noteholder or Certificateholder, then and in every such case the Issuer, the Indenture Trustee, the
Noteholders and Certificateholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders and Certificateholders shall continue as
though no such Proceeding had been instituted.
Section 10.10. The Indenture Trustee May File Proofs of Claim. The Indenture Trustee is authorized to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel) and the Noteholders and
Certificateholders allowed in any judicial Proceedings relative to the Issuer (or any other obligor upon the Securities), its creditors or its
property, and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such
claim and any custodian in any such judicial Proceeding is hereby authorized by each Noteholder and Certificateholder to make such payments
to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of such payments directly to the Noteholders
and Certificateholders to pay the Indenture Trustee any amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, and any other amounts due the Indenture Trustee under Section 11.6 and 11.17. To
the extent that the payment of any such compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel,
and any other amounts due the Indenture Trustee under Section 11.6 and 11.17 out of the estate in any such Proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, notes and
other properties which the Noteholders and Certificateholders may be entitled to receive in such Proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or
consent to or accept or adopt on behalf of any Noteholder or Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Noteholder or Certificateholder thereof, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or Certificateholder in any such Proceeding.
Section 10.11. Priorities. Following the declaration of an Event of Default or a Rapid Amortization Event pursuant to Section 9.1
or 10.2, all amounts in any Payment Account,
71
4143-0949-1521
including any money or property collected pursuant to Section 10.4 (after deducting the reasonable costs and expenses of such collection), shall
be applied by the Indenture Trustee on the related Payment Date in accordance with the provisions of Article 5.
The Indenture Trustee may fix a record date and payment date for any payment to Secured Parties pursuant to this Section. At
least fifteen (15) days before such record date the Issuer shall mail to each Secured Party and the Indenture Trustee a notice that states the
record date, the payment date and the amount to be paid.
Section 10.12. Undertaking for Costs. All parties to this Indenture agree, and each Secured Party shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the
Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of the aggregate outstanding principal balance of the Notes on the
date of the filing of such action, (c) any suit instituted by any Certificateholder, or group of Certificateholders, in each case holding in the
aggregate more than 10% of the Certificates on the date of the filing of such action, (d) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date) or (e) any suit instituted by any Certificateholder for the
enforcement of the payment of any amount on any Certificate on or after the respective due dates expressed in such Certificate and in this
Indenture.
Section 10.13. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or
to the Secured Parties is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by
Law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 10.14. Delay or Omission Not Waiver. No delay or omission of the Indenture Trustee or any Secured Party to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default
or Event of Default or an acquiescence therein. Every right and remedy given by this Article 10 or by Law to the Indenture Trustee or to the
Secured Parties may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Secured
Parties, as the case may be.
Section 10.15. Control by Noteholders. The Required Noteholders shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any Law or with this Indenture;
(ii) subject to the express terms of Section 10.4 and Section 10.5, any direction to the Indenture Trustee to sell or liquidate the
Underlying Securities shall be
72
4143-0949-1521
by the Holders of Notes representing not less than 100% of the aggregate outstanding principal balance of all the Notes;
(iii) the Indenture Trustee shall have been provided with indemnity satisfactory to it; and
(iv) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 11.1, the Indenture Trustee need not take any action that it determines might involve it in liability or
might materially adversely affect the rights of any Noteholders not consenting to such action.
Section 10.16. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension Law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of any such Law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as
though no such Law had been enacted.
Section 10.17. Action on Securities. The Indenture Trustee’s right to seek and recover judgment on the Securities or under this
Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the
Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Secured Parties shall be impaired by the recovery of any
judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer.
Section 10.18. Performance and Enforcement of Certain Obligations.
(a) The Issuer agrees to take all such lawful action as is necessary and desirable to compel or secure the performance and
observance by the Seller and the Parent, as applicable, of each of their obligations to the Issuer under or in connection with the Transaction
Documents in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Transaction Documents, including the transmission of notices of default on the part of the Seller or the
Parent thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance by the Seller or the
Parent of each of their obligations under the Transaction Documents.
(b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction
shall be in writing) of the Required Noteholders shall, subject to Section 10.2(b), exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller or the Parent under or in connection with the Transaction Documents, including the right or power to take any
action to compel or secure performance or observance by the Seller or the Parent of each of their obligations to the Issuer thereunder and to
give any consent, request, notice, direction, approval, extension or waiver under the Transaction Documents, and any right of the Issuer to take
such action shall be suspended.
Section 10.19. Reassignment of Surplus. Promptly after termination of this Indenture and the payment in full of the Secured
Obligations, any proceeds of all the Underlying Securities and other assets in the Trust Estate received or held by the Indenture Trustee shall be
73
4143-0949-1521
turned over to the Issuer and the Underlying Securities and other assets in the Trust Estate shall be released to the Issuer by the Indenture
Trustee without recourse to the Indenture Trustee and without any representations, warranties or agreements of any kind.
ARTICLE 11.
THE INDENTURE TRUSTEE
Section 11.1. Duties of the Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, and of which a Trust Officer of the Indenture Trustee has written
notice, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture and any related document, and use the
same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such
person’s own affairs; provided, however, that the Indenture Trustee shall have no liability in connection with any action or inaction taken, or
not taken, by it upon the deemed occurrence of an Event of Default of which a Trust Officer has not received written notice; and provided,
further that the preceding sentence shall not have the effect of insulating the Indenture Trustee from liability arising out of the Indenture
Trustee’s negligence or willful misconduct.
(b) Except during the occurrence and continuance of an Event of Default of which a Trust Officer of the Indenture Trustee has
written notice:
(i) the Indenture Trustee undertakes to perform only those duties that are specifically set forth in this Indenture and no others,
and no implied covenants or obligations shall be read into this Indenture or any related document against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely (without independent confirmation,
verification, inquiry or investigation of the contents thereof), as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture;
provided, however, in the case of any such certificates or opinions which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and, if applicable, the Transaction Documents to which the Indenture Trustee is a party,
provided, further, that the Indenture Trustee shall not be responsible for the accuracy or content of any of the aforementioned documents
and the Indenture Trustee shall have no obligation to verify or recompute any numeral information provided to it pursuant to the
Transaction Documents.
(c) No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct except that:
(i) this clause does not limit the effect of clause (b) of this Section 11.1;
(ii) the Indenture Trustee shall not be personally liable for any error of judgment made in good faith by a Trust Officer or Trust
Officers of the Indenture Trustee, unless it is conclusively determined by the final judgment of a court of competent jurisdiction, no
longer subject to appeal or review that the Indenture Trustee was negligent in ascertaining the pertinent facts; or
74
4143-0949-1521
(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to the terms of this Indenture or the Transaction Documents.
(d) Notwithstanding anything to the contrary contained in this Indenture or any of the Transaction Documents, no provision of
this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights and powers, if there is reasonable ground (as determined by the Indenture
Trustee in its sole discretion) for believing that the repayment of such funds or adequate indemnity against such risk is not reasonably assured
to it by the security afforded to it by the terms of this Indenture.
Trustee shall be subject to the provisions of this Article .
(e) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture
(f) The Indenture Trustee shall, and hereby agrees that it will, perform all of the obligations and duties required of it under the
Servicing Agreement.
(g) Without limiting the generality of this Section 11.1 and subject to the other provisions of this Indenture, the Indenture
Trustee shall have no duty (i) to see to any recording, filing or depositing of this Indenture or any agreement referred to herein, or to see to the
maintenance of any such recording or filing or depositing or to any recording, refiling or redepositing of any thereof or to see to the validity,
perfection, continuation, or value of any lien or security interest created herein, (ii) to see to the payment or discharge of any tax, assessment or
other governmental Lien owing with respect to, assessed or levied against any part of the Issuer, (iii) to confirm or verify the contents of any
reports or certificates delivered to the Indenture Trustee pursuant to this Indenture or the Servicing Agreement believed by the Indenture
Trustee to be genuine and to have been signed or presented by the proper party or parties, or (iv) to confirm or effect the acquisition or
maintenance of any insurance. The Indenture Trustee shall be authorized to, but shall in no event have any duty or responsibility to, file any
financing or continuation statements or record any documents or instruments in any public office at any time or times or otherwise perfect or
maintain any security interest in the Trust Estate.
(h) Subject to Section 11.1(d), in the event that the Paying Agent or the Transfer Agent and Registrar (if other than the
Indenture Trustee) shall fail to perform any obligation, duty or agreement in the manner or on the day required to be performed by the Paying
Agent or the Transfer Agent and Registrar, as the case may be, under this Indenture, the Indenture Trustee shall be obligated as soon as
practicable upon written notice to a Trust Officer thereof and receipt of appropriate records and information, if any, to perform such obligation,
duty or agreement in the manner so required.
(i) [Reserved].
(j) Subject to Section 11.4, all moneys received by the Indenture Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by Law or
the Transaction Documents.
(k) Nothing contained herein shall be deemed to authorize the Indenture Trustee to engage in any business operations or any
activities other than those set forth in this Indenture. Specifically, the Indenture Trustee shall have no authority to engage in any business
operations, acquire any assets other than those specifically included in the Trust Estate under this
75
4143-0949-1521
Indenture or otherwise vary the assets held by the Issuer. Similarly, the Indenture Trustee shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the purpose of this Indenture.
(l) The Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of any Default or
Event of Default unless a Trust Officer of the Indenture Trustee shall have received written notice thereof. In the absence of receipt of such
notice, the Indenture Trustee may conclusively assume that there is no Default or Event of Default.
(m) [Reserved].
(n) The Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Issuer, Oportun and/or a specified percentage of Noteholders or Certificateholders under circumstances in
which such direction is required or permitted by the terms of this Indenture or other Transaction Document.
(o) The enumeration of any permissive right or power herein or in any other Transaction Document available to the Indenture
Trustee shall not be construed to be the imposition of a duty.
separately agree in writing with the Issuer.
(p) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may
(q) Every provision of the Indenture or any related document relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this Article.
Section 11.2. Rights of the Indenture Trustee. Except as otherwise provided by Section 11.1:
(a) The Indenture Trustee may conclusively rely on and shall be protected in acting upon or refraining from acting upon and in
accord with, without any duty to verify the contents or recompute any calculations therein, any document (whether in its original or facsimile
form), including the annual certificate, the monthly payment instructions and notification to the Indenture Trustee, the Monthly Report, any
resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document, believed by it to be genuine and to have been signed by or presented by the proper Person.
Without limiting the Indenture Trustee’s obligations to examine pursuant to Section 11.1(b)(ii), the Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, the Indenture Trustee may require an Officer’s Certificate or an
Opinion of Counsel or consult with counsel of its selection and the Officer’s Certificate or the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys, custodians and nominees and the Indenture Trustee shall not be liable for any misconduct or negligence on
the part of, or for the supervision of, any such agent or attorneys, custodian or nominee so long as such agent, custodian or nominee is
appointed with due care.
76
4143-0949-1521
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers conferred upon it by this Indenture; provided, however, that the Indenture Trustee’s conduct does not
constitute willful misconduct or negligence.
(e) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, or
to institute, conduct or defend any litigation hereunder or in relation hereto, at the request, order or direction of any of the Noteholders or
Certificateholders, pursuant to the provisions of this Indenture, unless such Noteholders or Certificateholders shall have offered to the
Indenture Trustee security or indemnity satisfactory to the Indenture Trustee (in its sole discretion) against the costs, expenses (including
attorneys’ fees and expenses) and liabilities which may be incurred therein or thereby; nothing contained herein shall, however, relieve the
Indenture Trustee of the obligations, upon the occurrence of an Event of Default (which has not been cured or waived), to exercise such of the
rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.
(f) The Indenture Trustee shall not be bound to make any investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document (including, the
annual certificate, the monthly payment instructions and notification to the Indenture Trustee or the Monthly Report), unless requested in
writing so to do by the Holders of Securities evidencing not less than 25% of the aggregate outstanding principal balance or par value of the
Securities, but the Indenture Trustee may, but is not obligated to, make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation; provided, however, that if the payment within a reasonable time to the Indenture
Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture
Trustee, not assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require
indemnity satisfactory to it against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the Indenture Trustee, shall be reimbursed by the Person making
such request.
(g) The Indenture Trustee shall have no liability for the selection of Permitted Investments and shall not be liable for any
losses or liquidation penalties in connection with Permitted Investments, unless such losses or liquidation penalties were incurred through the
Indenture Trustee’s own willful misconduct or negligence. The Indenture Trustee shall have no obligation to invest or reinvest any amounts
except as directed by the Issuer (or the Administrator) in accordance with this Indenture.
acts or omissions were not the result of the negligence, bad faith or willful misconduct of the predecessor Indenture Trustee.
(h) The Indenture Trustee shall not be liable for the acts or omissions of any successor to the Indenture Trustee so long as such
(i) The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee and the entity serving as Indenture Trustee (a) in
each of its capacities hereunder and under the Transaction Documents, and to each agent, custodian and other Person employed to act
hereunder or thereunder and (b) in each document to
77
4143-0949-1521
which it is a party (in any capacity) whether or not specifically set forth herein or therein; provided that the Securities Intermediary and the
Depositary Bank shall comply with Section 5.3.
(j) Except as may be required by Sections 11.1(b)(ii), 11.2(a) and 11.2(f), the Indenture Trustee shall not be required to make
any initial or periodic examination of any documents or records related to the Trust Estate for the purpose of establishing the presence or
absence of defects, the compliance by the Seller, the Parent or the Administrator with their respective representations and warranties or for any
other purpose.
(k) Without limiting the Indenture Trustee’s obligation to examine pursuant to Section 11.1(b)(ii), the Indenture Trustee shall
not be bound to make any investigation into (i) the performance or observance by the Issuer or any other Person of any of the covenants,
agreements or other terms or conditions set forth in this Indenture or in any related document, (ii) the occurrence of any default, or the validity,
enforceability, effectiveness or genuineness of this Indenture, any related document or any other agreement, instrument or document, (iii) the
creation, perfection or priority of any Lien purported to be created by this Indenture or any related document, (iv) the value or the sufficiency of
any collateral or (v) the satisfaction of any condition set forth in this Indenture or any related document, but the Indenture Trustee, in its
discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally
or by agent or attorney, and shall incur no liability of any kind by reason of such inquiry or investigation.
(l) In no event shall the Indenture Trustee be responsible or liable for special, indirect, punitive or consequential loss or
damage of any kind whatsoever (including, but not limited to, loss of profit), even if the Indenture Trustee has been advised of the likelihood of
such loss or damage and regardless of the form of action.
(m) The Indenture Trustee may, from time to time, request that the Issuer and any other applicable party deliver a certificate
(upon which the Indenture Trustee may conclusively rely) setting forth the names of individuals and/or titles of officers authorized at such time
to take specified actions pursuant to this Indenture or any related document together with a specimen signature of such authorized officers;
provided, however, that from time to time, the Issuer or such other applicable party may, by delivering to the Indenture Trustee a revised
certificate, change the information previously provided by it pursuant to the Indenture, but the Indenture Trustee shall be entitled to
conclusively rely on the then current certificate until receipt of a superseding certificate.
(n) The right of the Indenture Trustee to perform any discretionary act enumerated in this Indenture or any related document
shall not be construed as a duty.
(o) Except for notices, reports and other documents expressly required to be furnished to the Holders by the Indenture Trustee
hereunder, the Indenture Trustee shall not have any duty or responsibility to provide any Holder with any other information concerning the
Issuer or any other parties to any related documents which may come into the possession of the Indenture Trustee or any of its officers,
directors, employees, agents, representatives or attorneys-in-fact.
(p) If the Indenture Trustee requests instructions from the Issuer, the Administrator or the Holders with respect to any action
or omission in connection with this Indenture, the Indenture Trustee shall be entitled (without incurring any liability therefor) to refrain from
taking such action and continue to refrain from acting unless and until the Indenture Trustee shall have received written instructions from the
Issuer, the Administrator or the Holders, as applicable, with respect to such request.
78
4143-0949-1521
(q) In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking
institutions, including those relating to the funding of terrorist activities and money laundering (“Applicable Law”), the Indenture Trustee is
required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the
Indenture Trustee. Accordingly, each of the parties agrees to provide to the Indenture Trustee upon its request from time to time such
identifying information and documentation as may be available for such party in order to enable the Indenture Trustee to comply with
Applicable Law.
(r) In no event shall the Indenture Trustee be liable for any failure or delay in the performance of its obligations under this
Indenture or any related documents because of circumstances beyond the Indenture Trustee’s control, including, but not limited to, a failure,
termination, or suspension of a clearing house, securities depositary, settlement system or central payment system in any applicable part of the
world or acts of God, flood, war (whether declared or undeclared), civil or military disturbances or hostilities, nuclear or natural catastrophes,
political unrest, explosion, severe weather or accident, earthquake, terrorism, fire, riot, labor disturbances, strikes or work stoppages for any
reason, embargo, government action, including any laws, ordinances, regulations or the like (whether domestic, federal, state, county or
municipal or foreign) which delay, restrict or prohibit the providing of the services contemplated by this Indenture or any related documents, or
the unavailability of communications or computer facilities, the failure of equipment or interruption of communications or computer facilities,
or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or any other causes beyond the
Indenture Trustee’s control whether or not of the same class or kind as specified above.
(s) The Indenture Trustee shall not be liable for failing to comply with its obligations under this Indenture in so far as the
performance of such obligations is dependent upon the timely receipt of instructions and/or other information from any other Person which are
not received or not received by the time required.
(t) The Indenture Trustee shall be fully justified in failing or refusing to take any action under this Indenture or any other
related document if such action (A) would, in the reasonable opinion of the Indenture Trustee, in good faith (which may be based on the advice
or opinion of counsel), be contrary to applicable Law, this Indenture or any other related document, or (B) is not provided for in the Indenture
or any other related document.
(u) The Indenture Trustee shall not be required to take any action under this Indenture or any related document if taking such
action (A) would subject the Indenture Trustee to a tax in any jurisdiction where it is not then subject to a tax, or (B) would require the
Indenture Trustee to qualify to do business in any jurisdiction where it is not then so qualified.
(v) The Indenture Trustee shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any
other agreement, instrument or document other than this Indenture or any other Transaction Document to which it is a party, whether or not an
original or a copy of such agreement has been provided to the Indenture Trustee.
the Credit Risk Retention Rules or any other laws, rules or regulations of any other jurisdiction related to risk retention.
(w) The Indenture Trustee shall have no obligation or duty to determine or otherwise monitor any Person’s compliance with
(x) Notwithstanding anything contained in this Indenture or any other Transaction Document to the contrary, the Indenture
Trustee shall be under no obligation (i) to monitor, determine or verify the unavailability or cessation of any applicable benchmark interest rate,
or whether or when there has occurred, or to give notice to any other Person of the
79
4143-0949-1521
occurrence of, any date on which such rate may be required to be transitioned or replaced in accordance with the terms of the Transaction
Documents, applicable law or otherwise, (ii) to select, determine or designate any replacement to such rate, or other successor or replacement
benchmark index, or whether any conditions to the designation of such a rate have been satisfied, (iii) to select, determine or designate any
modifier to any replacement or successor index, or (iv) to determine whether or what any amendments to this Indenture or the other Transaction
Documents are necessary or advisable, if any, in connection with any of the foregoing.
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities. The Indenture Trustee assumes no responsibility for the
correctness of the recitals contained in this Indenture and in the Securities (other than the signature and authentication of the Indenture Trustee
on the Securities). Except as set forth in Section 11.16, the Indenture Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities (other than the signature and authentication of the Indenture Trustee on the Securities) or of any asset of the Trust
Estate or related document. The Indenture Trustee shall not be accountable for the use or application by the Issuer or the Seller of any of the
Securities or of the proceeds of such Securities, or for the use or application of any funds paid to the Seller or to the Issuer in respect of the
Trust Estate or deposited in or withdrawn from the Payment Account by Oportun.
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities. The Indenture Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuer or an Affiliate of the Issuer with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Transfer Agent and Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Indenture Trustee must comply with Sections 11.9 and 11.11. It is expressly acknowledged, agreed and
consented to that Wilmington Trust, National Association will be acting in the capacities of Indenture Trustee, Paying Agent, Depositary Bank
and Securities Intermediary. Wilmington Trust, National Association may, in such multiple capacities, discharge its separate functions fully,
without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any
such conflict or breach arises from the performance by Wilmington Trust, National Association of express duties set forth in this Indenture or
any other Transaction Documents in any such capacities, all of which defenses, claims or assertions are hereby expressly waived by the Issuer,
the Holders and any other Person having rights pursuant hereto or thereto and to disclaim any potential liability. For the avoidance of doubt,
any actions taken by the Securities Intermediary with respect to the First Priority Custody Account or the Second Priority Custody Account
shall be taken pursuant to the terms of the Custody Agreement and, so long as this Indenture is in effect, the provisions of this Indenture
applicable to the Securities Intermediary; it being understood that any such actions shall be taken solely in accordance with the Custody
Agreement and, so long as this Indenture is in effect, the provisions of this Indenture applicable to the Securities Intermediary, and Wilmington
Trust, National Association will discharge its separate functions fully, without hindrance or regard to conflict of interest principles, duty of
loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wilmington
Trust, National Association of express duties set forth in this Indenture or any other Transaction Documents in any such capacities, all of which
defenses, claims or assertions are hereby expressly waived by the Issuer, the Holders and any other Person having rights pursuant hereto or
thereto and to disclaim any potential liability.
Section 11.5. Notice of Defaults. If a Default, Event of Default or Rapid Amortization Event occurs and is continuing and if a Trust
Officer of the Indenture Trustee receives written notice or has actual knowledge thereof, the Indenture Trustee shall promptly provide each
Notice Person (and, with respect to any Event of Default or Rapid Amortization Event, each Noteholder and Certificateholder), to the extent
possible by email or facsimile, and, otherwise, by first class mail at their respective addresses appearing in the Register.
80
4143-0949-1521
Section 11.6. Compensation.
(a) To the extent not otherwise paid pursuant to the Indenture, the Issuer covenants and agrees to pay to the Indenture Trustee
from time to time, and the Indenture Trustee shall be entitled to receive, such compensation as the Issuer and the Indenture Trustee shall agree
in writing from time to time (which compensation shall not be limited by any provision of Law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Indenture Trustee, and, the Issuer will pay or reimburse the Indenture Trustee (without reimbursement from
the Payment Account or otherwise) all reasonable expenses, disbursements and advances (including legal fees and costs and costs of persons
not regularly employed by the Indenture Trustee) incurred or made by the Indenture Trustee in accordance with any of the provisions of this
Indenture except any such expense, disbursement or advance as may arise from its own willful misconduct or negligence.
(b) The obligations of the Issuer under this Section 11.6 shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee.
Section 11.7. Replacement of the Indenture Trustee.
(a) A resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee shall become effective
only upon the successor Indenture Trustee’s acceptance of appointment as provided in this Section 11.7.
(b) The Indenture Trustee may, after giving sixty (60) days’ prior written notice to the Issuer, resign at any time and be
discharged from the trust hereby created; provided, however, that no such resignation of the Indenture Trustee shall be effective until a
successor trustee has assumed the obligations of the Indenture Trustee hereunder. The Issuer may remove the Indenture Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor
trustee if:
(i) the Indenture Trustee fails to comply with Section 11.9;
(ii) a court or federal or state bank regulatory agency having jurisdiction in the premises in respect of the Indenture Trustee
shall have entered a decree or order granting relief or appointing a receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s property, or ordering the
winding-up or liquidation of the Indenture Trustee’s affairs;
(iii) the Indenture Trustee consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s
property, or makes any assignment for the benefit of creditors or fails generally to pay its debts as such debts become due or takes any
corporate action in furtherance of any of the foregoing; or
(iv) the Indenture Trustee becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the Indenture Trustee for any reason, the
Issuer shall promptly appoint a successor Indenture Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered
to the resigning and one copy to the successor trustee.
81
4143-0949-1521
(c) If a successor Indenture Trustee does not take office within thirty (30) days after the retiring Indenture Trustee provides
written notice of its resignation or is removed, the retiring Indenture Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring or removed Indenture Trustee
and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders and Certificateholders. The retiring
Indenture Trustee shall, at the expense of the Issuer, promptly transfer to the successor Indenture Trustee all property held by it as Indenture
Trustee and all documents and statements held by it hereunder; provided, however, that all sums owing to the retiring Indenture Trustee
hereunder (and its agents and counsel) have been paid, and the Issuer and the predecessor Indenture Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Indenture
Trustee all such rights, powers, duties and obligations. Notwithstanding replacement of the Indenture Trustee pursuant to this Section 11.7, the
Issuer’s obligations under Sections 11.6 and 11.17 shall continue for the benefit of the retiring Indenture Trustee.
(d) Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of
the provisions of this Section 11.7 shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to
this Section 11.7 and payment of all fees and expenses owed to the retiring Indenture Trustee.
acceptance such successor Indenture Trustee shall be eligible under the provisions of Section 11.9 hereof.
(e) No successor Indenture Trustee shall accept appointment as provided in this Section 11.7 unless at the time of such
Section 11.8. Successor Indenture Trustee by Merger, etc . Any Person into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person succeeding to the corporate trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, provided such Person shall be eligible under the provisions of Section 11.9 hereof, without the execution or filing
of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any successor to the Indenture Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Indenture
Trustee shall have.
Section 11.9. Eligibility: Disqualification. The Indenture Trustee hereunder shall at all times be organized and doing business
under the Laws of the United States of America or any State thereof authorized under such Laws to exercise corporate trust powers, having a
long-term unsecured debt rating of at least BBB- (or the equivalent thereof) by a Rating Agency, having, in
82
4143-0949-1521
the case of an entity that is subject to risk-based capital adequacy requirements, risk-based capital of at least $50,000,000 or, in the case of an
entity that is not subject to risk-based capital adequacy requirements, having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to Law,
then for the purpose of this Section 11.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section 11.9, the
Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 11.7.
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute
and deliver all instruments to appoint one or more persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of this Section 11.10 such powers, duties, obligations, rights and trusts as
the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 11.9 and no notice to Noteholders or Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.7. No co-trustee shall be appointed without the consent of the Issuer unless such
appointment is required as a matter of Law or to enable the Indenture Trustee to perform its functions hereunder. The appointment of any co-
trustee or separate trustee shall not relieve the Indenture Trustee of any of its obligations hereunder.
provisions and conditions:
(b) Every separate trustee and co-trustee shall, to the extent permitted by Law, be appointed and act subject to the following
(i) the Securities shall be authenticated and delivered solely by the Indenture Trustee or an authenticating agent appointed by
the Indenture Trustee;
(ii) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent
that under any Law (whether as Indenture Trustee hereunder), the Indenture Trustee shall be incompetent or unqualified to perform, such
act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction
of the Indenture Trustee;
(iii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustees, hereunder, including
acts or omissions of predecessor or successor trustees;
(iv) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee; and
83
4143-0949-1521
(v) the Indenture Trustee shall remain primarily liable for the actions of any co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall
refer to this Indenture and the conditions of this Article 11. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to Oportun.
(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by Law, to do any lawful act under or in respect to this Indenture on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies
and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by Law, without the appointment of a new or
successor Indenture Trustee.
Section 11.11. [Reserved].
Section 11.12. Taxes. The Indenture Trustee shall not be liable for any liabilities, costs or expenses of the Issuer, the Noteholders,
the Note Owners or the Certificateholders arising under any tax Law, including without limitation federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any interest or penalty with respect thereto or arising from a failure to
comply therewith).
Section 11.13. [Reserved].
Section 11.14. Suits for Enforcement. If an Event of Default shall occur and be continuing, the Indenture Trustee, may (but shall
not be obligated to) subject to the provisions of Section 2.01 of the Servicing Agreement, proceed to protect and enforce its rights and the rights
of any Secured Party under this Indenture or any other Transaction Document by a Proceeding, whether for the specific performance of any
covenant or agreement contained in this Indenture or such other Transaction Document or in aid of the execution of any power granted in this
Indenture or such other Transaction Document or for the enforcement of any other legal, equitable or other remedy as the Indenture Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee or any Secured Party.
Section 11.15. Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver to each Noteholder and
Certificateholder such information as may be expressly required by the Code.
Section 11.16. Representations and Warranties of Indenture Trustee. The Indenture Trustee represents and warrants to the Issuer
and the Secured Parties that:
(i) the Indenture Trustee is a national banking association with trust powers duly organized, existing and authorized to engage
in the business of banking under the Laws of the United States;
84
4143-0949-1521
(ii) the Indenture Trustee has full power, authority and right to execute, deliver and perform this Indenture and to authenticate
the Securities, and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and to
authenticate the Securities;
(iii) this Indenture has been duly executed and delivered by the Indenture Trustee; and
(iv) the Indenture Trustee meets the requirements of eligibility hereunder set forth in Section 11.9.
Section 11.17. The Issuer Indemnification of the Indenture Trustee. The Issuer shall fully indemnify, defend and hold harmless the
Indenture Trustee (and any predecessor Indenture Trustee) and its directors, officers, agents and employees from and against any and all loss,
liability, claim, expense, damage or injury suffered or sustained of whatever kind or nature regardless of their merit, demanded, asserted, or
claimed directly or indirectly relating to any acts, omissions or alleged acts or omissions arising out of the activities of the Indenture Trustee
pursuant to this Indenture and any other Transaction Document to which it is a party or any transaction contemplated hereby or thereby,
including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with
the defense of any actual or threatened action, Proceeding or claim; provided, however, that the Issuer shall not indemnify the Indenture
Trustee or its directors, officers, employees or agents if such acts, omissions or alleged acts or omissions constitute negligence or willful
misconduct by the Indenture Trustee. The indemnity provided herein shall (i) survive the termination of this Indenture and the resignation and
removal of the Indenture Trustee, and (ii) apply to the Indenture Trustee (including (a) in its capacity as Agent and (b) Wilmington Trust,
National Association, as Securities Intermediary and Depositary Bank).
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer . Any application by the Indenture Trustee for
written instructions from the Issuer or the Administrator may, at the option of the Indenture Trustee, set forth in writing any action proposed to
be taken or omitted by the Indenture Trustee under this Indenture and the date on and/or after which such action shall be taken or such
omission shall be effective. Subject to Section 11.1, the Indenture Trustee shall not be liable for any action taken by, or omission of, the
Indenture Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall
not be less than thirty (30) days after the date any Responsible Officer of the Issuer or the Administrator actually receives such application,
unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the
case of an omission), the Indenture Trustee shall have received written instructions in response to such application specifying the action to be
taken or omitted.
Section 11.19. [Reserved].
Section 11.20. Maintenance of Office or Agency. The Indenture Trustee will maintain an office or offices, or agency or agencies,
where notices and demands to or upon the Indenture Trustee in respect of the Securities and this Indenture may be served. The Indenture
Trustee initially appoints its Corporate Trust Office as its office for such purposes. The Indenture Trustee will give prompt written notice to the
Issuer, Oportun, the Noteholders and the Certificateholders of any change in the location of the Register or any such office or agency.
Section 11.21. Concerning the Rights of the Indenture Trustee . The rights, privileges and immunities afforded to the Indenture
Trustee in the performance of its duties
85
4143-0949-1521
under this Indenture shall apply equally to the performance by the Indenture Trustee of its duties under each other Transaction Document to
which it is a party.
Section 11.22. Direction to the Indenture Trustee. The Issuer hereby directs the Indenture Trustee to enter into the Transaction
Documents.
ARTICLE 12.
DISCHARGE OF INDENTURE
Section 12.1. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the
Securities except as to (i) rights of Noteholders to receive payments of principal thereof and interest thereon and any other amount due to
Noteholders, (ii) rights of Certificateholders to receive payments of amount distributable to Certificateholders, (iii) Sections 8.1, 11.6, 11.12,
11.17, 12.2, 12.5(b), 15.16 and 15.17, (iv) the rights, obligations under Sections 12.2 and 15.17 and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Sections 11.6 and 11.17) and (v) the rights of Noteholders and Certificateholders
as beneficiaries hereof with respect to the property deposited with the Indenture Trustee as described below payable to all or any of them, and
the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Securities (and their related Secured Parties), on the Payment Date (the “Indenture Termination
Date”) on which the Issuer has paid, caused to be paid or irrevocably deposited or caused to be irrevocably deposited in the applicable Payment
Account funds sufficient to pay in full all Secured Obligations, and the Issuer has delivered to the Indenture Trustee an Officer’s Certificate and
an Opinion of Counsel, each meeting the applicable requirements of Section 15.1(a) and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have been complied with.
After any irrevocable deposit made pursuant to Section 12.1 and satisfaction of the other conditions set forth herein, the
Indenture Trustee promptly upon request shall acknowledge in writing the discharge of the Issuer’s obligations under this Indenture except for
those surviving obligations specified above.
Section 12.2. Application of Issuer Money. All moneys deposited with the Indenture Trustee pursuant to Section 12.1 shall be held
in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any
Paying Agent to the Noteholder or Certificateholders of the particular Securities for the payment or redemption of which such moneys have
been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and other amounts; but such
moneys need not be segregated from other funds except to the extent required herein or in the other Transaction Documents or required by
Law.
The provisions of this Section 12.2 shall survive the expiration or earlier termination of this Indenture.
Section 12.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with
respect to the Securities, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with
respect to such Securities shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 8.1 and
thereupon such Paying Agent shall be released from all further liability with respect to such moneys.
Section 12.4. [Reserved].
86
4143-0949-1521
Section 12.5. Final Payment.
(a) Written notice of any termination, specifying the Payment Date upon which the Noteholders or Certificateholders may
surrender their Securities for final payment and cancellation, shall be given (subject to at least two (2) Business Days’ prior notice from the
Issuer to the Indenture Trustee) by the Indenture Trustee to Noteholders or Certificateholders mailed not later than five (5) Business Days
preceding such final payment specifying (i) the Payment Date (which shall be the Payment Date in the month in which the Termination Date
occurs) upon which final payment of such Securities will be made upon presentation and surrender of such Securities at the office or offices
therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the Securities at the office or offices therein specified. The Issuer’s
notice to the Indenture Trustee in accordance with the preceding sentence shall be accompanied by an Officer’s Certificate of the Issuer setting
forth the information specified in Article 6 of this Indenture covering the period during the then current calendar year through the date of such
notice and setting forth the date of such final distribution. The Indenture Trustee shall give such notice to the Transfer Agent and the Paying
Agent at the time such notice is given to such Noteholders or Certificateholders.
(b) Notwithstanding the termination or discharge of the trust of the Indenture pursuant to Section 12.1 or the occurrence of the
Termination Date, all funds then on deposit in the Payment Account shall continue to be held in trust for the benefit of the Noteholders or
Certificateholders and the Paying Agent or the Indenture Trustee shall pay such funds to the Noteholders or Certificateholders upon surrender
of their Securities. In the event that all of the Noteholders or Certificateholders shall not surrender their Securities for cancellation within six
(6) months after the date specified in the above-mentioned written notice, the Indenture Trustee shall give second written notice to the
remaining Noteholders or Certificateholders upon receipt of the appropriate records from the Transfer Agent and Registrar to surrender their
Securities for cancellation and receive the final distribution with respect thereto. If within one and one-half years after the second notice all the
Securities shall not have been surrendered for cancellation, the Indenture Trustee may take appropriate steps or may appoint an agent to take
appropriate steps, to contact the remaining Noteholders or Certificateholders concerning surrender of their Securities, and the cost thereof shall
be paid out of the funds in the Payment Account held for the benefit of such Noteholders or Certificateholders. The Indenture Trustee and the
Paying Agent shall pay to the Issuer upon request any monies held by them for the payment of principal or interest which remains unclaimed
for two (2) years. After such payment to the Issuer, Noteholders or Certificateholders entitled to the money must look to the Issuer for payment
as general creditors unless an applicable abandoned property Law designates another Person.
(c) All Securities surrendered for payment of the final distribution with respect to such Securities and cancellation shall be
cancelled by the Transfer Agent and Registrar and be disposed of in a manner satisfactory to the Indenture Trustee and the Issuer.
Section 12.6. Termination Rights of Issuer. Upon the termination of the Lien of the Indenture pursuant to Section 12.1, and after
payment of all amounts due hereunder on or prior to such termination, the Indenture Trustee shall execute a written release and reconveyance
substantially in the form of Exhibit A hereto pursuant to which it shall release the Lien of the Indenture and reconvey to the Issuer (without
recourse, representation or warranty) all right, title and interest in the Trust Estate, whether then existing or thereafter created, all moneys due
or to become due with respect to such Trust Estate and all proceeds of the Trust Estate, except for amounts held by the Indenture Trustee or any
Paying Agent pursuant to Section 12.5(b). The Indenture Trustee shall execute and deliver such instruments of transfer and assignment, in each
case without recourse, as shall be reasonably requested by the Issuer to vest in the Issuer all right, title and interest in the Trust Estate.
87
4143-0949-1521
Section 12.7. Repayment to the Issuer. The Indenture Trustee and the Paying Agent shall promptly pay to the Issuer upon written
request any excess money or, pursuant to Sections 2.10 and 2.13, return any Securities held by them at any time.
ARTICLE 13.
AMENDMENTS
Section 13.1. Supplemental Indentures without Consent of the Noteholders. Without the consent of the Holders of any Notes, and,
if the Certificateholders’ rights and/or obligations are materially and adversely affected thereby, with the consent of the Required
Certificateholders, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indenture supplements or amendments hereto, in form satisfactory to the Indenture Trustee for any of the following purposes:
(a) to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject to the
Lien of this Indenture additional property;
(b) to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in the Securities;
(c) to add to the covenants of the Issuer for the benefit of any Secured Parties or to surrender any right or power herein
conferred upon the Issuer;
(d) to convey, transfer, assign, mortgage or pledge to the Indenture Trustee any property or assets as security for the Secured
Obligations and to specify the terms and conditions upon which such property or assets are to be held and dealt with by the Indenture Trustee
and to set forth such other provisions in respect thereof as may be required by this Indenture or as may, consistent with the provisions of this
Indenture, be deemed appropriate by the Issuer and the Indenture Trustee, or to correct or amplify the description of any such property or assets
at any time so mortgaged, pledged, conveyed and transferred to the Indenture Trustee;
(e) to cure any ambiguity, or correct or supplement any provision of this Indenture which may be inconsistent with any other
provision of this Indenture;
(f) to make any other provisions of this Indenture with respect to matters or questions arising under this Indenture; provided,
however, that such action shall not adversely affect the interests of any Holder of the Notes in any material respect without consent being
provided as set forth in Section 13.2; or
(g) to evidence and provide for the acceptance of appointment hereunder by a successor Indenture Trustee with respect to the
Securities or to add to or change any of the provisions of this Indenture as shall be necessary and permitted to provide for or facilitate the
administration of the trusts hereunder by more than one trustee pursuant to the requirements of Article 11;
provided, however, that no amendment or supplement shall be permitted unless a Tax Opinion is delivered to the Indenture Trustee.
88
4143-0949-1521
Upon the request of the Issuer, the Indenture Trustee shall join with the Issuer in the execution of any supplemental indenture or
amendment authorized or permitted by the terms of this Indenture and shall make any further appropriate agreements and stipulations that may
be therein contained, but the Indenture Trustee shall not be obligated to enter into such supplemental indenture or amendment that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 13.2. Supplemental Indentures with Consent of Noteholders. The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with the consent of the Required Noteholders and, if the Certificateholders’ rights and/or obligations are materially and
adversely affected thereby, the Required Certificateholders enter into one or more indenture supplements or amendments hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such indenture supplement or amendment shall,
without the consent of the Required Noteholders and without the consent of the Holder of each outstanding Note affected thereby (and in the
case of clause (iii) below, the consent of each Secured Party):
(i) change the date of payment of any installment of principal of or interest on, or any premium payable upon the redemption
of, any Note or reduce in any manner the principal amount thereof, the interest rate thereon or the Redemption Price with respect
thereto, modify the provisions of this Indenture relating to the application of payments on, or the proceeds of the sale of, the Trust Estate
to payment of principal of, or interest on, the Notes, or change any place of payment where, or the coin or currency in which, any Note
or the interest thereon is payable;
(ii) change the Noteholder voting requirements with respect to any Transaction Document;
(iii) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article 9, to the payment of any such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption Date);
(iv) reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required for any such indenture supplement or amendment, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;
(v) modify or alter the provisions of this Indenture regarding the voting of Notes held by the Issuer, the Seller or an Affiliate of
the foregoing;
(vi) reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required to direct the Indenture Trustee to sell or liquidate the Trust Estate pursuant to Section 10.4 if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on the outstanding Notes;
(vii) modify any provision of this Section 13.2, except to increase any percentage specified herein or to provide that certain
additional provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note
affected thereby;
89
4143-0949-1521
(viii) modify any of the provisions of this Indenture in such manner as to affect in any material respect the calculation of the
amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual
components of such calculation), to alter the application of payments or to affect the rights of the Holders of Notes to the benefit of any
provisions for the mandatory redemption of the Notes contained in this Indenture; or
(ix) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the
Trust Estate for the Notes (except for Permitted Encumbrances) or, except as otherwise permitted or contemplated in this Indenture,
terminate the Lien of this Indenture on any such collateral at any time subject hereto or deprive any Secured Party of the security
provided by the Lien of this Indenture.
The Indenture Trustee may, but shall not be obligated to, enter into any such amendment or supplement that affects the
Indenture Trustee’s rights, duties or immunities under this Indenture or otherwise.
It shall not be necessary for any consent of Noteholders or Certificateholders under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Additionally, with respect to
a Book-Entry Note, such consent may be provided directly by the Note Owner or indirectly through a Clearing Agency.
The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Note shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture or amendment to this
Indenture pursuant to this Section, the Indenture Trustee shall mail to each Holder of the Securities a copy of such supplemental indenture or
amendment. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture or amendment.
Section 13.3. Execution of Supplemental Indentures. In executing any amendment or supplemental indenture permitted by this
Article 13 or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to
Section 11.1, shall be fully protected in relying upon, an Officer’s Certificate of the Issuer and an Opinion of Counsel stating that the execution
of such amendment or supplemental indenture is authorized, permitted or not prohibited (as the case may be) by this Indenture and all
conditions precedent to the execution of such amendment or supplemental indenture have been satisfied. Such Opinion of Counsel may be
subject to reasonable qualifications and assumptions of fact. The Indenture Trustee may, but shall not be obligated to, enter into any such
amendment or supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or
otherwise. No amendment or supplemental indenture may adversely affect the rights, duties, immunities, protections or indemnification rights
of any Agent, the Depositary Bank or the Securities Intermediary without its consent.
Section 13.4. Effect of Supplemental Indenture. Upon the execution of any amendment or supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Securities
affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the
90
4143-0949-1521
Holders of the Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such amendment or supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
Section 13.5. [Reserved].
Section 13.6. [Reserved].
Section 13.7. [Reserved].
Section 13.8. Revocation and Effect of Consents. Until an amendment, supplemental indenture or waiver becomes effective, a
consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Note that
evidences the same debt or other amount payable as the consenting Holder’s Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent as to such Holder’s Security or portion of a Security if the
Indenture Trustee receives written notice of revocation before the date the amendment, supplemental indenture or waiver becomes effective.
An amendment, supplemental indenture or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Issuer
may fix a record date for determining which Holders must consent to such amendment, supplemental indenture or waiver.
Section 13.9. Notation on or Exchange of Securities Following Amendment. The Indenture Trustee may place an appropriate
notation about an amendment, supplemental indenture or waiver on any Security thereafter authenticated. If the Issuer shall so determine, new
Securities so modified as to conform to any such amendment, supplemental indenture or waiver may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee (upon receipt of an Issuer Order) in exchange for outstanding Securities. Failure to
make the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplemental indenture or
waiver.
Section 13.10. The Indenture Trustee to Sign Amendments, etc. The Indenture Trustee shall sign any amendment or supplemental
indenture authorized pursuant to this Article 13 if the amendment or supplemental indenture does not adversely affect in any material respect
the rights, duties, liabilities or immunities of the Indenture Trustee. If any amendment or supplemental indenture does have such a materially
adverse effect, the Indenture Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Indenture Trustee
shall be entitled to receive, if requested, an indemnity reasonably satisfactory to it and to receive and, subject to Section 11.1, shall be fully
protected in relying upon, an Officer’s Certificate of the Issuer and an Opinion of Counsel as conclusive evidence that such amendment or
supplemental indenture is authorized, permitted or not prohibited (as the case may be) by this Indenture and that it will be valid and binding
upon the Issuer in accordance with its terms and all conditions precedent to the execution of such amendment or supplemental indenture have
been satisfied.
ARTICLE 14.
REDEMPTION AND REFINANCING OF NOTES
Section 14.1. Redemption and Refinancing.
(a) The Notes are subject to redemption by the Issuer, at its option, in accordance with the terms of this Article 14, in full or in
part, on any Payment Date; provided
91
4143-0949-1521
that the Issuer has available funds sufficient to pay the Redemption Price. If the Notes are to be redeemed pursuant to this Section 14.1, the
Issuer shall furnish notice of such election to the Indenture Trustee and the Noteholders not later than fifteen (15) days prior to the Redemption
Date and the Issuer shall deposit with the Indenture Trustee in a Trust Account that is within the sole control of the Indenture Trustee no later
than 10:00 a.m. New York time on the Redemption Date the Redemption Price of the Notes to be redeemed (or portion thereof) whereupon all
such redeemed Notes shall be due and payable on the Redemption Date upon the furnishing of a notice complying with Section 14.2 to each
Holder of such Notes.
(b) The redemption price for the Notes will be equal to the sum of (i) the Note Principal amount being redeemed (determined
without giving effect to any Notes owned by the Issuer), plus (ii) accrued and unpaid interest on such Notes through the day preceding the
Payment Date on which the redemption occurs, plus (iii) any other amounts payable to such Noteholders pursuant to the Transaction
Documents, plus (iv) any other amounts due and owing by the Issuer to the other Secured Parties pursuant to the Transaction Documents,
minus (v) the amounts, if any, on deposit on such Payment Date in the Payment Account for the payment of the foregoing amounts.
(c) Unless otherwise consented to by the Holders of 100% of the Certificates outstanding, concurrent with any redemption of
any Notes by the Issuer, the Issuer shall make a distribution on the Certificates in accordance with this Article 14 in an amount equal to the
sum of (i) the amount distributable on the Certificates on the Payment Date on which the redemption occurs (calculated as though the Notes
were not redeemed on such Payment Date), plus (ii) any other amounts due and owing to the Holders of the outstanding Certificates pursuant
to the Transaction Documents, in each case, without duplication and net of any amounts payable in connection with the redemption of the
Notes.
Section 14.2. Form of Redemption Notice. Subject to Section 2.17, notice of redemption under Section 14.1 shall be given by the
Indenture Trustee by facsimile or by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to each
Holder of Notes to be redeemed, as of the close of business on the Record Date preceding the applicable Redemption Date, at such Holder’s
address appearing in the Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Issuer’s good faith estimate of the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as provided in Section 8.2); and
(iv) that interest on the Notes shall cease to accrue on the Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. For the
avoidance of doubt, the Issuer shall provide the Indenture Trustee with the actual Redemption Price prior to the applicable Redemption Date.
Failure to give notice of redemption, or any defect therein, to any Holder of any Note to be redeemed shall not impair or affect the validity of
the redemption of any other Note.
92
4143-0949-1521
Section 14.3. Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by
Section 14.2, on the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the payment of
the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
ARTICLE 15.
MISCELLANEOUS
Section 15.1. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee if requested thereby (i) an Officer’s Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been complied with, and (ii) an Opinion of Counsel (subject to
reasonable assumptions and qualifications) stating that in the opinion of such counsel all such conditions precedent, if any, have been complied
with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied
with; and
(iv) a statement as to whether, in the opinion of each such signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of the Underlying Securities or other property or securities (other than cash) with the Indenture
Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition
to any obligation imposed in Section 15.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee upon the Indenture Trustee’s
request an Officer’s Certificate certifying or stating the opinion of each individual signing such certificate as to the fair value (within ninety
(90) days of such deposit) to the Issuer of the Underlying Securities or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer
93
4143-0949-1521
of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the
commencement of the then-current Fiscal Year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the aggregate outstanding principal amount or par value of all the Securities issued by the Issuer, but such
a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the
related Officer’s Certificate is less than $25,000 or less than 1% percent of the aggregate outstanding principal amount or par value of
all the Securities issued by the Issuer of the Securities.
(iii) Other than with respect to the release of any cash (including Underlying Payments), and except for discharges of this
Indenture as described in Section 12.1, whenever any property or securities are to be released from the Lien of this Indenture, the Issuer
shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each individual signing such
certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating
that in the opinion of such individual the proposed release will not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the property or securities and of all other property other than cash
(including Underlying Payments) or securities released from the Lien of this Indenture since the commencement of the then current
calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10% or more of the aggregate
outstanding principal amount or par value of all Securities issued by the Issuer, but such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than $25,000 or less
than 1% percent of the then aggregate outstanding principal amount or par value of all Securities issued by the Issuer of the Securities.
Section 15.2. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters
in one or several documents.
Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any
such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller, the Administrator or the Issuer, stating that the information with respect to
such factual matters is in the possession of or known to the Seller, the Administrator or the Issuer, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
94
4143-0949-1521
opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements,
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any
term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate
or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to
affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided
in Article 10.
Section 15.3. Acts of Noteholders and Certificateholders.
(a) Wherever in this Indenture a provision is made that an action may be taken or a notice, demand or instruction given by
Noteholders or Certificateholders, such action, notice or instruction may be taken or given by any Noteholder or Certificateholder, unless such
provision requires a specific percentage of Noteholders or Certificateholders. Notwithstanding anything in this Indenture to the contrary, so
long as any other Person is a Noteholder or Certificateholder, none of the Seller, the Issuer or any Affiliate controlled by Oportun or controlling
Oportun shall have any right to vote with respect to any Security.
(b) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders or Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders or Certificateholders in person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where
it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Noteholders or Certificateholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to
Section 11.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section.
manner of the Indenture Trustee.
(c) The fact and date of the execution by any Person of any such instrument or writing may be proved in any customary
(d) The ownership of Securities shall be proved by the Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any such Securities
shall bind such Noteholder or Certificateholder and the Holder of every Security and every subsequent Holder of such Securities issued upon
the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Security.
Section 15.4. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at, sent by facsimile to, sent by courier (overnight or hand-delivered) at or mailed by certified mail, return
receipt requested, to (a) in the case of the Issuer, to 2 Circle Star Way, Room 322, San Carlos,
95
4143-0949-1521
California 94070, Attention: Secretary, and (b) in the case of the Indenture Trustee, to the Corporate Trust Office. Unless expressly provided
herein, any notice required or permitted to be mailed to a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder or Certificateholder as shown in the Register. Any notice so mailed within the time prescribed in this Indenture
shall be conclusively presumed to have been duly given, whether or not the Noteholder or Certificateholder receives such notice.
The Issuer or the Indenture Trustee by notice to the other may designate additional or different addresses for subsequent notices
or communications; provided, however, the Issuer may not at any time designate more than a total of three (3) addresses to which notices must
be sent in order to be effective.
Any notice (i) given in person shall be deemed delivered on the date of delivery of such notice, (ii) given by first class mail shall
be deemed given five (5) days after the date that such notice is mailed, (iii) delivered by telex or telecopier shall be deemed given on the date
of confirmation of the delivery of such notice by e-mail or telephone, and (iv) delivered by overnight air courier shall be deemed delivered one
(1) Business Day after the date that such notice is delivered to such overnight courier.
arising from the failure to receive any notice required by or relating to this Indenture or the Securities.
Notwithstanding any provisions of this Indenture to the contrary, the Indenture Trustee shall have no liability based upon or
the same time.
If the Issuer mails a notice or communication to Noteholders or Certificateholder, it shall mail a copy to the Indenture Trustee at
Section 15.5. Notices to Noteholders and Certificateholders; Waiver. Where this Indenture provides for notice to Noteholders or
Certificateholders of any event, such notice shall be sufficiently given if sent in accordance with Section 15.4 hereof. In any case where notice
to Noteholders or Certificateholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder or Certificateholder shall affect the sufficiency of such notice with respect to other Noteholders or Certificateholders, and
any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders or
Certificateholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken
in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders or Certificateholders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
Section 15.6. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Securities to
the contrary, the Indenture Trustee on behalf of the Issuer may enter into any agreement with any Holder of a Security providing for a method
of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are consented to by the Issuer (which consent shall not be
96
4143-0949-1521
unreasonably withheld). The Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements.
Section 15.7. [Reserved].
Section 15.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents and
Cross-Reference Table are for convenience of reference only, are not to be considered a part hereof, and shall not affect the meaning or
construction hereof.
Section 15.9. Successors and Assigns. All covenants and agreements in this Indenture and the Securities by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.
Section 15.10. Separability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Indenture or
Securities shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Indenture and shall in no way affect the validity or enforceability of the
other provisions of this Indenture or of the Securities or rights of the Holders thereof.
Section 15.11. Benefits of Indenture. Except as set forth in this Indenture, nothing in this Indenture or in the Securities, expressed
or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Secured Parties, any benefit or any
legal or equitable right, remedy or claim under the Indenture.
Section 15.12. Legal Holidays. In any case where the date on which any payment is due to any Secured Party shall not be a
Business Day, then (notwithstanding any other provision of the Securities or this Indenture) any such payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
Section 15.13. GOVERNING LAW; JURISDICTION . THIS INDENTURE AND THE SECURITIES SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS. EACH OF THE PARTIES TO THIS INDENTURE AND EACH SECURED PARTY HEREBY
AGREES TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENT THEREOF.
EACH OF THE PARTIES AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.
Section 15.14. Counterparts; Electronic Execution. This Indenture may be executed in any number of counterparts, and by different
parties on separate counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument. Each of the parties hereto agrees that this transaction may be conducted by electronic means. Each party
agrees, and acknowledges that it is such party’s
97
4143-0949-1521
intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting, and accepting this Indenture and that signing
this Indenture using an electronic signature is the legal equivalent of having placed its handwritten signature on this Indenture on paper. Each
party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format.
Section 15.15. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such
recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture
Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders, the Certificateholders or any other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 15.16. Issuer Obligation. Neither any trustee nor any member of the Issuer nor any of their respective officers, directors,
employers or agents will have any liability with respect to this Indenture, and no recourse may be had solely to the assets of the Issuer respect
thereto. In addition, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the
Securities or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) any assets of the
Issuer other than the Trust Estate, (ii) the Seller, or the Indenture Trustee in their respective individual capacities, or (iii) any partner, owner,
incorporator, member, manager, beneficiary, beneficial owner, agent, officer, director, employee, shareholder or agent of the Issuer, the Seller,
or the Indenture Trustee, except as any such Person may have expressly agreed. Nothing in this Section 15.16 shall be construed to limit the
Indenture Trustee from exercising its rights hereunder with respect to the Trust Estate.
Section 15.17. No Bankruptcy Petition Against the Issuer . Each of the Secured Parties and the Indenture Trustee by entering into
the Indenture or any Note Purchase Agreement, and in the case of a Noteholder, Certificateholder and Note Owner, by accepting a Security,
hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of the latest maturing Security and
the termination of the Indenture, it will not institute against, or join with any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation Proceedings, or other Proceedings, under any United States federal or state bankruptcy
or similar Law in connection with any obligations relating to the Securities, the Indenture or any of the Transaction Documents. In the event
that any such Secured Party or the Indenture Trustee takes action in violation of this Section 15.17, the Issuer shall file an answer with the
bankruptcy court or otherwise properly contesting the filing of such a petition by any such Secured Party or the Indenture Trustee against the
Issuer or the commencement of such action and raising the defense that such Secured Party or the Indenture Trustee has agreed in writing not
to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.
The provisions of this Section 15.17 shall survive the termination of this Indenture, and the resignation or removal of the Indenture Trustee.
Nothing contained herein shall preclude participation by any Secured Party or the Indenture Trustee in the assertion or defense of its claims in
any such Proceeding involving the Issuer.
Section 15.18. No Joint Venture. Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture
between the parties hereto and the services of Oportun shall be rendered as an independent contractor and not as agent for the Indenture Trustee
or the Issuer.
Section 15.19. Rule 144A Information. For so long as any of the Securities are “restricted securities” within the meaning of Rule
144(a)(3) under the Securities Act, the Issuer
98
4143-0949-1521
agrees to reasonably cooperate to provide to any Noteholders or Certificateholders and to any prospective purchaser of Securities designated by
such Noteholder or Certificateholder upon the request of such Noteholder or Certificateholder or prospective purchaser, any information
required to be provided to such holder or prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act if
at the time of the request the Issuer is not a reporting company under Section 13 or Section 15(d) of the Exchange Act and the Administrator
agrees to reasonably cooperate with the Issuer and the Indenture Trustee in connection with the foregoing.
Section 15.20. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Indenture
Trustee or any Secured Party, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by Law.
Section 15.21. Third-Party Beneficiaries. This Indenture will inure to the benefit of and be binding upon the parties hereto, the
Secured Parties, and their respective successors and permitted assigns. Except as otherwise provided in this Article 15, no other Person will
have any right or obligation hereunder.
Section 15.22. Merger and Integration. Except as specifically stated otherwise herein, this Indenture sets forth the entire
understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Indenture.
Section 15.23. Rules by the Indenture Trustee. The Indenture Trustee may make reasonable rules for action by or at a meeting of
any Secured Parties.
Section 15.24. Duplicate Originals. The parties may sign any number of copies of this Indenture. One signed copy is enough to
prove this Indenture.
Section 15.25. Waiver of Trial by Jury . To the extent permitted by applicable Law, each of the Secured Parties irrevocably waives
all right of trial by jury in any action or Proceeding arising out of or in connection with this Indenture or the Transaction Documents or any
matter arising hereunder or thereunder.
Section 15.26. No Impairment. Except for actions expressly authorized by this Indenture, the Indenture Trustee shall take no action
reasonably likely to impair the interests of the Issuer in any asset of the Trust Estate now existing or hereafter created or to impair the value of
any asset of the Trust Estate now existing or hereafter created.
[THIS SPACE LEFT INTENTIONALLY BLANK]
99
4143-0949-1521
IN WITNESS WHEREOF, the Indenture Trustee, the Issuer, the Securities Intermediary and the Depositary Bank have caused
this Indenture to be duly executed by their respective duly authorized officers as of the day and year first written above.
OPORTUN RF, LLC,
as Issuer
By:
Name: Jonathan Coblentz
Title: Treasurer
4143-0949-1521
[Indenture (Oportun RF, LLC)]
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Indenture Trustee
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Securities Intermediary
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Depositary Bank
By:
Name:
Title:
4143-0949-1521
[Indenture (Oportun RF, LLC)]
EXHIBIT A
TO INDENTURE
Form of Release and Reconveyance of Trust Estate
RELEASE AND RECONVEYANCE OF TRUST ESTATE
RELEASE AND RECONVEYANCE OF TRUST ESTATE, dated as of __________, _____, between Oportun RF, LLC (the
“Issuer”) and Wilmington Trust, National Association, a national banking association with trust powers (the “ Indenture Trustee”) pursuant to
the Indenture referred to below.
W I T N E S S E T H :
WHEREAS, the Issuer and the Indenture Trustee are parties to the Indenture dated as of December 20, 2021 (hereinafter as such
agreement may have been, or may from time to time be, amended, supplemented or otherwise modified, the “Indenture”);
WHEREAS, pursuant to the Indenture, upon the termination of the Lien of the Indenture pursuant to Section 12.1 of the
Indenture and after payment of all amounts due under the terms of the Indenture on or prior to such termination, the Indenture Trustee shall at
the request of the Issuer reconvey and release the Lien on the Trust Estate;
WHEREAS, the conditions to termination of the Indenture pursuant to Sections 12.1 and 12.6 have been satisfied;
WHEREAS, the Issuer has requested that the Indenture Trustee terminate the Lien of the Indenture on the Trust Estate pursuant
to Section 12.6; and
WHEREAS, the Indenture Trustee is willing to execute such release and reconveyance subject to the terms and conditions
hereof;
NOW, THEREFORE, the Issuer and the Indenture Trustee hereby agree as follows:
1 . Defined Terms . All terms defined in the Indenture and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
2 . Release and Reconveyance. (a) The Indenture Trustee does hereby release and reconvey to the Issuer, without recourse,
representation or warranty, on and after ____, ____ (the “Reconveyance Date”) all right, title and interest in the Trust Estate whether then
existing or thereafter created, all monies due or to become due with respect thereto and all proceeds of such Trust Estate, except for amounts, if
any, held by the Indenture Trustee or any Paying Agent pursuant to Section 12.5 of the Indenture.
(b) In connection with such transfer, the Indenture Trustee does hereby release the Lien of the Indenture on the Trust Estate
and agrees, upon the reasonable request and at the expense of the Issuer, to authorize the filing of any necessary or reasonably desirable UCC
termination statements in connection therewith.
3. [Reserved]
4. Counterparts; Electronic Execution. This Release and Reconveyance may be executed in two or more counterparts (and by
different parties on separate counterparts), each
A-1
4143-0949-1521
of which shall be an original, but all of which together shall constitute one and the same instrument. Each of the parties hereto agrees that this
transaction may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs
this Release and Reconveyance using an electronic signature, it is signing, adopting, and accepting this Release and Reconveyance and that
signing this Release and Reconveyance using an electronic signature is the legal equivalent of having placed its handwritten signature on this
Release and Reconveyance on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Release and
Reconveyance in a usable format.
5. Governing Law. THIS RELEASE AND RECONVEYANCE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
A-2
4143-0949-1521
IN WITNESS WHEREOF, the undersigned have caused this Release and Reconveyance of Trust Estate to be duly executed and delivered by
their respective duly authorized officers on the day and year first above written.
OPORTUN RF, LLC, as Issuer
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Indenture Trustee
By:
Name:
Title:
A-3
4143-0949-1521
EXHIBIT B
TO INDENTURE
[Reserved]
B-1
4143-0949-1521
EXHIBIT C
TO INDENTURE
FORM OF CLASS A RESTRICTED GLOBAL NOTE
RESTRICTED GLOBAL NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE OFFERED, SOLD,
PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN
COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE
SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT
TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW
THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (II) (A)
ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR
LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN
INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN
CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW
INVESTMENT GRADE.
C-1
4143-0949-1521
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE,
SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH TRANSFEREE OF THIS NOTE,
BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE
INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND CONDITIONS SET FORTH IN
THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
C-2
4143-0949-1521
No. R-[_] $[_]
CUSIP No. 68378L AA2
THE PRINCIPAL OF THIS CLASS A NOTE MAY BE PAYABLE IN INSTALLMENTS AS SET FORTH IN THE INDENTURE
DEFINED HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED NOTES, CLASS A
Oportun RF, LLC, a Delaware limited liability company (herein referred to as the “Issuer”), for value received, hereby promises to
pay Cede & Co., or registered assigns, the principal sum set forth above or such other principal sum set forth on Schedule A attached hereto
(which sum shall not exceed $[_]), payable on each Payment Date as set forth in the Indenture, in an amount equal to the amount available for
distribution under Section 5.15(b)(iv) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or otherwise modified from
time to time, the “Indenture”), between the Issuer and the Indenture Trustee; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the Legal Final Payment Date (as defined in the Indenture). The Issuer will pay interest on this Class A Note
at the Class A Note Rate (as defined in the Indenture) on each Payment Date until the principal of this Class A Note is paid or made available
for payment, which interest will be computed on the basis set forth in the Indenture. Such principal of and interest on this Class A Note shall be
paid in the manner specified on the reverse hereof.
The Class A Notes are subject to optional redemption in accordance with the Indenture by the Issuer on any Payment Date.
The principal of and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Class A Note set forth on the reverse hereof and to the Indenture, which shall have
the same effect as though fully set forth on the face of this Class A Note.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual
signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory
for any purpose.
C-3
4143-0949-1521
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
C-4
4143-0949-1521
This is one of the Class A Notes referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Indenture Trustee
By:_____________________________________
Authorized Signatory
C-5
4143-0949-1521
[REVERSE OF NOTE]
This Class A Note is one of a duly authorized issue of Class A Notes of the Issuer, designated as its Asset Backed Notes, Class A,
(herein called the “Class A Notes ”), all issued under the Indenture dated as of December 20, 2021 (such Indenture, as supplemented or
amended, is herein called the “Indenture”), between the Issuer and Wilmington Trust, National Association, as trustee (the “ Indenture Trustee,”
which term includes any successor Indenture Trustee under the Indenture), as securities intermediary and as depositary bank, to which
Indenture reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and
the Class A Noteholders. The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the
Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
Principal of the Class A Notes will be payable on each Payment Date, and may be prepaid, in each case, as set forth in the Indenture.
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on [__], 202[_].
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the next
succeeding Business Day.
nd
All principal payments on the Class A Notes shall be made pro rata to the Class A Noteholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of interest on this Class A Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in full payment of this Class A Note, shall be made by wire transfer in
immediately available funds to the Person whose name appears as the Class A Noteholder on the Register as of the close of business on the
immediately preceding Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the
principal amount of this Class A Note effected by any payments made on any Payment Date or date of prepayment shall be binding upon all
future Class A Noteholders and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted on Schedule A attached hereto. If funds are expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Class A Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record Date immediately preceding such Payment Date prior to such
Payment Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the
Indenture Trustee’s principal Corporate Trust Office.
On any redemption, purchase, exchange or cancellation of any of the beneficial interests represented by this Restricted Global Note,
details of such redemption, purchase, exchange or cancellation shall be entered by the Paying Agent in Schedule A hereto recording any such
redemption, purchase, exchange or cancellation and shall be signed by or on behalf of the Issuer. Upon any such redemption, purchase,
exchange or cancellation, the principal amount of this Restricted Global Note and the beneficial interests represented by the Restricted Global
Note shall be reduced or increased, as appropriate, by the principal amount so redeemed, purchased, exchanged or cancelled.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Class A Noteholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security of the
Issuer and the termination of the Indenture institute against the Issuer or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any United States federal or state bankruptcy or
similar
C-6
4143-0949-1521
Law in connection with any obligations relating to the Securities, the Indenture or the Transaction Documents.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Noteholder will treat such Note as debt for all federal, state and local income and franchise tax purposes.
Prior to the due presentment for registration of transfer of this Class A Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Class A Note (as of the date of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and
neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the
Indenture Trustee on the Securities or under the Indenture, including this Class A Note, against (i) any assets of the Issuer other than the Trust
Estate, (ii) the Seller or the Indenture Trustee in their respective individual capacities, or (iii) any partner, owner, incorporator, beneficiary,
beneficial owner, agent, officer, director, employee, shareholder or agent of the Issuer the Seller or the Indenture Trustee except as any such
Person may have expressly agreed.
The term “Issuer” as used in this Class A Note includes any successor to the Issuer under the Indenture.
The Class A Notes are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture,
subject to certain limitations therein set forth.
This Class A Note and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and interest on this Class A Note.
C-7
4143-0949-1521
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
_____________________________________
the within Class A Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Class A Note on the books kept for registration thereof, with full power of substitution in the premises.
(name and address of assignee)
Dated: _______________
Signature Guaranteed:
1
1
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without
alteration, enlargement or any change whatsoever.
——————————
C-8
4143-0949-1521
SCHEDULE A
SCHEDULE OF REDEMPTIONS
OR PURCHASES AND CANCELLATIONS
The following increases or decreases in principal amount of this Restricted Global Note or redemptions, purchases or cancellation of this
Restricted Global Note have been made:
Date of redemption or purchase
or cancellation
Increase or decrease in principal amount of this
Restricted Global Note due to redemption or
purchase or cancellation of this Restricted Global
Note
Remaining principal amount of this
Restricted Global Note following such
redemption or purchase or cancellation
Notation made by or on behalf of
the Issuer
__________
__________
__________
________________
________________
________________
_____________
_____________
_____________
_____________
_____________
_____________
C-9
4143-0949-1521
EXHIBIT D
FORM OF MONTHLY REPORT
(attached)
D-1
4143-0949-1521
EXHIBIT E
TO INDENTURE
FORM OF CERTIFICATE
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY
DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE MAY
BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS
OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION
4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE FOREGOING,
A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS
SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS CERTIFICATE. EACH TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE
ACCEPTED THIS CERTIFICATE, SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH
TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND
AGREEMENTS SET FORTH IN THE INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO THE TERMS AND CONDITIONS SET
FORTH IN THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS CERTIFICATE IS HEREBY NOTIFIED THAT THE SELLER OF THIS CERTIFICATE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
E-1
4143-0949-1521
No. R144A-[_] Percentage of this Certificate: [_]%
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED CERTIFICATE
Oportun RF, LLC, a limited liability company organized and existing under the laws of the State of Delaware (herein referred to as
the “Issuer”), for value received, hereby promises to pay Cede & Co., or registered assigns, on each Payment Date, an amount equal to 100% of
the amount available for distribution under Section 5.15(b)(vii) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or
otherwise modified from time to time, the “Indenture”), between the Issuer and the Indenture Trustee. This Certificate will not accrue interest
and will represent 100% of the aggregate amount of Certificates issued under the Indenture. Payments with respect to this Certificate will be
made in the manner specified on the reverse hereof.
The Certificates may be subject to redemption in connection with the optional redemption of the Notes in accordance with the
Indenture.
The payments with respect to this Certificate are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Certificate set forth on the reverse hereof and to the Indenture, which shall have the
same effect as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.
E-2
4143-0949-1521
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
Attested to:
By:
Authorized Officer
E-3
4143-0949-1521
This is one of the Certificates referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Indenture Trustee
By:_____________________________________
Authorized Officer
E-4
4143-0949-1521
[REVERSE OF CERTIFICATE]
This Certificate is one of a duly authorized issue of Certificates of the Issuer, designated as its Asset Backed Certificates (herein called
the “Certificates”), all issued under the Indenture, dated as of December 20, 2021 (the “Indenture”), between the Issuer and Wilmington Trust,
National Association, as indenture trustee (the “Indenture Trustee,” which term includes any successor Trustee under the Indenture), as
securities intermediary and as depositary bank, to which Indenture reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Certificateholders. The Certificates are subject to all terms of the Indenture.
All terms used in this Certificate that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
“Payment Date” means the second (2nd) Business Day immediately following each Underlying Payment Date, commencing on January
12, 2022.
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the
next succeeding Business Day.
All payments with respect to the Certificates shall be made pro rata to the Certificateholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of amounts with respect to the Certificates shall be made by wire
transfer in immediately available funds to the Person whose name appears as the Certificateholder on the Register as of the close of business
on the immediately preceding Record Date without requiring that this Certificate to be submitted for notation of payment.
Each Certificateholder, by acceptance of a Certificate, covenants and agrees that by accepting the benefits of the Indenture that such
Certificateholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security institute against
the Issuer or join in any institution against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States federal or state bankruptcy or similar Law in connection with any obligations relating to the
Securities, the Indenture or the Transaction Documents.
Prior to the due presentment for registration of transfer of this Certificate, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Certificate (as of the date of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not this Certificate be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the
Indenture, including this Certificate, against any Seller, the Servicer, the Trustee or any partner, owner, incorporator, beneficiary, beneficial
owner, agent, officer, director, employee, shareholder or agent of the Issuer, any Seller, the Servicer or the Trustee except as any such Person
may have expressly agreed.
The term “Issuer” as used in this Certificate includes any successor to the Issuer under the Indenture.
The Certificates are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture, subject
to certain limitations therein set forth.
E-5
4143-0949-1521
This Certificate and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Certificate or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay amounts payable under Section 5.15(b)(vii) of the Indenture.
E-6
4143-0949-1521
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
_____________________________________
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
(name and address of assignee)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated: _______________
Signature Guaranteed:
2
——————————
2
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever.
E-7
4143-0949-1521
Schedule 1
AMORTIZATION SCHEDULE
Scheduled Note
Principal Amount
$101,238,000
$94,101,000
$85,679,000
$75,484,000
$70,608,000
$61,198,000
$57,656,000
$54,114,000
$50,577,000
$47,122,000
$43,697,000
$40,294,000
$36,878,000
$33,483,000
$29,997,000
$26,560,000
$23,093,000
$19,559,000
$16,065,000
$6,272,000
$0
Minimum Principal
Payment Amount
n/a
$7,137,000
$8,422,000
$10,195,000
$4,876,000
$9,410,000
$3,542,000
$3,542,000
$3,537,000
$3,455,000
$3,425,000
$3,403,000
$3,416,000
$3,395,000
$3,486,000
$3,437,000
$3,467,000
$3,534,000
$3,494,000
$9,793,000
$6,272,000
Date / Payment Date
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Schedule 1-1
4143-0949-1521
Schedule 2
CUSTODY ACCOUNT ALLOCATIONS
Underlying Securities
2019-A Certificates
2021-A Certificates
2021-B Certificates
2021-C Certificates
2022-A Certificates
2022-2 Certificates
Percentage Interest Maintained in
First Priority Custody Account
84.00%
82.00%
83.50%
83.00%
77.00%
46.50%
Percentage Interest Maintained in
Second Priority Custody Account
16.00%
18.00%
16.50%
17.00%
23.00%
53.50%
Schedule 2-1
4143-0949-1521
Schedule 3
PERFECTION REPRESENTATIONS, WARRANTIES
AND COVENANTS
With respect to such of the Trust Estate as constitutes securities entitlements:
(1) This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Trust Estate in favor of the
Indenture Trustee, which security interest is prior to all other security interests, and is enforceable as such against creditors of and purchasers
from the Issuer.
(2) All of the Trust Estate has been and will have been credited to a securities account. The securities intermediary for each securities
account has agreed to treat all assets credited to such securities account as “financial assets” within the meaning of the UCC.
(3) The Issuer owns and has good and marketable title to the Trust Estate free and clear of any security interest, claim, or encumbrance
of any Person.
(4) The Issuer has received all consents and approvals required by the terms of the Trust Estate to the transfer to the Indenture Trustee
of its interest and rights in the Trust Estate hereunder.
(5) The Issuer has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted in the Trust Estate to the Indenture
Trustee hereunder.
(6) Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the Trust Estate. The Issuer has not authorized the filing of and is not aware of
any financing statements against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement
relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment
or tax lien filings against the Issuer.
Schedule 3-1
4143-0949-1521
Schedule 4
LIST OF PROCEEDINGS
[None]
Schedule 4-1
4143-0949-1521
Schedule 5
2022-2 ADDITIONAL PRINCIPAL PAYMENT SCHEDULE
2022-2 Cumulative Default Ratio
1.90%
2.00%
2.50%
3.00%
4.00%
6.40%
8.80%
10.40%
12.00%
13.20%
14.40%
15.20%
16.00%
16.40%
16.80%
17.20%
17.60%
18.00%
18.40%
18.80%
18.80%
18.80%
18.80%
2022-2 Additional Principal Payment Amount
$13,668,000
$13,668,000
$13,668,000
$13,313,000
$12,115,000
$11,119,000
$10,248,000
$9,430,000
$8,646,000
$7,975,000
$7,363,000
$6,803,000
$6,260,000
$5,759,000
$5,208,000
$4,740,000
$4,272,000
$3,771,000
$3,317,000
$2,883,000
$2,407,000
$1,795,000
$1,214,000
2022-2 Payment Date
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
4147-1030-9697.5
Execution Copy
OPORTUN RF, LLC
FOURTH AMENDMENT TO INDENTURE
This FOURTH AMENDMENT TO INDENTURE, dated as of December 22, 2022 (this “Amendment”), is entered into among
OPORTUN RF, LLC, a special purpose Delaware limited liability company, as issuer (the “ Issuer”), and WILMINGTON TRUST,
NATIONAL ASSOCIATION, a national banking association with trust powers, as indenture trustee (in such capacity, the “ Indenture
Trustee”), as securities intermediary (in such capacity, the “Securities Intermediary”) and as depositary bank (in such capacity, the “Depositary
Bank”).
RECITALS
that certain Indenture, dated as of December 20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Indenture”);
WHEREAS, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have previously entered into
WHEREAS, in accordance with Section 13.2 of the Base Indenture, the Issuer desires to amend the Indenture as provided
herein; and
herein;
WHEREAS, as evidenced by their signature hereto, the Required Noteholders have consented to the amendments provided for
the receipt and adequacy of which are hereby acknowledged, each party hereto agrees as follows:
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration,
ARTICLE I
DEFINITIONS
SECTION 1.01
Defined Terms Not Defined Herein . All capitalized terms used herein that are not defined herein shall have the
meanings assigned to them in, or by reference in, the Indenture.
ARTICLE II
AMENDMENTS TO THE INDENTURE
SECTION 2.01 Amendments. The Indenture is hereby amended to incorporate the changes reflected on the marked pages of the
Indenture attached hereto as Schedule I, with a conformed copy of the amended Indenture attached hereto as Schedule II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties. The Issuer hereby represents and warrants to the Indenture Trustee, the Securities
Intermediary, the Depositary Bank and each of the other Secured Parties that:
4145-2172-4227.4
(i)Representations and Warranties. Both before and immediately after giving effect to this Amendment, the representations and warranties
made by the Issuer in the Indenture and each of the other Transaction Documents to which it is a party are true and correct as of the date hereof
(unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).
(ii)Enforceability. This Amendment and the Indenture, as amended hereby, constitute the legal, valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally and by general principles of equity.
(iii)No Defaults. No Rapid Amortization Event, Event of Default, Servicer Default or Default has occurred and is continuing.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Ratification of Indenture. As amended by this Amendment, the Indenture is in all respects ratified and confirmed
and the Indenture, as amended by this Amendment, shall be read, taken and construed as one and the same instrument.
SECTION 4.02. Counterparts. This Amendment may be executed in any number of counterparts, and by different parties in separate
counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the
same instrument. Each of the parties hereto agrees that the transaction consisting of this Amendment may be conducted by electronic means.
Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Amendment using an electronic signature, it is
signing, adopting, and accepting this Amendment and that signing this Amendment using an electronic signature is the legal equivalent of
having placed its handwritten signature on this Amendment on paper. Each party acknowledges that it is being provided with an electronic or
paper copy of this Amendment in a usable format.
SECTION 4.03. Recitals. The recitals contained in this Amendment shall be taken as the statements of the Issuer, and none of the
Indenture Trustee, the Securities Intermediary or the Depositary Bank assumes any responsibility for their correctness. None of the Indenture
Trustee, the Securities Intermediary or the Depositary Bank makes any representations as to the validity or sufficiency of this Amendment.
SECTION 4.04. Rights of the Indenture Trustee, the Securities Intermediary and the Depositary Bank . The rights, privileges and
immunities afforded to the Indenture Trustee, the Securities Intermediary and the Depositary Bank under the Indenture shall apply hereunder
as if fully set forth herein.
SECTION 4.05. GOVERNING LAW; JURISDICTION . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES HERETO AND
EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION
TO VENUE OF ANY ACTION
4145-2172-4227.4
2
INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 4.06 .Effectiveness. This Amendment shall become effective as of the date hereof upon:
(i)receipt by the Indenture Trustee of an Issuer Order directing it to execute and deliver this Amendment;
(ii)receipt by the Indenture Trustee of an Officer’s Certificate of the Issuer stating that the execution of this Amendment is authorized and
permitted by the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(iii)receipt by the Indenture Trustee of an Opinion of Counsel stating that the execution of this Amendment is authorized and permitted
under the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(iv)receipt by the Indenture Trustee of evidence of the consent of the Required Noteholders to this Amendment;
(v)receipt by the Indenture Trustee of counterparts of this Amendment, duly executed by each of the parties hereto; and
(vi)receipt by the Indenture Trustee of such other instruments, documents, agreements and opinions reasonably requested by the Indenture
Trustee prior to the date hereof.
4145-2172-4227.4
(Signature page follows)
3
IN WITNESS WHEREOF, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have caused
this Amendment to be duly executed by their respective officers as of the day and year first above written.
OPORTUN RF, LLC,
as Issuer
By: /s/ Jonathan Coblentz
Name: Jonathan Coblentz
Title: Treasurer
4145-2172-4227.4
Fourth Amendment to Indenture
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By: /s/ Patrick A. Kanar
Name: Patrick A. Kanar
Title: Assistant Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities Intermediary
By: /s/ Patrick A. Kanar
Name: Patrick A. Kanar
Title: Assistant Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Depositary Bank
By: /s/ Patrick A. Kanar
Name: Patrick A. Kanar
Title: Assistant Vice President
4145-2172-4227.4
Fourth Amendment to Indenture
Consented to by the Required Noteholders:
JEFFERIES FUNDING LLC,
as Holder of 100% of the outstanding Notes
By: /s/ Mark Sahler
Name: Mark Sahler
Title: Managing Director
4145-2172-4227.4
Fourth Amendment to Indenture
SCHEDULE I
4145-2172-4227.4
Amendments to Indenture
Fourth Amendment to Indenture
CONFORMED COPY As amended by the Fourth Amendment to Indenture, dated as of December 22, 2022
4145-2172-4227.4
Fourth Amendment to Indenture
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4145-2172-4227.4
Fourth Amendment to Indenture
TABLE OF CONTENTS (continued)
Exhibits and Schedules:
Exhibit A: Form of Release and Reconveyance of Trust Estate
Exhibit B: [Reserved]
Exhibit C: Form of Class A Restricted Global Note
Exhibit D: Form of Monthly Report
Exhibit E: Form of Certificate
Schedule 1 Amortization Schedule
Schedule 2 Custody Account Allocations
Schedule 3 Perfection Representations, Warranties and Covenants
Schedule 4 List of Proceedings
Schedule 5 2022 2 Additional Principal Payment Amounts
4145-2172-4227.4
Fourth Amendment to Indenture
“2021-C Indenture” means the Indenture, dated as of October 28, 2021, between the 2021-C Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2021-C Issuer” means Oportun Issuance Trust 2021-C, a Delaware statutory trust. “2021-C Transaction Documents” means the
“Transaction Documents” as defined in the 2021-C Indenture.
“2021-C Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-C Issuer, dated as of October 28,
2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“2022-A Certificates” means the trust certificates issued by the 2022-A Issuer pursuant to the 2022-A Trust Agreement, representing
the beneficial interest in the 2022-A Issuer and assigned CUSIP Number 68378N AE0.
“2022-A Class D Notes ” means the Class D notes issued by the 2022-A Issuer pursuant to the 2022-A Indenture and assigned CUSIP
Number 68378N AD2.
“2022-A Indenture” means the Indenture, dated as of May 23, 2022, between the 2022-A Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-A Issuer” means Oportun Issuance Trust 2022-A, a Delaware statutory trust.
“2022-A Purchase Agreement ” means the Security Purchase Agreement (2022-A), dated as of the 2022-A Purchase Date, among the
Seller and the Issuer, relating to the purchase by the Issuer of the 2022-A Class D Notes and the 2022-A Certificates, as such agreement may
be amended, supplemented or otherwise modified and in effect from time to time.
“2022-A Purchase Date” means May 24, 2022.
“2022-A Transaction Documents” means the “Transaction Documents” as defined in the
2022-A Indenture.
“2022-A Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2022-A Issuer, dated as of May 23,
2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“2022-2 Additional Principal Payment Amount” means, (i) for any Payment Date on or after the occurrence of a 2022-2 Cumulative Default
Ratio Trigger Event, the “2022-2 Additional Principal Payment Amount” specified therefor on Schedule 5 hereto, and (ii) otherwise, zero.
4145-2172-4227.4
Fourth Amendment to Indenture
“2022-2 Certificates” means the trust certificates issued by the 2022-2 Issuer pursuant to the 2022-2 Trust Agreement, representing the
beneficial interest in the 2022-2 Issuer and assigned CUSIP Number 68377H 104.
“2022-2 Cumulative Default Ratio” means “Cumulative Default Ratio” as defined in the 2022-2 Indenture.
“2022-2 Cumulative Default Ratio Trigger Event” shall have occurred on any Payment Date if the 2022-2 Cumulative Default Ratio for the
immediately preceding 2022-2 Payment Date exceeds the percentage set forth opposite such 2022-2 Payment Date on Schedule 5 hereto.
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National Association, as
indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust. “2022-2 Payment Date” means “Payment Date” as
defined in the 2022-2 Indenture.
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among the
Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the 2022-2 Indenture
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22, 2022,
among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the February 2023 Payment Date, 0%,
and (II) for any Payment Date on or after the March 2023 Payment Date, (a) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such Payment Date is
greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for such Payment Date
is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 15.0%, 100.0%.
4145-2172-4227.4
Fourth Amendment to Indenture
any Class A Deficiency Amount for such Payment Date and (C) any Class A Additional Interest for such Payment Date;
(4)
fourth, to the Class A Noteholders, on a pari passu a n d pro rata basis, (A) prior to the occurrence of a Rapid
Amortization Event, an amount equal to the sum of (I) the greater of the Scheduled Principal Payment Amount for such Payment Date
and the Minimum Principal Payment Amount for such Payment Date, and (II) following the occurrence of a 2022 2 Cumulative
Default Ratio Trigger Event, the 2022 2 A dditional Principal Payment Amount for such Payment Date and (III) following the
application under clausesclause (I) and (II), the product of all remaining Available Funds multiplied by the Additional Principal
Payment Percentage for such Payment Date, until the outstanding principal amount of the Class A Notes has been reduced to zero; and
(B) following the occurrence of a Rapid Amortization Event, all remaining Available Funds until the outstanding principal amount of
the Class A Notes has been reduced to zero;
(5)
fifth, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis,
any unreimbursed fees, expenses and indemnity amounts payable thereto (including due to the limitations set forth in the definition of
Trustee Fees and Expenses);
(6)
sixth, to the Class A Noteholders, on a pari passu and pro rata basis any other amounts (excluding the Note Principal
Amount) payable thereto on such Payment Date pursuant to the Transaction Documents; and
(7)
seventh, the balance, if any, shall be distributed to the Certificateholders.
Section 5.16. Failure to Make a Deposit or Payment. The Indenture Trustee shall not have any liability for any failure or delay in
making the payments or deposits described herein resulting from a failure or delay by the Issuer or the Administrator to make, or give
instructions to make, such payment or deposit in accordance with the terms herein. If the Issuer or the Administrator fails to make, or give
instructions to make, any payment, deposit or withdrawal required to be made or given by the Issuer or the Administrator at the time specified
in this Indenture (including applicable grace periods), the Indenture Trustee shall make such payment, deposit or withdrawal from the
applicable Trust Account without instruction from the Issuer or the Administrator. The Indenture Trustee shall be required to make any such
payment, deposit or withdrawal hereunder only to the extent that the Indenture Trustee has sufficient information to allow it to determine the
amount thereof. the Issuer or the Administrator shall, upon reasonable request of the Indenture Trustee, promptly provide the Indenture Trustee
with all information necessary and in its possession to allow the Indenture Trustee to make such payment, deposit or withdrawal. Such funds or
the proceeds of such withdrawal shall be applied by the Indenture Trustee in the manner in which such payment or deposit should have been
made (or instructed to be made) by the Issuer or the Administrator.
4145-2172-4227.4
ARTICLE 6.
DISTRIBUTIONS AND REPORTS
Fourth Amendment to Indenture
Date / Payment Date
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
JunMay-24
Scheduled Note
Principal Amount
$101,238,000
$94,101,000
$85,679,000
$75,484,000
$70,608,00068,330,000
$61,198,00056,642,000
$57,656,00050,822,000
$54,114,00045,002,000
$50,577,00039,187,000
$47,122,00033,454,000
$43,697,00030,029,000
$40,294,00026,626,000
$36,878,00023,210,000
$33,483,00019,815,000
$29,997,00016,329,000
$26,560,00012,892,000
$23,093,0009,425,000
$19,559,0005,891,000
$16,065,0002,397,000
$6,272,000
$0
4145-2172-4227.4
Fourth Amendment to Indenture
Minimum Principal
Payment Amount
n/a
$7,137,000
$8,422,0000
$10,195,000
$4,876,0007,154,000
$9,410,00011,688,000
$3,542,0005,820,000
$3,542,0005,820,000
$3,537,0005,815,000
$3,455,0005,733,000
$3,425,000
$3,403,000
$3,416,000
$3,395,000
$3,486,000
$3,437,000
$3,467,000
$3,534,000
$3,494,000
$9,793,000
$6,272,0002,397,000
SCHEDULE II
Conformed Copy of Amended Indenture
4147-9029-0755.4
CONFORMED COPY
As amended by the
Fourth Amendment to Indenture,
dated as of December 22, 2022
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4147-9029-0755.4
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions
Section 1.2. [Reserved]
Section 1.3. Cross-References
Section 1.4. Accounting and Financial Determinations; No Duplication
Section 1.5. Rules of Construction
Section 1.6. Other Definitional Provisions.
ARTICLE 2. THE SECURITIES
Section 2.1. Designation and Terms of Securities
Section 2.2. [Reserved]
Section 2.3. [Reserved].
Section 2.4. Execution and Authentication.
Section 2.5. Authenticating Agent.
Section 2.6. Registration of Transfer and Exchange of Securities.
Section 2.7. Appointment of Paying Agent
Section 2.8. Paying Agent to Hold Money in Trust.
Section 2.9. Private Placement Legend
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities.
Section 2.11. Temporary Notes.
Section 2.12. Persons Deemed Owners
Section 2.13. Cancellation
Section 2.14. Release of Trust Estate
Section 2.15. Payment of Principal, Interest and Other Amounts.
Section 2.16. Book-Entry Notes.
Section 2.17. Notices to Clearing Agency
Section 2.18. Definitive Notes.
Section 2.19. Global Note
Section 2.20. Tax Treatment
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and Registrar
ARTICLE 3. ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
Section 3.1. Issuance.
Section 3.2. Certain Fees and Expenses.
ARTICLE 4. NOTEHOLDER LISTS AND REPORTS
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders
Section 4.2. Preservation of Information; Communications to Noteholders and Certificateholders.
Section 4.3. Reports by Issuer
Section 4.4. [Reserved]
Section 4.5. Reports and Records for the Indenture Trustee and Instructions.
-i-
4147-9029-0755.4
2
2
26
26
27
27
27
28
28
28
28
28
29
30
33
33
34
36
37
38
38
38
39
39
44
44
45
46
46
46
46
47
48
48
48
49
49
49
TABLE OF CONTENTS
(continued)
Page
ARTICLE 5. ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
Section 5.1. Rights of Noteholders and Certificateholders
Section 5.2. Collection of Money
Section 5.3. Establishment of Accounts.
Section 5.4. Payments and Allocations.
Section 5.5. [Reserved]
Section 5.6. [Reserved]
Section 5.7. General Provisions Regarding Accounts
Section 5.8. [Reserved].
Section 5.9. [Reserved].
Section 5.10. [Reserved].
Section 5.11. [Reserved].
Section 5.12. Determination of Monthly Interest.
Section 5.13. Benchmark Replacement.
Section 5.14. [Reserved].
Section 5.15. Monthly Payments.
Section 5.16. Failure to Make a Deposit or Payment.
ARTICLE 6. DISTRIBUTIONS AND REPORTS
Section 6.1. Distributions.
Section 6.2. Monthly Report.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Section 7.1. Representations and Warranties of the Issuer.
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer.
ARTICLE 8. COVENANTS
Section 8.1. Money for Payments To Be Held in Trust
Section 8.2. Affirmative Covenants of Issuer
Section 8.3. Negative Covenants
Section 8.4. Further Instruments and Acts
Section 8.6. Perfection Representations
ARTICLE 9. RAPID AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Rapid Amortization Events.
ARTICLE 10. REMEDIES
Section 10.1. Events of Default
Section 10.2. Rights of the Indenture Trustee Upon Events of Default.
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
Section 10.4. Remedies
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities
Section 10.6. Waiver of Past Events
Section 10.7. Limitation on Suits
-ii-
4147-9029-0755.4
50
50
50
50
52
53
53
53
53
53
53
53
53
54
55
55
56
57
57
57
58
58
62
62
62
62
66
69
69
69
69
70
70
71
72
74
75
75
76
TABLE OF CONTENTS
(continued)
Page
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
Section 10.9. Restoration of Rights and Remedies
Section 10.10. The Indenture Trustee May File Proofs of Claim
Section 10.11. Priorities
Section 10.12. Undertaking for Costs
Section 10.13. Rights and Remedies Cumulative
Section 10.14. Delay or Omission Not Waiver
Section 10.15. Control by Noteholders
Section 10.16. Waiver of Stay or Extension Laws
Section 10.17. Action on Securities
Section 10.18. Performance and Enforcement of Certain Obligations.
Section 10.19. Reassignment of Surplus
ARTICLE 11. THE INDENTURE TRUSTEE
Section 11.1. Duties of the Indenture Trustee.
Section 11.2. Rights of the Indenture Trustee
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities
Section 11.5. Notice of Defaults
Section 11.6. Compensation.
Section 11.7. Replacement of the Indenture Trustee.
Section 11.8. Successor Indenture Trustee by Merger, etc.
Section 11.9. Eligibility: Disqualification
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
Section 11.11. [Reserved]
Section 11.12. Taxes
Section 11.13. [Reserved]
Section 11.14. Suits for Enforcement
Section 11.15. Reports by Indenture Trustee to Holders
Section 11.16. Representations and Warranties of Indenture Trustee
Section 11.17. The Issuer Indemnification of the Indenture Trustee
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer
Section 11.19. [Reserved].
Section 11.20. Maintenance of Office or Agency
Section 11.21. Concerning the Rights of the Indenture Trustee
Section 11.22. Direction to the Indenture Trustee
ARTICLE 12. DISCHARGE OF INDENTURE
Section 12.1. Satisfaction and Discharge of Indenture
Section 12.2. Application of Issuer Money
Section 12.3. Repayment of Moneys Held by Paying Agent
Section 12.4. [Reserved].
-iii-
4147-9029-0755.4
76
77
77
78
78
78
78
79
79
79
80
80
80
80
83
87
87
88
88
88
90
90
91
92
92
92
92
92
92
93
93
93
93
94
94
94
94
94
95
95
TABLE OF CONTENTS
(continued)
Page
Section 12.5. Final Payment.
Section 12.6. Termination Rights of Issuer
Section 12.7. Repayment to the Issuer
ARTICLE 13. AMENDMENTS
Section 13.1. Supplemental Indentures without Consent of the Noteholders
Section 13.2. Supplemental Indentures with Consent of Noteholders
Section 13.3. Execution of Supplemental Indentures
Section 13.4. Effect of Supplemental Indenture
Section 13.5. [Reserved]
Section 13.6. [Reserved]
Section 13.7. [Reserved].
Section 13.8. Revocation and Effect of Consents.
Section 13.9. Notation on or Exchange of Securities Following Amendment.
Section 13.10. The Indenture Trustee to Sign Amendments, etc.
ARTICLE 14. REDEMPTION AND REFINANCING OF NOTES
Section 14.1. Redemption and Refinancing
Section 14.2. Form of Redemption Notice
Section 14.3. Notes Payable on Redemption Date
ARTICLE 15. MISCELLANEOUS
Section 15.1. Compliance Certificates and Opinions, etc
Section 15.2. Form of Documents Delivered to Indenture Trustee
Section 15.3. Acts of Noteholders and Certificateholders.
Section 15.4. Notices
Section 15.5. Notices to Noteholders and Certificateholders; Waiver
Section 15.6. Alternate Payment and Notice Provisions
Section 15.7. [Reserved]
Section 15.8. Effect of Headings and Table of Contents
Section 15.9. Successors and Assigns
Section 15.10. Separability of Provisions
Section 15.11. Benefits of Indenture
Section 15.12. Legal Holidays
Section 15.13. GOVERNING LAW; JURISDICTION
Section 15.14. Counterparts; Electronic Execution
Section 15.15. Recording of Indenture
Section 15.16. Issuer Obligation
Section 15.17. No Bankruptcy Petition Against the Issuer
Section 15.18. No Joint Venture
Section 15.19. Rule 144A Information
Section 15.20. No Waiver; Cumulative Remedies
Section 15.21. Third-Party Beneficiaries
Section 15.22. Merger and Integration
-iv-
4147-9029-0755.4
95
96
96
96
96
97
99
99
99
99
99
99
100
100
100
100
101
101
102
102
103
104
105
105
106
106
106
106
106
106
106
107
107
107
107
108
108
108
108
108
109
TABLE OF CONTENTS
(continued)
Page
109
109
109
109
Section 15.23. Rules by the Indenture Trustee
Section 15.24. Duplicate Originals
Section 15.25. Waiver of Trial by Jury
Section 15.26. No Impairment
-v-
4147-9029-0755.4
TABLE OF CONTENTS
(continued)
Page
Exhibits and Schedules:
Exhibit A: Form of Release and Reconveyance of Trust Estate
Exhibit B: [Reserved]
Exhibit C: Form of Class A Restricted Global Note
Exhibit D: Form of Monthly Report
Exhibit E: Form of Certificate
Schedule 1 Amortization Schedule
Schedule 2 Custody Account Allocations
Schedule 3 Perfection Representations, Warranties and Covenants
Schedule 4 List of Proceedings
-vi-
4147-9029-0755.4
INDENTURE, dated as of December 20, 2021, between OPORTUN RF, LLC, a Delaware limited liability company, as issuer
(the “Issuer”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association with trust powers, as Indenture
Trustee, as Securities Intermediary and as Depositary Bank.
W I T N E S S E T H :
provided in this Indenture; and
WHEREAS, the Issuer has duly executed and delivered this Indenture to provide for the issuance of Securities, issuable as
WHEREAS, all things necessary to make this Indenture a legal, valid and binding agreement of the Issuer, enforceable in
accordance with its terms, have been done, and the Issuer proposes to do all the things necessary to make the Securities, when executed by the
Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the legal, valid and binding
obligations of the Issuer as hereinafter provided.
NOW, THEREFORE, for and in consideration of the premises and the receipt of the Securities by the Holders, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
GRANTING CLAUSE
The Issuer hereby grants to the Indenture Trustee at the Closing Date, for the benefit of the Indenture Trustee, the Noteholders,
the Certificateholders and any other Person to which any Secured Obligations are payable (the “Secured Parties”), to secure the Secured
Obligations, a continuing Lien on and security interest in all of the Issuer’s right, title and interest in, to and under the following property
whether now owned or hereafter acquired, now existing or hereafter created and wherever located: (a) all Underlying Securities, and any and
all monies due or to become due thereunder; (b) the Payment Account, each other Securities Account, and any other account maintained by the
Indenture Trustee pursuant hereto (each such account, a “Trust Account ”), all monies from time to time deposited therein and all money,
instruments, investment property and other property from time to time credited thereto or on deposit therein; (c) all certificates and instruments,
if any, representing or evidencing any or all of the Trust Accounts or the funds on deposit therein from time to time; (d) all investments made at
any time and from time to time with moneys in the Trust Accounts; (e) the Purchase Agreements; (f) all accounts, chattel paper, commercial
tort claims, deposit accounts, documents, general intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit,
money, and oil, gas and other minerals, (g) all additional property that may from time to time hereafter be subjected to the grant and pledge
made by the Issuer or by anyone on its behalf; (h) all present and future claims, demands, causes and choses in action and all payments on or
under the foregoing; and (i) all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of
all of the foregoing and the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property, rights to
payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing (collectively, the “Trust Estate”).
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in
respect of, the Secured Obligations, equally and ratably without prejudice, priority or distinction except as set forth herein, and to secure
compliance with the provisions of this Indenture, all as provided in this Indenture.
4147-9029-0755.4
The Issuer hereby assigns to the Indenture Trustee all of the Issuer’s power to authorize an amendment to the financing
statement filed with the Delaware Secretary of State relating to the security interest granted to the Issuer by the Seller pursuant to each
Purchase Agreement; provided, however, that the Indenture Trustee shall be entitled to all the protections of Article 11, including Sections
11.1(g) and 11.2(k), in connection therewith, and the obligations of the Issuer under Sections 8.2(i) and 8.3(j) shall remain unaffected.
The Indenture Trustee, for the benefit of the Secured Parties, hereby acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and the Lien on the Trust Estate conveyed by the Issuer pursuant to the Grant,
declares that it shall maintain such right, title and interest, upon the trust set forth, for the benefit of all Secured Parties, subject to Sections 11.1
and 11.2, and agrees to perform its duties required in this Indenture in accordance with the terms of this Indenture.
DESIGNATION
(a) There are hereby created notes and subordinate residual certificates to be issued pursuant to this Indenture and such notes
and subordinate residual certificates shall be substantially in the form of Exhibit C and E, respectively, hereto, executed by or on behalf of the
Issuer and authenticated by the Indenture Trustee and designated generally Asset Backed Notes, Class A, which notes shall include any
Additional Notes (the “Class A Notes ” or the “Notes”), and Asset Backed Certificates (the “Certificates” and, together with the Notes, the
“Securities”)). The Class A Notes shall be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof,
and the Certificates shall be issued in minimum percentage interests of 5% with no minimum incremental percentage interests in excess thereof.
(b) The Certificates shall be subordinate to the Class A Notes to the extent described herein.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
a. Definitions. Certain capitalized terms used herein (including the preamble and the recitals hereto) shall have the following
meanings:
CUSIP Number 68377F 108.
“2019-A Certificates” means the residual certificates issued by the 2019-A Issuer under the 2019-A Indenture and assigned
“2019-A Indenture” means the Base Indenture as supplemented by the Series 2019-A Supplement, each dated as of August 1,
2019, between the 2019-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2019-A Issuer” means Oportun Funding XIII, LLC, a Delaware special purpose limited liability company.
“2019-A Transaction Documents” means the “Transaction Documents” as defined in the 2019-A Indenture.
CUSIP Number 68377B 107.
“2021-A Certificates” means the residual certificates issued by the 2021-A Issuer under the 2021-A Indenture and assigned
2
4147-9029-0755.4
“2021-A Indenture” means the Base Indenture as supplemented by the Series 2021-A Supplement, each dated as of March 8,
2021, between the 2021-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2021-A Issuer” means Oportun Funding XIV, LLC, a Delaware special purpose limited liability company.
“2021-A Transaction Documents” means the “Transaction Documents” as defined in the 2021-A Indenture.
“2021-B Certificates” means the trust certificates issued by the 2021-B Issuer pursuant to the 2021-B Trust Agreement,
representing the beneficial interest in the 2021-B Issuer and assigned CUSIP Number 68377G AE6.
“2021-B Indenture” means the Indenture, dated as of May 10, 2021, between the 2021-B Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2021-B Issuer” means Oportun Issuance Trust 2021-B, a Delaware statutory trust.
“2021-B Transaction Documents” means the “Transaction Documents” as defined in the 2021-B Indenture.
“2021-B Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-B Issuer, dated as of May
10, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2021-C Issuer and assigned CUSIP Number 68377W 101.
“2021-C Certificates” means the trust certificates issued by the 2021-C Issuer pursuant to the 2021-C Trust Agreement,
“2021-C Indenture” means the Indenture, dated as of October 28, 2021, between the 2021-C Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2021-C Issuer” means Oportun Issuance Trust 2021-C, a Delaware statutory trust.
“2021-C Transaction Documents” means the “Transaction Documents” as defined in the 2021-C Indenture.
“2021-C Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-C Issuer, dated as of
October 28, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing,
LLC, as administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2022-A Issuer and assigned CUSIP Number 68378N AE0.
“2022-A Certificates” means the trust certificates issued by the 2022-A Issuer pursuant to the 2022-A Trust Agreement,
3
4147-9029-0755.4
“2022-A Class D Notes ” means the Class D notes issued by the 2022-A Issuer pursuant to the 2022-A Indenture and assigned
CUSIP Number 68378N AD2.
“2022-A Indenture” means the Indenture, dated as of May 23, 2022, between the 2022-A Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2022-A Issuer” means Oportun Issuance Trust 2022-A, a Delaware statutory trust.
“2022-A Purchase Agreement ” means the Security Purchase Agreement (2022-A), dated as of the 2022-A Purchase Date,
among the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-A Class D Notes and the 2022-A Certificates, as such
agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“2022-A Purchase Date” means May 24, 2022.
“2022-A Transaction Documents” means the “Transaction Documents” as defined in the 2022-A Indenture.
“2022-A Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2022-A Issuer, dated as of May
23, 2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“2022-2 Certificates” means the trust certificates issued by the 2022-2 Issuer pursuant to the 2022-2 Trust Agreement,
representing the beneficial interest in the 2022-2 Issuer and assigned CUSIP Number 68377H 104.
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust.
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among
the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the 2022-2 Indenture.
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22,
2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
4
4147-9029-0755.4
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the February 2023 Payment
Date, 0%, and (II) for any Payment Date on or after the March 2023 Payment Date, (a) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for
such Payment Date is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is greater than 15.0%, 100.0%.
“Adjusted Leverage Ratio” means, on any date of determination, the ratio of (i) Adjusted Liabilities to (ii) Tangible Net Worth.
“Adjusted Leverage Ratio Covenant” means that the Parent will have a maximum Adjusted Leverage Ratio of 3.5:1.
“Adjusted Liabilities” means, on any date of determination, the excess of total Liabilities over the amount of any asset-backed
securities that would appear as liabilities on the balance sheet of the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
“Administration Fee” means the fee payable to the Administrator pursuant to the Administrative Services Agreement.
Date, between the Issuer and the Administrator, as amended, supplemented or otherwise modified from time to time.
“Administrative Services Agreement” means the Administrative Services and Premises Agreement, dated as of the Closing
“Administrator” means Oportun, as administrator of the Issuer pursuant to the Administrative Services Agreement.
“Administrator Default” has the meaning specified in the Administrative Services Agreement.
statement or any similar instrument filed against such Person’s assets or properties), other than a Permitted Encumbrance.
“Adverse Claim” means a Lien on any Person’s assets or properties in favor of any other Person (including any UCC financing
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of
voting stock, by contract or otherwise.
“Agent” means any Transfer Agent and Registrar or Paying Agent.
“Alternative Rate” means, for any day, the sum of a per annum rate equal to the sum of (i) the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such
successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective)” and (ii) 0.50%. If on any relevant day such rate is not
yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for
5
4147-9029-0755.4
U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor,
the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate
rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as
determined by the Calculation Agent of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent.
“Amortization Schedule” means the schedule of Payment Dates and corresponding Scheduled Note Principal Amounts attached
hereto as Schedule 1, as amended as of the 2022-2 Purchase Date and as otherwise amended with the prior written consent of the Noteholders.
“Applicable Margin” shall have the meaning set forth in the Fee Letter.
“Applicants” has the meaning specified in Section 4.2(b).
“Available Funds” means, with respect to any Monthly Period and the Payment Date related thereto, the sum of the following,
without duplication: (a) any Underlying Payments received in respect of the Underlying Securities on the Underlying Payment Date
immediately following such Monthly Period and deposited into the Payment Account on such Underlying Payment Date; and (b) any
Investment Earnings received with respect to the Trust Estate.
“Available Tenor ” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any
tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component
thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining
any frequency of making payments of interest calculated pursuant to this Indenture as of such date.
“Bankruptcy Code” means the United States Bankruptcy Code, Title 11, United States, as amended.
“Benchmark” means, effective as of May 24, 2022, Term SOFR; provided that if a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred with respect to the then-current Benchmark, then “Benchmark” means the applicable Benchmark
Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of Section 5.13.
determined by the Required Noteholders, in consultation with the Issuer, for the applicable Benchmark Replacement Date:
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be
(1) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; or
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Required Noteholders and the Issuer as the
replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or
(ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the
6
4147-9029-0755.4
then-current Benchmark for dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement
Adjustment.
Replacement will be deemed to be the Floor for the purposes of this Indenture and the other Transaction Documents.
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark
The Required Noteholders shall use commercially reasonable efforts to satisfy any applicable IRS guidance, including Proposed
Treasury Regulation 1.1001-6 and any future guidance, to the effect that a Benchmark Replacement will not result in a deemed exchange for
U.S. federal income Tax purposes of any Class A Note hereunder.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an
Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark
Replacement:
below that can be determined by the Required Noteholders:
(1) for purposes of clause (1) of the definition of “Benchmark Replacement,” the first alternative set forth in the order
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a
positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that
has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the
applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; and
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such
Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction
referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable
Corresponding Tenor; and
(2) for purposes of clause (2) of the definition of “Benchmark Replacement,” the spread adjustment, or method for
calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the
Required Noteholders and the Issuer for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark
Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for
calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement for dollar-denominated syndicated credit facilities at such time;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such
Benchmark Replacement Adjustment from time to time as selected by the Required Noteholders in their reasonable discretion.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
7
4147-9029-0755.4
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the
public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the
published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such
Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark
(or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the
administrator of such Benchmark (or component thereof) to be no longer representative; provided that such non-representativeness will
be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of
such Benchmark (or component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but
earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to
the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause
(1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current
Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current
Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the
published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component
thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official
with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the
administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the
administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has
ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely,
provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available
Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or
such component thereof) are no longer, or as of a specified future date will no longer be, representative.
8
4147-9029-0755.4
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if
a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such
Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date
pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 5.13 and (y) ending at the time that a
Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in
accordance with Section 5.13.
“Benefit Plan Investor” mean an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, a “plan” as described in Section 4975 of the Code, which is subject to Section 4975 of the Code, or an entity deemed to hold plan
assets of any of the foregoing.
“Book-Entry Notes” means Notes in which beneficial interests are owned and transferred through book entries by a Clearing
Agency as described in Section 2.16; provided that after the occurrence of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Notes are issued to the Note Owners, such Definitive Notes shall replace Book-Entry Notes.
“Business Day” means any day that DTC is open for business at its office in New York City and any day other than a Saturday,
Sunday or other day on which banking institutions or trust companies in the States of California, Florida, Illinois, Missouri, New York or Texas
are authorized or obligated by Law to be closed.
“Calculation Agent” means the party designated as such by the Issuer from time to time, with the written consent of the
Required Noteholders; initially, the Administrator. The compensation payable to the Administrator for the services performed by the
Calculation Agent hereunder shall be included in the Administration Fee.
sheet of such Person prepared in accordance with GAAP.
“Capitalized Lease” of a Person means any lease of property by such Person as lessee which would be capitalized on a balance
“Cash Equivalents” means (a) securities with maturities of one hundred twenty (120) days or less from the date of acquisition
issued or fully guaranteed or insured by the United States government or any agency thereof, (b) certificates of deposit and eurodollar time
deposits with maturities of one hundred twenty (120) days or less from the date of acquisition and overnight bank deposits of any commercial
bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the
United States government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor’s or P-1
or the equivalent thereof by Moody’s and in either case maturing within ninety (90) days after the day of acquisition, (e) securities with
maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated
at least A by Standard & Poor’s or A by Moody’s, (f) securities with maturities of ninety (90) days
9
4147-9029-0755.4
or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b)
of this definition or, (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.
“Certificateholder” means a Holder of a Certificate.
“Certificates” has the meaning specified in paragraph (a) of the Designation.
“Class A Additional Interest” has the meaning specified in Section 5.12(a).
“Class A Deficiency Amount” has the meaning specified in Section 5.12(a).
“Class A Monthly Interest” has the meaning specified in Section 5.12(a).
“Class A Note Rate” means, with respect to any Interest Period, a variable rate per annum equal to the sum of (i) the Benchmark
applicable to such Interest Period (or if the Alternative Rate applies pursuant to Section 5.13, the Alternative Rate) plus (ii) the Applicable
Margin.
“Class A Noteholder” means a Holder of a Class A Note.
“Class A Notes” has the meaning specified in paragraph (a) of the Designation.
“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act or any
successor provision thereto.
time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to
“Closing Date” means December 20, 2021.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and Treasury Regulations promulgated
thereunder.
“Commission” means the U.S. Securities and Exchange Commission, and its successors.
“Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational
changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of
“Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or
operational matters) that the Required Noteholders, in consultation with the Issuer, decide may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration thereof in a manner substantially consistent with market
practice (or, if the Required Noteholders decide that adoption of any portion of such market practice is not administratively feasible or if the
Required Noteholders determine that no market practice for the administration of such Benchmark Replacement exists, in such other manner of
administration as the Required Noteholders, in consultation with the Issuer, decide is reasonably necessary in connection with the
administration of this Indenture and the other Transaction Documents).
10
4147-9029-0755.4
“Consolidated Parent” means initially, Oportun Financial Corporation, a Delaware corporation, and any successor to Oportun
Financial Corporation as the indirect or direct parent of Oportun, the financial statements of which are for financial reporting purposes
consolidated with Oportun in accordance with GAAP, or if there is none, then Oportun.
“Contingent Liability” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other
liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or
other distributions upon the shares of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to
any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
“Contractual Obligation” means, with respect to any Person, any provision of any security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject.
“Corporate Trust Office” means the principal office of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of this Indenture is located at 1100 N. Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration.
interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an
“Credit Risk Retention Rules” means Regulation RR (17 C.F.R. Part 246), as such rule may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the Department of Treasury, the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Federal Housing Finance Agency, the Securities and Exchange Commission and the Department of
Housing and Urban Development in the adopting release (79 F.R. 77601 et seq.) or by the staff of any such agency, or as may be provided by
any such agency or its staff from time to time, in each case, as effective from time to time.
“Custody Account” means each of the First Priority Custody Account and the Second Priority Custody Account.
Trust, National Association, as custodian, as amended, supplemented or otherwise modified from time to time.
“Custody Agreement” means the Custody Agreement, dated as of December 20, 2021, between the Issuer and Wilmington
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being
established by the Required Noteholders in accordance with the conventions for this rate selected or recommended by the Relevant
Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Required Noteholders decide that any such
convention is not administratively feasible, then the Required Noteholders may establish another convention in their reasonable discretion.
“Default” means any occurrence that is, or with notice or lapse of time or both would become, an Event of Default, an
Administrator Default or a Rapid Amortization Event.
11
4147-9029-0755.4
“Definitive Notes” has the meaning specified in Section 2.16(i).
“Depository” means the Clearing Agency.
“Depository Agreement” means the agreement among the Issuer and the Clearing Agency.
“Determination Date” means the third Business Day prior to each Underlying Payment Date.
“Dollars” and the symbol “$” mean the lawful currency of the United States.
“DTC” means The Depository Trust Company.
thereunder.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated
“ERISA Affiliate ” means, with respect to any Person, (i) any corporation which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as such Person; (ii) any trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with such Person; or (iii) any member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as such Person.
“ERISA Event” means any of the following: (i) the failure to satisfy the minimum funding standard under Section 302 of
ERISA or Section 412 of the Code with respect to any Pension Plan; (ii) the filing by the Pension Benefit Guaranty Corporation or a plan
administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or an event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or grounds to appoint a trustee to administer any Pension Plan; (iii) the complete
withdrawal or partial withdrawal by any Person or any of its ERISA Affiliates from any Multiemployer Plan; (iv) any “reportable event” as
defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Pension Plan (other than an event for which the 30-day
notice period is waived), (v) the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the termination of any Pension Plan
(vi) the receipt by the Issuer, the Seller or any ERISA Affiliate of any notice concerning a determination that a Multiemployer Plan is, or is
expected to be insolvent within the meaning of Title IV of ERISA; or (vii) the imposition of any liability under Title IV of ERISA, other than
for Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Person or any of its
ERISA Affiliates with respect to a Pension Plan.
“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if:
(i)a Proceeding shall be commenced, without the application or consent of such Person, before any Governmental Authority,
seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or adjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any Law relating to bankruptcy, insolvency, reorganization, winding up or composition
or adjustment of debts, and in the case of any Person, such Proceeding shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) consecutive days; or an
12
4147-9029-0755.4
order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy Laws or other similar Laws now
or hereafter in effect; or
(ii)such Person shall (i) consent to the institution of (except as described in the proviso to clause (a) above) any Proceeding or
petition described in clause (a) of this definition, or (ii) commence a voluntary Proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar Law now or hereafter in effect, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial
part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its
debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Section 10.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
any regulations or official interpretations issued with respect thereof or agreements thereunder and any amended or successor provisions).
“FATCA” means the Foreign Account Tax Compliance Act provisions, sections 1471 through to 1474 of the Code (including
“FATCA Withholding Tax” means any withholding or deduction required pursuant to FATCA.
principal functions.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its
“Fee Letter” shall mean that fee letter by and between Jefferies Funding LLC and the Issuer, dated December 20, 2021.
Worth Covenant and the Liquidity Covenant.
“Financial Covenants” means each of the Leverage Ratio Covenant, the Adjusted Leverage Ratio Covenant, the Tangible Net
“First Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
“Fiscal Year” means any period of twelve consecutive calendar months ending on December 31.
“Fitch” means Fitch, Inc.
“Floor” means a rate of interest equal to 0.00%.
“Flow-through Entity” has the meaning specified in Section 2.6(e)(iii).
“GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to time supplemented and amended, and with respect to determinations
or calculations to be made by a Person, applied on a basis consistent with the most recent audited financial statements of Consolidated Parent
before the Closing Date.
13
4147-9029-0755.4
“Global Note” has the meaning specified in Section 2.19.
“Governmental Authority” means any government or political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
“Grant” means the Issuer’s grant of a Lien on the Trust Estate as set forth in the Granting Clause of this Indenture.
“Holder” means the Person in whose name a Note or Certificate is registered in the Register.
“Indebtedness” means, with respect to any Person, such Person’s (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on
terms customary in the trade, (iii) obligations, whether or not assumed, secured by Liens on or payable out of the proceeds or production from,
property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments,
(v) Capitalized Lease obligations and (vi) obligations of another Person of a type described in clauses (i) through (v) above, for which such
Person is obligated pursuant to a guaranty, put or similar arrangement.
Intermediary and Depositary Bank, as amended, restated, modified or supplemented from time to time.
“Indenture” means this Indenture dated as of the Closing Date, between the Issuer and the Indenture Trustee, Securities
“Indenture Termination Date” has the meaning specified in Section 12.1.
“Indenture Trustee” means initially Wilmington Trust, National Association, acting in such capacity under this Indenture, and its
successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any
successor trustee appointed in accordance with the provisions of this Indenture.
“Independent” means, when used with respect to any specified Person, that such Person (a) is in fact independent of the Issuer,
any other obligor upon the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or
any material indirect financial interest in the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar functions.
“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of Section 15.1, prepared by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall
state that the signer has read the definition of “Independent” in this Indenture and that the signer is Independent within the meaning thereof.
“Initial Purchase Agreement” means the Certificate Purchase Agreement, dated as of the Closing Date, among the Seller and the
Issuer, relating to the purchase by the Issuer of the 2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates and the 2021-C
Certificates, as such agreement may be amended, supplemented or otherwise modified and in effect from time to time.
14
4147-9029-0755.4
“Initial Purchaser” means Jefferies Funding LLC.
“Interest Period” means, with respect to any Payment Date, the period from and including the Payment Date immediately
preceding such Payment Date (or, in the case of the first Payment Date, from and including the Closing Date) to but excluding such Payment
Date.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
the Trust Accounts.
“Investment Earnings” means all interest and earnings (net of losses and investment expenses) accrued on funds on deposit in
“Issuer” has the meaning specified in the preamble of this Indenture.
December 20, 2021, as further amended, supplemented or otherwise modified from time to time.
“Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Issuer, dated as of
Responsible Officers and delivered to the Indenture Trustee.
“Issuer Order” and “Issuer Request” means a written order or request signed in the name of the Issuer by any one of its
decree or award of any Governmental Authority.
“Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ,
“Legal Final Payment Date” means the latest Payment Date listed on the Amortization Schedule.
“Leverage Ratio” means, on any date of determination, the ratio of (i) Liabilities to (ii) Tangible Net Worth.
“Leverage Ratio Covenant” means that the Parent will have a maximum Leverage Ratio of 11.5:1.
“Liabilities” means, on any date of determination, the total liabilities which would appear on the balance sheet of the Parent and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC or comparable Law of
any
as such agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“Limited Guaranty” means the Limited Guaranty, dated as of December 20, 2021, between Oportun and the Indenture Trustee,
“Liquidity Covenant” means that the Seller will have a minimum liquidity of $10,000,000, equal to unrestricted cash or Cash
Equivalents.
15
4147-9029-0755.4
“Material Adverse Effect” means any event or condition which would have a material adverse effect on (i) the Underlying
Securities or Underlying Payments, (ii) the condition (financial or otherwise), businesses or properties of the Issuer or the Seller, (iii) the ability
of the Issuer or the Seller to perform its respective obligations under the Transaction Documents or the ability of the Administrator to perform
its obligations under the Administrative Services Agreement or (iv) the interests of the Indenture Trustee or any Secured Party in the Trust
Estate or under the Transaction Documents.
“Minimum Principal Payment Amount” means, for any Payment Date, the “Minimum Principal Payment Amount” specified
therefor on the Amortization Schedule.
“Monthly Period” means the period from and including the first day of a calendar month to and including the last day of such
calendar month; provided, however, that the first Monthly Period shall be the period from and including the Closing Date to and including
December 31, 2021.
“Monthly Report” means a report substantially in the form attached as Exhibit D or in such other form as the Administrator may
determine necessary or desirable (with prior consent of the Indenture Trustee); provided, however, that no such other agreed form shall serve to
exclude information expressly required by this Indenture.
“Moody’s” means Moody’s Investors Service, Inc.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA with respect to which the
Seller, the Issuer or any of their respective ERISA Affiliates is making, is obligated to make, or has made or been obligated to make,
contributions.
“Note Owner” means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as
an indirect participant, in accordance with the rules of such Clearing Agency).
“Note Principal Amount” means on any date of determination the then outstanding principal amount of the Notes.
“Note Purchase Agreement” means the agreement by and among the Initial Purchaser, Oportun and the Issuer, dated December
20, 2021, pursuant to which the Initial Purchaser agreed to purchase an interest in the Class A Notes from the Issuer, subject to the terms and
conditions set forth therein, as amended, supplemented or otherwise modified from time to time.
“Note Rate” means the Class A Note Rate.
“Noteholder” means with respect to any Note, the holder of record of such Note.
“Notes” has the meaning specified in paragraph (a) of the Designation.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
16
4147-9029-0755.4
“Officer’s Certificate” means a certificate signed by any Responsible Officer of the Person providing the certificate.
“Opinion of Counsel” means one or more written opinions of counsel to the Issuer or the Seller who (except in the case of
opinions regarding matters of organizational standing, power and authority, conflict with organizational documents, conflict with agreements
other than Transaction Documents, qualification to do business, licensure and litigation or other Proceedings) shall be external counsel,
satisfactory to the Indenture Trustee, which opinions shall comply with any applicable requirements of Section 15.1, and shall be in form and
substance satisfactory to the Indenture Trustee, and shall be addressed to the Indenture Trustee. An Opinion of Counsel may, to the extent same
is based on any factual matter, rely on an Officer’s Certificate as to the truth of such factual matter.
“Oportun” means Oportun, Inc., a Delaware corporation.
“Parent” means Oportun Financial Corporation.
“Paying Agent” means any paying agent appointed pursuant to Section 2.7 and shall initially be the Indenture Trustee.
“Payment Account” means the account established as such for the benefit of the Secured Parties pursuant to Section 5.3(c).
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on
nd
January 12, 2022.
“Pension Plan” means an “employee pension benefit plan” as described in Section 3(2) of ERISA (excluding a Multiemployer
Plan) that is subject to Title IV of ERISA or Section 302 of ERISA or 412 of the Code, and in respect of which the Issuer, the Seller or any
ERISA Affiliate thereof is, or at any time during the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of
ERISA, or with respect to which the Issuer, the Seller or any of their respective ERISA Affiliates has any liability, contingent or otherwise.
“Perfection Representations” means the representations, warranties and covenants set forth in Schedule 3 attached hereto.
“Periodic Term SOFR Determination Day” has the meaning specified in in the definition of “Term SOFR.”
(b) with respect to the Seller, any item described in clauses (i) through (vi) of the following:
“Permitted Encumbrance” means (a) with respect to the Issuer, any item described in clause (i), (iv) or (vi) of the following, and
1.
Liens for taxes and assessments that are not yet due and payable or that are being contested in good faith and for which
reserves have been established, if required in accordance with GAAP;
2.
Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Seller shall at any time in good faith be prosecuting an appeal or proceeding for a review and with
respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP;
17
4147-9029-0755.4
3.
Liens incidental to the conduct of business or the ownership of properties and assets (including mechanics’, carriers’,
repairers’, warehousemen’s and statutory landlords’ liens and liens to secure the performance of leases) and Liens to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in connection
with the borrowing of money, provided in each case, the obligation secured is not overdue, or, if overdue, is being contested in good
faith by appropriate actions or Proceedings and with respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
4.
Liens in favor of the Indenture Trustee, or otherwise created by the Issuer, the Seller or the Indenture Trustee pursuant to
the Transaction Documents;
5.
Liens that, in the aggregate do not exceed $250,000 (such amount not to include Permitted Encumbrances under clauses (i)
through (iv) or (vi)) and which, individually or in the aggregate, do not materially interfere with the rights under the Transaction
Documents of the Indenture Trustee or any Noteholder or Certificateholder in any of the Trust Estate; and
6.
any Lien created in favor of the Issuer or the Seller in connection with the purchase of the Underlying Securities by the
Issuer or the Seller and covering such Underlying Securities.
or registered form and that evidence:
“Permitted Investments” means book-entry securities, negotiable instruments or securities represented by instruments in bearer
(iii)direct obligations of, and obligations fully guaranteed as to the full and timely payment by, the United States;
(iv)demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the
Laws of the United States or any state thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depository institution authorities (including depository receipts issued by any such institution or
trust company as custodian with respect to any obligation referred to in clause (a) above or a portion of such obligation for the benefit of the
holders of such depository receipts); provided that at the time of the investment or contractual commitment to invest therein (which shall be
deemed to be made again each time funds are reinvested following each Payment Date), the commercial paper or other short-term senior
unsecured debt obligations (other than such obligations the rating of which is based on the credit of a person other than such depository
institution or trust company) of such depository institution or trust company shall have a credit rating from a Rating Agency in the highest
investment category granted thereby;
(v)commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Fitch of “F2”
or the equivalent thereof from Moody’s or Standard & Poor’s; or
(vi)only to the extent permitted by Rule 3a-7 under the Investment Company Act, investments in money market funds having a
rating from Fitch of “AA” or, to the extent not rated by Fitch, rated in the highest rating category by Moody’s, Standard & Poor’s or another
Rating Agency.
Permitted Investments may be purchased by or through the Indenture Trustee or any of its Affiliates.
18
4147-9029-0755.4
“Person” means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated
organization, enterprise, government or any department or agency of any government.
“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.
Purchase Agreement.
“Purchase Agreement” means each of the Initial Purchase Agreement, the 2022-A Purchase Agreement and the 2022-2
“QIB” has the meaning specified in Section 2.16(a)(i).
“Qualified Institution” means a depository institution or trust company:
(vii)whose commercial paper, short-term unsecured debt obligations or other short-term deposits have a rating commonly regarded
as “investment grade” by at least one Rating Agency, if the deposits are to be held in the account for 30 days or less, or
(viii)whose long-term unsecured debt obligations have a rating commonly regarded as “investment grade” by at least one Rating
Agency, if the deposits are to be held in the account more than 30 days.
“Rapid Amortization Event” has the meaning specified in Section 9.1.
“Rating Agency” means any nationally recognized statistical rating organization.
“Record Date” means, with respect to any Payment Date, the last Business Day of the preceding Monthly Period.
“Records” means all documents, books, records and other information in physical or electronic format (including, without
limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) maintained with respect to
the Underlying Securities.
pursuant to Section 14.1.
“Redemption Date” means in the case of a redemption of the Notes, the Payment Date specified by Oportun or the Issuer
“Redemption Price” means an amount as set forth in Section 14.1(b) for the redemption of the Notes.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 5:00
p.m. (New York City time) on each Periodic Term SOFR Determination Day, and (2) if such Benchmark is not Term SOFR, the time
determined by the Required Noteholders in their reasonable discretion.
“Register” has the meaning specified in Section 2.6(a).
“Registered Certificates” has the meaning specified in Section 2.1.
“Registered Notes” has the meaning specified in Section 2.1.
convened by the Federal Reserve Board or the NYFRB, or any successor thereto.
“Relevant Governmental Body” means the Federal Reserve Board or the NYFRB, or a committee officially endorsed or
19
4147-9029-0755.4
Certificates outstanding.
“Required Certificateholders” means the holders of Certificates representing a percentage interest in excess of 50% of the
the aggregate principal balance of the Class A Notes outstanding (or, if the Notes have been paid in full, the Required Certificateholders).
“Required Noteholders” means the holders of the Class A Notes outstanding, voting together, representing in excess of 50% of
“Requirements of Law” means, as to any Person, the organizational documents of such Person and any Law applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” means (i) with respect to any Person, the member, the Chairman, the President, the Controller, any Vice
President, the Secretary, the Treasurer, or any other officer of such Person or of a direct or indirect managing member of such Person, who
customarily performs functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter
any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and
(ii) with respect to the Indenture Trustee, in any of its capacities hereunder, a Trust Officer.
“Restricted Global Notes” has the meaning specified in Section 2.16(a)(i).
“Retained Notes” means any Notes, or interests therein, beneficially owned by the Issuer or an entity which, for U.S. federal
income tax purposes, is considered the same Person as the Issuer, until such time as such Notes are the subject of an opinion pursuant to
Section 2.6(d) hereof.
“Rule 144A” has the meaning specified in Section 2.16(a)(i).
on the Amortization Schedule.
“Scheduled Note Principal Amount” means, for any Payment Date, the “Scheduled Note Principal Amount” specified therefor
Amount on such Payment Date over (b) the Scheduled Note Principal Amount for such Payment Date.
“Scheduled Principal Payment Amount” means, for any Payment Date, an amount equal to the excess of (a) the Note Principal
“Second Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
“Secured Obligations” means (i) all principal and interest, at any time and from time to time, owing by the Issuer on the Notes
(including any Note held by the Seller, the Parent or any Affiliate of any of the foregoing), (ii) all amounts distributable to the
Certificateholders and (iii) all costs, fees, expenses, indemnity and other amounts owing or payable by, or obligations of, the Issuer to any
Person (other than any Affiliate of the Issuer) under the Indenture or the other Transaction Documents.
“Secured Parties” has the meaning specified in the Granting Clause of this Indenture.
“Securities” has the meaning specified in paragraph (a) of the Designation.
Priority Custody Account.
“Securities Account” means each of (i) the Payment Account, (ii) the First Priority Custody Account, and (iii) the Second
20
4147-9029-0755.4
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Intermediary” has the meaning specified in Section 5.3(e) and shall initially be Wilmington Trust, National
Association, acting in such capacity under this Indenture.
“Seller” means Oportun.
“Similar Law” means applicable Law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such
Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor
“Solvent” means with respect to any Person that as of the date of determination both (A)(i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of liabilities (including Contingent Liabilities) of such Person and (z) not less than
the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not
unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person
is “solvent” within the meaning given that term and similar terms under applicable Laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any Contingent Liability at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Standard & Poor’s” means S&P Global Ratings.
“Subsidiary” of a Person means any other Person more than 50% of the outstanding voting interests of which shall at any time
be owned or controlled, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or any similar business
organization which is so owned or controlled.
“Supplement” means a supplement to this Indenture complying with the terms of Article 13 of this Indenture.
“Tangible Net Worth ” means, on any date of determination, the total shareholders’ equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury stock) which would appear on the balance sheet of the Parent and its Subsidiaries
determined on a consolidated basis in accordance with GAAP, less the sum of (a) all notes receivable from officers and employees of the
Parent and its Subsidiaries and from affiliates of the Parent, and (b) the aggregate book value of all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, patents, trademarks, trade names, copyrights, and franchises.
21
4147-9029-0755.4
“Tangible Net Worth Covenant” means that the Parent will have a minimum Tangible Net Worth of $100,000,000.
to eliminate the imposition of or to determine the amount of any withholding of tax, including FATCA Withholding Tax.
“Tax Information” means information and/or properly completed and signed tax certifications and/or documentation sufficient
“Tax Opinion” means with respect to any action or event, an Opinion of Counsel to the effect that, for United States federal
income tax purposes, (a) such action or event will not adversely affect the tax characterization of the Notes issued to investors as debt, and (b)
such action or event will not cause the Issuer to be classified as an association or publicly traded partnership, in each case, taxable as a
corporation.
“Term SOFR” means the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such
day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such
Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on
any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term
SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR
will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as
such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to
such Periodic Term SOFR Determination Day; provided that if Term SOFR as so determined would be less than 0%, such rate shall be deemed
to be 0% for the purposes of this Indenture.
the Term SOFR Reference Rate selected by the Required Noteholders and the Issuer).
“Term SOFR Administrator ” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
owing to the Noteholders, are paid in full, (b) the Legal Final Payment Date and (c) the Indenture Termination Date.
“Termination Date” means the earliest to occur of (a) the Payment Date on which the Notes, plus all other amounts due and
“Three-Month Average Underlying Loss Percentage ” means, for any Payment Date, the weighted average of the Underlying
Monthly Loss Percentages over the previous three (3) Monthly Periods for all Underlying Securities that were outstanding during such
Monthly Periods.
“Transaction Documents” means, collectively, this Indenture, the Notes, the Purchase Agreements, the Note Purchase
Agreement, the Limited Guaranty, the Administrative Services Agreement, the Custody Agreement and any agreements of the Issuer relating
to the issuance or the purchase of any of the Notes.
“Transfer” has the meaning specified in Section 2.6(e).
National Association is acting as Indenture Trustee, be the Indenture Trustee.
“Transfer Agent and Registrar ” has the meaning specified in Section 2.6 and shall initially, and so long as Wilmington Trust,
22
4147-9029-0755.4
and control of the Indenture Trustee.
“Trust Account” has the meaning specified in the Granting Clause to this Indenture, which accounts are under the sole dominion
“Trust Estate” has the meaning specified in the Granting Clause of this Indenture.
“Trust Officer” means any officer within the Corporate Trust Office (or any successor group of the Indenture Trustee),
including any Vice President, any Director, any Managing Director, any Assistant Vice President or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any individual who at the time shall be an above-designated officer and is
directly responsible for the day-to-day administration of the transactions contemplated herein.
“Trustee Fees and Expenses” means, for any Payment Date, the amount of accrued and unpaid fees, indemnity amounts and
reasonable out-of-pocket expenses, not in excess of $150,000 per calendar year for the Indenture Trustee (including in its capacity as Agent),
the Securities Intermediary and the Depositary Bank (or, if an Event of Default or other Rapid Amortization Event has occurred and is
continuing, without limit).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the
Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire
day for purposes of trading in United States government securities.
“UCC” means, with respect to any jurisdiction, the Uniform Commercial Code as the same may, from time to time, be enacted
and in effect in such jurisdiction.
Replacement Adjustment.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark
2022-A Indenture or the 2022-2 Indenture, as applicable.
“Underlying Indenture” means the 2019-A Indenture, the 2021-A Indenture, the 2021-B Indenture, the 2021-C Indenture, the
the 2022-2 Issuer, as applicable.
“Underlying Issuer” means the 2019-A Issuer, the 2021-A Issuer, the 2021-B Issuer, the 2021-C Issuer, the 2022-A Issuer or
applicable Underlying Indenture.
“Underlying Monthly Loss Percentage” means, for any Underlying Issuer, the “Monthly Loss Percentage” as defined in the
or if such eighth (8th) day is not a Business Day, the next succeeding Business Day.
“Underlying Payment Date” means with respect to any Underlying Security, means the eighth (8th) day of each calendar month,
Underlying Securities in accordance with the applicable Underlying Transaction Documents.
“Underlying Payments” means, with respect to any Underlying Securities, any payments or distributions made in respect of such
“Underlying Securities” means, collectively, the 2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates, the
2021-C Certificates, the 2022-A Certificates and the 2022-2 Certificates.
2021-B Transaction Documents, the 2021-C Transaction
“Underlying Transaction Documents” means the 2019-A Transaction Documents, the 2021-A Transaction Documents, the
23
4147-9029-0755.4
Documents, the 2022-A Transaction Documents and the 2022-2 Transaction Documents as applicable.
“U.S.” or “United States” means the United States of America and its territories.
“written” or “in writing” means any form of written communication, including, without limitation, by means of e-mail, telex or
telecopier device.
b. [Reserved].
c. Cross-References. Unless otherwise specified, references in this Indenture and in each other Transaction Document to any
Article or Section are references to such Article or Section of this Indenture or such other Transaction Document, as the case may be, and,
unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or
definition.
d. Accounting and Financial Determinations; No Duplication. Where the character or amount of any asset or liability or item of
income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this Indenture, such
determination or calculation shall be made, to the extent applicable and except as otherwise specified in this Indenture, in accordance with
GAAP. When used herein, the term “financial statement” shall include the notes and schedules thereto. All accounting determinations and
computations hereunder or under any other Transaction Documents shall be made without duplication.
e. Rules of Construction. In this Indenture, unless the context otherwise requires:
1.
2.
“or” is not exclusive;
the singular includes the plural and vice versa;
3.
reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Indenture, and reference to any Person in a particular capacity only refers to such Person in such capacity;
4.
reference to any gender includes the other gender;
reference to any Requirement of Law means such Requirement of Law as amended, modified, codified or reenacted, in
whole or in part, and in effect from time to time;
5.
6.
preceding such term; and
“including” (and with correlative meaning “include”) means including without limiting the generality of any description
7.
excluding.”
with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but
f. Other Definitional Provisions.
(i)All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. Capitalized terms used but not defined herein shall have the respective meaning
given to such term in the Servicing Agreement.
24
4147-9029-0755.4
(ii)The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this Indenture; and Section, subsection, Schedule and Exhibit references contained
in this Indenture are references to Sections, subsections, Schedules and Exhibits in or to this Indenture unless otherwise specified.
(iii)Terms used herein that are defined in the New York Uniform Commercial Code and not otherwise defined herein shall have the
meanings set forth in the New York Uniform Commercial Code, unless the context requires otherwise. Any reference herein to a “beneficial
interest” in a security also shall mean, unless the context requires otherwise, a security entitlement with respect to such security, and any
reference herein to a “beneficial owner” or “beneficial holder” of a security also shall mean, unless the context requires otherwise, the holder of
a security entitlement with respect to such security. Any reference herein to money or other property that is to be deposited in or is on deposit in
a securities account shall also mean that such money or other property is to be credited to, or is credited to, such securities account.
ARTICLE 2.
THE SECURITIES
a. Designation and Terms of Securities. Subject to Sections 2.16 and 2.19, the Notes shall be issued in fully registered form (the
“Registered Notes”), the Certificates shall be issued in definitive, fully registered form (the “Registered Certificates”), and Registered Notes
and Registered Certificates shall be substantially in the form of exhibits with respect thereto attached hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks
of identification and such restrictions, legends or endorsements placed thereon and shall bear, upon their face, the designation for such series to
which they belong so selected by the Issuer, all as determined by the Responsible Officers executing such Securities, as evidenced by their
execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Security.
b. [Reserved].
c. [Reserved].
d. Execution and Authentication.
(i)Each Security shall be executed by manual or facsimile signature by the Issuer. Securities bearing the manual or facsimile
signature of the individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Issuer shall not be
rendered invalid, notwithstanding that such individual has ceased to be so authorized prior to the authentication and delivery of such Securities
or does not hold such office at the date of such Securities. No Securities shall be entitled to any benefit under this Indenture, or be valid for any
purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein, duly executed by or
on behalf of the Indenture Trustee by the manual signature of a duly authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.
(ii)The Issuer shall execute and the Indenture Trustee shall authenticate and deliver the Securities having the terms specified
herein, upon the receipt of an Issuer Order, to the purchasers thereof, the underwriters for sale or to the Issuer for initial retention by it. The
Issuer shall execute and the Indenture Trustee shall authenticate and deliver each Global Note that is
25
4147-9029-0755.4
issued upon original issuance thereof, upon the receipt of an Issuer Order against payment of the purchase price therefor. The Issuer shall
execute and the Indenture Trustee shall authenticate Book-Entry Notes that are issued upon original issuance thereof, upon the receipt of an
Issuer Order, to a Clearing Agency or its nominee as provided in Section 2.16 against payment of the purchase price thereof.
(iii)All Securities shall be dated and issued as of the date of their authentication.
e. Authenticating Agent.
(i)The Indenture Trustee may appoint one or more authenticating agents with respect to the Securities which shall be authorized to
act on behalf of the Indenture Trustee in authenticating the Securities in connection with the issuance, delivery, registration of transfer,
exchange or repayment of the Securities. Whenever reference is made in this Indenture to the authentication of Securities by the Indenture
Trustee or the Indenture Trustee’s certificate of authentication, such reference shall be deemed to include authentication on behalf of the
Indenture Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Indenture Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the Issuer.
(ii)Any institution succeeding to the corporate agency business of an authenticating agent shall continue to be an authenticating
agent without the execution or filing of any paper or any further act on the part of the Indenture Trustee or such authenticating agent.
(iii)An authenticating agent may at any time resign by giving written notice of resignation to the Indenture Trustee and to the Issuer.
The Indenture Trustee may at any time terminate the agency of an authenticating agent by giving notice of termination to such authenticating
agent and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time an authenticating agent
shall cease to be acceptable to the Indenture Trustee or the Issuer, the Indenture Trustee promptly may appoint a successor authenticating
agent. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent.
(iv)The Issuer agrees to pay each authenticating agent from time to time reasonable compensation for its services under this
Section 2.5.
(v)Pursuant to an appointment made under this Section 2.5, the Securities may have endorsed thereon, in lieu of the Indenture
Trustee’s certificate of authentication, an alternate certificate of authentication in substantially the following form:
This is one of the [notes/certificates] described in the Indenture.
[Name of Authenticating Agent],
as Authenticating Agent
for the Indenture Trustee,
By:
Responsible Officer
26
4147-9029-0755.4
f. Registration of Transfer and Exchange of Securities.
(i)(i) The Indenture Trustee shall cause to be kept at the office or agency to be maintained by a transfer agent and registrar (the
“Transfer Agent and Registrar”), in accordance with the provisions of Section 2.6(c), a register (the “Register”) in which, subject to such
reasonable regulations as it may prescribe, the Transfer Agent and Registrar shall provide for the registration of the Securities and
registrations of transfers and exchanges of the Securities as herein provided. The Indenture Trustee is hereby initially appointed Transfer
Agent and Registrar for the purposes of registering the Securities and transfers and exchanges of the Securities as herein provided. If a
Person other than the Indenture Trustee is appointed by the Issuer as Transfer Agent and Registrar, the Issuer will give the Indenture
Trustee prompt written notice of the appointment of such Transfer Agent and Registrar and of the location, and any change in the
location, of the Register, and the Indenture Trustee shall have the right to inspect the Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Transfer Agent and Registrar by
a Responsible Officer thereof as to the names and addresses of the Holders of the Securities and the principal amounts or par values and
number of such Securities. If any form of Note is issued as a Global Note, the Indenture Trustee may appoint a co-transfer agent and co-
registrar in a European city. Any reference in this Indenture to the Transfer Agent and Registrar shall include any co-transfer agent and
co-registrar unless the context otherwise requires. The Indenture Trustee shall be permitted to resign as Transfer Agent and Registrar
upon thirty (30) days’ written notice to Administrator and the Issuer. In the event that the Indenture Trustee shall no longer be the
Transfer Agent and Registrar, the Issuer shall appoint a successor Transfer Agent and Registrar.
1.
Upon surrender for registration of transfer of any Security at any office or agency of the Transfer Agent and Registrar, if
the requirements of Section 8-401(a) of the UCC are met, the Issuer shall execute, subject to the provisions of Section 2.6(b), and the
Indenture Trustee shall authenticate and (unless the Transfer Agent and Registrar is different than the Indenture Trustee, in which case
the Transfer Agent and Registrar shall) deliver and the Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Securities in authorized denominations of like aggregate principal amount or
aggregate par value, as applicable.
2.
All Securities issued upon any registration of transfer or exchange of Securities shall be valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
3.
At the option of any Holder of Registered Notes, Registered Notes may be exchanged for other Registered Notes in
authorized denominations of like aggregate principal amounts or aggregate par values in the manner specified herein, upon surrender of
the Registered Notes to be exchanged at any office or agency of the Transfer Agent and Registrar maintained for such purpose. At the
option of any Holder of Registered Certificates, Registered Certificates may be exchanged for other Registered Certificates of like
percentage interests in the manner specified herein, upon surrender of the Registered Certificates to be exchanged at any office or
agency of the Transfer Agent and Registrar maintained for such purpose.
4.
Whenever any Securities are so surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are met, the
Issuer shall execute and the
27
4147-9029-0755.4
Indenture Trustee shall authenticate and (unless the Transfer Agent and Registrar is different than the Indenture Trustee, in which case
the Transfer Agent and Registrar shall) deliver and the Noteholders shall obtain from the Indenture Trustee, the Securities that the
Noteholder making the exchange is entitled to receive. Every Security presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory to the Issuer duly executed by the Noteholder thereof or
its attorney-in-fact duly authorized in writing.
5.
The preceding provisions of this Section 2.6 notwithstanding, the Indenture Trustee or the Transfer Agent and Registrar,
as the case may be, shall not be required to register the exchange of any Global Note for a Definitive Note or the transfer of or exchange
any Security for a period of five (5) Business Days preceding the due date for any payment with respect to the Securities or during the
period beginning on any Record Date and ending on the next following Payment Date.
6.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
7.
All Securities surrendered for registration of transfer and exchange shall be cancelled by the Transfer Agent and Registrar
and disposed of. The Indenture Trustee shall cancel and destroy any Global Note upon its exchange in full for Definitive Notes and shall
deliver a certificate of destruction to the Issuer. Such certificate shall also state that a certificate or certificates of each Clearing Agency
to the effect referred to in Section 2.19 was received with respect to each portion of the Global Note exchanged for Definitive Notes.
8.
Upon written request, the Issuer shall deliver to the Indenture Trustee or the Transfer Agent and Registrar, as applicable,
Registered Notes and Registered Certificates in such amounts and at such times as are necessary to enable the Indenture Trustee to fulfill
its responsibilities under this Indenture and the Securities.
9.
[Reserved].
10. Notwithstanding any other provision of this Section 2.6, the typewritten Note or Notes representing Book-Entry Notes
may be transferred, in whole but not in part, only to another nominee of the Clearing Agency for such Notes, or to a successor Clearing
Agency for such Notes selected or approved by the Issuer or to a nominee of such successor Clearing Agency, only if in accordance with
this Section 2.6.
11.
By its acceptance of a Class A Note, each Noteholder and Note Owner shall be deemed to have represented and warranted
that, with respect to the Class A Notes, either (i) it is not a Benefit Plan Investor or a governmental or other plan subject to Similar Law,
or (ii) (a) the purchase and holding of the Class A Note (or any interest therein) will not give rise to a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (b) it acknowledges and agrees that the
Class A Notes, are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law at any
time that the Class A Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated below
investment grade.
(ii)Registration of transfer of Registered Notes containing a legend relating to the restrictions on transfer of such Registered Notes
(which legend is set forth in Section 2.16(d) of
28
4147-9029-0755.4
this Indenture relating to such Notes) shall be effected only if the conditions set forth in Section 2.6 have been satisfied.
Whenever a Registered Note containing the legend set forth in Section 2.16(d) is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall promptly seek instructions from the Issuer regarding such transfer. The
Transfer Agent and Registrar and the Indenture Trustee shall be entitled to receive written instructions signed by a Responsible Officer of the
Issuer prior to registering any such transfer or authenticating new Registered Notes, as the case may be. The Issuer hereby agrees to indemnify
the Transfer Agent and Registrar and the Indenture Trustee and to hold each of them harmless against any loss, liability or expense incurred
without negligence or willful misconduct on their part arising out of or in connection with actions taken or omitted by them in reliance on any
such written instructions furnished pursuant to this Section 2.6(b).
(iii)The Transfer Agent and Registrar will maintain an office or offices or an agency or agencies where Securities may be
surrendered for registration of transfer or exchange.
(iv)Any Retained Notes may not be transferred to another Person for United States federal income tax purposes unless the
transferor shall cause an Opinion of Counsel to be delivered to the Seller and the Trustee at such time stating that, although not free from doubt,
such Notes will be characterized as debt for United States federal income tax purposes. In addition, if for tax or other reasons it may be
necessary to track such Notes (e.g., if the Notes have original issue discount), tracking conditions such as requiring that such Notes be in
definitive registered form may be required by the Issuer as a condition to such transfer.
(v)Notwithstanding anything to the contrary in this Indenture, no interest in the Certificates may be directly or indirectly sold,
transferred, assigned, exchanged, participated or otherwise conveyed, pledged, hypothecated or rehypothecated or made the subject of a
security interest (each such transaction for purposes of this Section 2.6(e), a “Transfer”) except to a Person who is a “United States person” for
United Stated federal income tax purposes and only upon the prior delivery of a Tax Opinion to the Indenture Trustee with respect to such
Transfer, and any Transfer in violation of these requirements shall be null and void ab initio.
g. Appointment of Paying Agent.
(i)The Paying Agent shall make payments to the Secured Parties from the appropriate account or accounts maintained for the
benefit of the Secured Parties as specified in this Indenture pursuant to Articles 5 and 6. Any Paying Agent shall have the revocable power to
withdraw funds from such appropriate account or accounts for the purpose of making distributions referred to above. The Indenture Trustee (or
the Issuer or Oportun if the Indenture Trustee is the Paying Agent) may revoke such power and remove the Paying Agent, if the Paying Agent
fails to perform its obligations under this Indenture in any material respect or for other good cause. The Paying Agent shall initially be the
Indenture Trustee. The Indenture Trustee shall be permitted to resign as Paying Agent upon thirty (30) days’ written notice to the Issuer with a
copy to Oportun. In the event that the Indenture Trustee shall no longer be the Paying Agent, the Issuer or Oportun shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company).
(ii)The Issuer shall cause each Paying Agent (other than the Indenture Trustee) to execute and deliver to the Indenture Trustee an
instrument in which such Paying Agent shall agree with the Indenture Trustee that such Paying Agent will hold all sums, if any, held by it for
payment to the Secured Parties in trust for the benefit of the Secured Parties entitled thereto until such sums shall be paid to such Secured
Parties and shall agree, and if the Indenture Trustee is the Paying Agent it hereby agrees, that it shall comply with all requirements of the Code
29
4147-9029-0755.4
regarding the withholding of payments in respect of federal income taxes due from Note Owners or other Secured Parties (including in respect
of FATCA and any applicable tax reporting requirements).
h. Paying Agent to Hold Money in Trust.
(i)The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an
instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Paying Agent will:
1.
hold all sums held by it for the payment of amounts due with respect to the Secured Obligations in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided herein and pay such sums
to such Persons as provided herein;
2.
give the Indenture Trustee written notice of any default by the Issuer (or any other obligor under the Secured Obligations)
of which it (or, in the case of the Indenture Trustee, a Trust Officer) has actual knowledge in the making of any payment required to be
made with respect to the Securities;
3.
at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
4.
immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the
payment of the Secured Obligations if at any time it ceases to meet the standards required to be met by an Indenture Trustee hereunder;
and
5.
comply with all requirements of the Code with respect to the withholding from any payments made by it on any Secured
Obligations of any applicable withholding taxes imposed thereon, including FATCA Withholding Tax (including obtaining and
retaining from Persons entitled to payments with respect to the Securities any Tax Information and making any withholdings with
respect to the Securities as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate
Governmental Authority), comply with respect to any applicable reporting requirements in connection with any payments made by it on
any Secured Obligations and any withholding of taxes therefrom, and, upon request, provide any Tax Information to the Issuer.
(ii)The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, cause to be delivered an Issuer Order directing any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to
such money.
(iii)Subject to applicable Laws with respect to escheat of funds, any money held by the Indenture Trustee, any Paying Agent or any
Clearing Agency in trust for the payment of any amount due with respect to any Secured Obligation and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Order; and the holder of
such Secured Obligation shall thereafter, as an
30
4147-9029-0755.4
unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all
liability of the Indenture Trustee, such Paying Agent or such Clearing Agency with respect to such trust money shall thereupon cease; provided,
however, that the Indenture Trustee, such Paying Agent or such Clearing Agency, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in New York City and, if the related Notes have been listed on the Luxembourg Stock Exchange, and
if the Luxembourg Stock Exchange so requires, in a newspaper customarily published on each Luxembourg business day and of general
circulation in Luxembourg City, Luxembourg, notice that such money remains unclaimed and that, after a date specified therein, which shall
not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the
Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such
repayment.
i.
Private Placement Legend.
(i)In addition to any legend required by Section 2.16, each Class A Note shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE OFFERED,
SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS OF
RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT
THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE
AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
31
4147-9029-0755.4
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY FIDUCIARY
ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT THAT
EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS
SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING
(EACH OF THE FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO
APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
(“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT
ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO
SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR
APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW INVESTMENT GRADE.
(ii)Each Certificate shall bear a legend in substantially the following form:
32
4147-9029-0755.4
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE
MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN
INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE
RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND
WARRANT THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A
“PLAN” AS DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
WHICH IS
33
4147-9029-0755.4
SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING,
OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
j.
Mutilated, Destroyed, Lost or Stolen Securities.
(i)If (i) any mutilated Security is surrendered to the Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Transfer Agent and Registrar, the
Indenture Trustee, and the Issuer such security or indemnity as may, in their sole discretion, be required by them to hold the Transfer Agent and
Registrar, the Indenture Trustee, and the Issuer harmless then, in the absence of written notice to the Indenture Trustee that such Security has
been acquired by a protected purchaser, and provided that the requirements of Section 8-405 of the UCC (which generally permit the Issuer to
impose reasonable requirements) are met, then the Issuer shall execute and the Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and (unless the Transfer Agent and Registrar is different from the Indenture Trustee, in which case the Transfer Agent and
Registrar shall) deliver (in compliance with applicable Law), in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security,
a replacement Security of like tenor and aggregate principal balance or aggregate par value; provided, however, that if any such destroyed, lost
or stolen Security, but not a mutilated Security, shall have become or within seven (7) days shall be due and payable or shall have been called
for redemption, instead of issuing a replacement Security, the Issuer may pay such destroyed, lost or stolen Security when so due or payable
without surrender thereof.
If, after the delivery of such replacement Security or payment of a destroyed, lost or stolen Security pursuant to the proviso to
the preceding sentence, a protected purchaser of the original Security in lieu of which such replacement Security was issued presents for
payment such original Security, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Security (or such payment)
from the Person to whom it was delivered or any Person taking such replacement Security from such Person to whom such replacement
Security was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(ii)Upon the issuance of any replacement Security under this Section 2.10, the Transfer Agent and Registrar or the Indenture
Trustee may require the payment by the Holder of such Security of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Transfer Agent
and Registrar) connected therewith.
(iii)Every replacement Security issued pursuant to this Section 2.10 in replacement of any mutilated, destroyed, lost or stolen
Security shall constitute an original additional Contractual Obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all
other Security of like kind duly issued hereunder.
34
4147-9029-0755.4
(iv)The provisions of this Section 2.10 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
k. Temporary Notes.
(i)Pending the preparation of Definitive Notes, the Issuer may request and the Indenture Trustee, upon receipt of an Issuer Order,
shall authenticate and deliver temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations
that are not inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of
such Notes.
(ii)If temporary Notes are issued pursuant to Section 2.11(a) above, the Issuer will cause Definitive Notes to be prepared without
unreasonable delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender
of the temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 8.2(b), without charge to the Noteholder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute and at the request of the Issuer the Indenture
Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes.
l.
Persons Deemed Owners. Prior to due presentation of a Security for registration of transfer, the Issuer, the Indenture Trustee,
the Paying Agent, the Transfer Agent and Registrar and any agent of any of them may treat a Person in whose name any Security is registered
(as of any date of determination) as the owner of the related Security for the purpose of receiving payments of principal and interest, if any, on
such Security and for all other purposes whatsoever whether or not such Security be overdue, and neither the Issuer, the Indenture Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them shall be affected by any notice to the contrary; provided,
however, that in determining whether the requisite number of Holders of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by any of the Issuer, the Seller, the Parent or any Affiliate controlled by or controlling
Oportun shall be disregarded and deemed not to be outstanding, except that, in determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Trust Officer in the
Corporate Trust Office of the Indenture Trustee actually knows to be so owned shall be so disregarded. The foregoing proviso shall not apply if
there are no Holders other than the Issuer or its Affiliates.
m. Cancellation. All Securities surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to
any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the Indenture Trustee.
The Issuer may at any time deliver to the Indenture Trustee for cancellation any Securities previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Indenture
Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to
it; provided that such Issuer Order is timely and the Securities have not been previously disposed of by the Indenture Trustee. The Registrar
and Paying Agent shall forward to the Indenture Trustee any Securities surrendered to them for registration of transfer, exchange or payment.
35
4147-9029-0755.4
n. Release of Trust Estate.
(i)The Indenture Trustee shall (a) in connection any redemption of the Securities, release the Trust Estate from the Lien created by
this Indenture upon receipt of an Officer’s Certificate of the Issuer certifying that (i) the Redemption Price and all other amounts due and owing
on the Redemption Date have been deposited into a Trust Account that is within the sole control of the Indenture Trustee, (ii) the distribution
on the Certificates if and as required by Section 14.1(c) has been made in full, and (iii) such release is authorized and permitted under the
Transaction Documents and (b) on or after the Indenture Termination Date, release any remaining portion of the Trust Estate from the Lien
created by this Indenture, including any funds then on deposit in any Trust Account upon receipt of an Issuer Order accompanied by an
Officer’s Certificate of the Issuer meeting the applicable requirements of Section 15.1.
(ii)On the 2022-2 Purchase Date, concurrently with the inclusion of the 2022-2 Certificates in the Trust Estate and the transfer by
the Issuer of the 2022-A Class D Notes, the Lien created by this Indenture in respect of the 2022-A Class D Notes, together with all monies due
or to become due thereunder and all proceeds of every kind and nature whatsoever in respect of the foregoing, shall be automatically released
and the Indenture Trustee shall be deemed to have released such Lien, without the execution or filing of any instrument or paper or the
performance of any further act, and the 2022-A Class D Notes shall no longer be included in the Trust Estate.
o. Payment of Principal, Interest and Other Amounts.
(i)The principal of each of the Notes shall be payable at the times and in the amounts set forth in Section 5.15 and in accordance
with Section 8.1.
(ii)Each of the Notes shall accrue interest as provided in Section 5.12 and such interest shall be payable at the times and in the
amounts set forth in Section 5.15 and in accordance with Section 8.1. The payments of amounts payable with respect to the Certificates shall be
made at the times and in the amounts set forth in Section 5.15 and in accordance with Section 8.1.
(iii)Any installment of interest, principal or other amounts, if any, payable on any Security which is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Security is registered at the close of
business on any Record Date with respect to a Payment Date for such Security and such Person shall be entitled to receive the principal, interest
or other amounts payable on such Payment Date notwithstanding the cancellation of such Security upon any registration of transfer, exchange
or substitution of such Security subsequent to such Record Date, by wire transfer in immediately available funds to the account designated by
the Holder of such Security, except that, unless Definitive Notes have been issued pursuant to Section 2.18, with respect to Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable
with respect to such Note on a Payment Date or on the Legal Final Payment Date (and except for the Redemption Price for any Note called for
redemption pursuant to Section 14.1) which shall be payable as provided herein; except that, any interest payable at maturity shall be paid to
the Person to whom the principal of such Note is payable. The funds represented by any such checks returned undelivered shall be held in
accordance with Section 2.8.
36
4147-9029-0755.4
p. Book-Entry Notes.
(i)The Notes shall be delivered as Registered Notes representing Book-Entry Notes as provided in subsection (a)(i). For purposes
of this Indenture, the term “Global Notes” refers to the Restricted Global Notes, as defined below.
1.
Restricted Global Notes. The Notes to be sold will be issued in book-entry form and represented by one or more
permanent global Notes in fully registered form without interest coupons (the “Restricted Global Notes”), substantially in the form
attached hereto as Exhibit C, and will be either (x) retained by the Issuer or an Affiliate thereof or (y) offered and sold, only (1) by the
Issuer to an institutional “accredited investor” within the meaning of Regulation D under the Securities Act in reliance on an exemption
from the registration requirements of the Securities Act and (2) thereafter only to a Person that is a qualified institutional buyer (“QIB”)
as defined in Rule 144A under the Securities Act (“ Rule 144A”) in accordance with subsection (c) hereof, and shall be deposited with a
custodian for, and registered in the name of a nominee of DTC, duly executed by the Issuer and authenticated by the Indenture Trustee
as provided in this Indenture for credit to the accounts of the subscribers at DTC. The initial principal amount of the Restricted Global
Notes may from time to time be increased or decreased by adjustments made on the records of the custodian for DTC, DTC or its
nominee, as the case may be, as hereinafter provided.
(ii)The Class A Notes will be issuable and transferable in minimum denominations of $100,000 and in integral multiples of $1,000
in excess thereof.
(iii)The Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Definitive Notes except in the limited circumstances described in
Section 2.18 of this Indenture. Beneficial interests in the Global Notes may be transferred only (i) to a Person that is a QIB in a transaction
meeting the requirements of Rule 144A and whom the transferor has notified that it may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A, in compliance with the Indenture and all applicable securities Laws of any state of
the United States or any other applicable jurisdiction, subject to any Requirement of Law that the disposition of the seller’s property or the
property of an investment account or accounts be at all times within the seller’s or account’s control. Each transferee of a beneficial interest in a
Global Note shall be deemed to have made the acknowledgments, representations and agreements set forth in subsection (d) hereof. Any such
transfer shall also be made in accordance with the following provisions:
1.
Transfer of Interests Within a Global Note. Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note in accordance with the transfer restrictions set forth in the
foregoing paragraph of this subsection 2.16(c) and the transferee shall be deemed to have made the representations contained in
subsection 2.16(d).
(iv)Each transferee of a beneficial interest in a Global Note or of any Definitive Notes shall be deemed to have represented and
agreed that:
it (A) is a QIB, (B) is aware that the sale to it is being made in reliance on Rule 144A and (C) is acquiring the Notes for
the Notes have not been and will not be registered under the Securities Act, and that, if in the future it decides to offer,
1.
2.
its own account or for the account of a QIB;
resell, pledge or otherwise transfer such
37
4147-9029-0755.4
Notes, such Notes may be offered, sold, pledged or otherwise transferred only to a Person that is a QIB in a transaction meeting the
requirements of Rule 144A and whom the transferor has notified that it may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A, in compliance with the Indenture and all applicable securities Laws of any
state of the United States or any other jurisdiction, subject to any Requirement of Law that the disposition of the seller’s property or the
property of an investment account or accounts be at all times within the seller’s or account’s control and it will notify any transferee of
the resale restrictions set forth above;
3.
applicable Law:
the following legend will be placed on the Class A Notes unless the Issuer determines otherwise in compliance with
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS
NOTE MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN
TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE
AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET
FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND
ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO
REPRESENT AND WARRANT THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION 4975
OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO
APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE (“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST
HEREIN) WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT ACKNOWLEDGES
AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN INVESTORS OR
GOVERNMENTAL OR OTHER
38
4147-9029-0755.4
PLANS SUBJECT TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN CHARACTERIZED AS
OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW
INVESTMENT GRADE.
4.
[Reserved].
5.
(A) in the case of Global Notes, the foregoing restrictions apply to holders of beneficial interests in such Notes
(notwithstanding any limitations on such transfer restrictions in any agreement between the Issuer, the Indenture Trustee and the holder
of a Global Note) as well as to Holders of such Notes and the transfer of any beneficial interest in such a Global Note will be subject to
the restrictions and certification requirements set forth herein and (B) in the case of Definitive Notes, the transfer of any such Notes will
be subject to the restrictions and certification requirements set forth herein.
6.
the Indenture Trustee, the Issuer, the Initial Purchasers or placement agents for the Notes and their Affiliates and others
will rely upon the truth and accuracy of the foregoing representations and agreements and agrees that if any of the representations or
agreements deemed to have been made by its purchase of such Notes cease to be accurate and complete, it will promptly notify the
Issuer and the Initial Purchasers or placement agents for the Notes in writing;
7.
if it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it has sole investment discretion with
respect to each such account and it has full power to make the foregoing representations and agreements with respect to each such
account; and
8.
with respect to the Class A Notes, either (A) it is not a Benefit Plan Investor or a governmental or other plan subject to
Similar Law, or (B) (1) the purchase and holding of the Note (or any interest therein) will not give rise to a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (2) it acknowledges and agrees
that the Class A Notes, are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law
at any time that the Class A Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated
below investment grade.
In addition, such transferee shall be responsible for providing additional information or certification, as reasonably requested by
the Indenture Trustee or the Issuer, to support the truth and accuracy of the foregoing representations and agreements, it being understood that
such additional information is not intended to create additional restrictions on the transfer of the Notes.
(v)For each of the Notes to be issued in registered form, the Issuer shall duly execute, and the Indenture Trustee shall, in
accordance with Section 2.4 hereof, authenticate and deliver initially, one or more Global Notes that shall be registered on the Register in the
name of a Clearing Agency or such Clearing Agency’s nominee. Each Global Note registered in the name of DTC or its nominee shall bear a
legend substantially to the following effect:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”), A NEW YORK CORPORATION, TO OPORTUN RF, LLC OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
39
4147-9029-0755.4
REGISTERED IN THE NAME OF CEDE & CO. (“CEDE”) OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE, HAS
AN INTEREST HEREIN.
So long as the Clearing Agency or its nominee is the registered owner or holder of a Global Note, the Clearing Agency or its
nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for purposes of this
Indenture and such Notes. Members of, or participants in, the Clearing Agency shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Clearing Agency, and the Clearing Agency may be treated by the Issuer, the Administrator, the
Indenture Trustee, any Agent and any agent of such entities as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Administrator, the Indenture Trustee, any Agent and any agent of
such entities from giving effect to any written certification, proxy or other authorization furnished by the Clearing Agency or impair, as
between the Clearing Agency and its agent members, the operation of customary practices governing the exercise of the rights of a holder of
any Note.
(vi)[Reserved].
(vii)Title to the Notes shall pass only by registration in the Register maintained by the Transfer Agent and Registrar pursuant to
Section 2.6.
(viii)Any typewritten Note or Notes representing Book-Entry Notes shall provide that they represent the aggregate or a specified
amount of outstanding Notes from time to time endorsed thereon and may also provide that the aggregate amount of outstanding Notes
represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of a typewritten Note or Notes
representing Book-Entry Notes to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Note Owners
represented thereby, shall be made in such manner and by such Person or Persons as shall be specified therein or in the Issuer Order to be
delivered to the Indenture Trustee pursuant to Section 2.4(b). The Indenture Trustee shall deliver and redeliver any typewritten Note or Notes
representing Book-Entry Notes in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Issuer
Order. Any instructions by the Issuer with respect to endorsement or delivery or redelivery of a typewritten Note or Notes representing the
Book-Entry Notes shall be in writing but need not comply with Section 13.3 hereof and need not be accompanied by an Opinion of Counsel.
(ix)Unless and until definitive, fully registered Notes (“Definitive Notes”) have been issued to Note Owners initially issued as
Book-Entry Notes pursuant to Section 2.18:
1.
the provisions of this Section 2.16 shall be in full force and effect with respect to each of the Notes;
2.
the Issuer, the Seller the Paying Agent, the Transfer Agent and Registrar and the Indenture Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes of this Indenture (including the making of payments on the
Notes and the giving of instructions or directions hereunder) as the authorized representatives of such Note Owners;
40
4147-9029-0755.4
3.
to the extent that the provisions of this Section 2.16 conflict with any other provisions of this Indenture, the provisions of
this Section 2.16 shall control;
4.
whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of such
Notes evidencing a specified percentage of the outstanding principal amount of such Notes, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or their related
Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in such Notes and
has delivered such instructions to the Indenture Trustee;
5.
the rights of Note Owners shall be exercised only through the Clearing Agency and their related Clearing Agency
Participants and shall be limited to those established by Law and agreements between such Note Owners and the related Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes are issued
pursuant to Section 2.18, the applicable Clearing Agencies or Foreign Clearing Agencies will make book-entry transfers among their
related Clearing Agency Participants and receive and transmit payments of principal and interest on such Notes to such Clearing Agency
Participants; and
6.
Note Owners may receive copies of any reports sent to Noteholders pursuant to this Indenture, upon written request,
together with a certification that they are Note Owners and payments of reproduction and postage expenses associated with the
distribution of such reports, from the Indenture Trustee at the Corporate Trust Office.
q. Notices to Clearing Agency. Whenever notice or other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.18, the Indenture Trustee shall give all such
notices and communications specified herein to be given to Holders of the Notes to the applicable Clearing Agency for distribution to the
Holders of the Notes.
r. Definitive Notes.
(i)Conditions for Exchange. If with respect to any of the Book-Entry Notes (i) (A) the Issuer advises the Indenture Trustee in
writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities under the applicable Depository
Agreement and (B) the Issuer is not able to locate a qualified successor, (ii) to the extent permitted by Law, the Issuer, at its option, advises the
Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency with respect to any of the Notes or
(iii) after the occurrence of an Event of Default, Note Owners representing beneficial interests aggregating not less than a majority of the
portion of outstanding principal amount of the Notes advise the Indenture Trustee and the applicable Clearing Agency through the applicable
Clearing Agency Participants in writing that the continuation of a book-entry system through the applicable Clearing Agency is no longer in
the best interests of the Note Owners, the Indenture Trustee shall notify all Note Owners, through the applicable Clearing Agency Participants,
of the occurrence of any such event and of the availability of Definitive Notes to Note Owners. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the applicable Clearing Agency, accompanied by registration instructions
from the applicable Clearing Agency for registration, the Indenture Trustee shall issue the Definitive Notes. Neither the Issuer nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Notes and upon the issuance of any Notes in definitive form in accordance with this
Indenture, all references herein to obligations imposed upon or to be performed by the
41
4147-9029-0755.4
applicable Clearing Agency shall be deemed to be imposed upon and performed by the Indenture Trustee, to the extent applicable with respect
to such Definitive Notes, and the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders hereunder.
(ii)Transfer of Definitive Notes. Subject to the terms of this Indenture, the holder of any Definitive Note may transfer the same in
whole or in part, in an amount equivalent to an authorized denomination, by surrendering at the Corporate Trust Office, such Note with the
form of transfer endorsed on it duly completed and executed by, or accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Transfer Agent and Registrar by, the holder thereof and, if applicable, accompanied by a certificate substantially in the form of
Exhibit B. In exchange for any Definitive Note properly presented for transfer, the Issuer shall execute and the Indenture Trustee shall
promptly authenticate and deliver or cause to be executed, authenticated and delivered in compliance with applicable Law, to the transferee at
such office, or send by mail (at the risk of the transferee) to such address as the transferee may request, Definitive Notes for the same aggregate
principal amount as was transferred. In the case of the transfer of any Definitive Note in part, the Issuer shall execute and the Indenture Trustee
shall promptly authenticate and deliver or cause to be authenticated and delivered to the transferor at such office, or send by mail (at the risk of
the transferor) to such address as the transferor may request, Definitive Notes for the aggregate principal amount that was not transferred. No
transfer of any Definitive Note shall be made unless the request for such transfer is made by the Holder at such office. Neither the Issuer nor
the Indenture Trustee shall be liable for any delay in delivery of transfer instructions and each may conclusively rely on, and shall be protected
in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
s. Global Note. As specified in Section 2.16, (i) the Notes may be initially issued in the form of a single temporary global note
(the “Global Note”) in registered form, without interest coupons, in the denomination of the initial aggregate principal amount of the Notes,
substantially in the form of Exhibit C. The provisions of this Section 2.19 shall apply to such Global Note. The Global Note will be
authenticated by the Indenture Trustee upon the same conditions, in substantially the same manner and with the same effect as the Definitive
Notes. The Global Note may be exchanged in the manner described herein.
t.
Tax Treatment. The Notes have been (or will be) issued with the intention that, the Notes will qualify under applicable tax Law
as debt for U.S. federal income tax purposes and any entity acquiring any direct or indirect interest in any Note by acceptance of its Notes (or,
in the case of a Note Owner, by virtue of such Note Owner’s acquisition of a beneficial interest therein) agrees to treat the Notes (or beneficial
interests therein) for purposes of federal, state and local income and franchise taxes and any other tax imposed on or measured by income, as
debt. Each Noteholder agrees that it will cause any Note Owner acquiring an interest in a Note through it to comply with this Indenture as to
treatment as debt for such tax purposes. Notwithstanding the foregoing, to the extent the Issuer is treated as a partnership for federal, state or
local income or franchise purposes and a Noteholder (or Note Owner, as applicable) is treated as a partner in such partnership, the Noteholders
(and Note Owners, as applicable) agree that any tax, penalty, interest or other obligation imposed under the Code with respect to the income
tax items arising from such partnership shall be the sole obligation of the Noteholder (or Note Owner, as applicable) to whom such items are
allocated and not of such partnership.
u. Duties of the Indenture Trustee and the Transfer Agent and Registrar. Notwithstanding anything contained herein to the
contrary, neither the Indenture Trustee nor the Transfer Agent and Registrar shall be responsible for ascertaining whether any transfer of a
Security complies with the terms of this Indenture, the registration provision of or exemptions from the Securities Act, applicable state
securities Laws, ERISA or the Investment Company Act; provided that if a transfer certificate or opinion is specifically required by the express
terms
42
4147-9029-0755.4
of this Indenture to be delivered to the Indenture Trustee or the Transfer Agent and Registrar in connection with a transfer, the Indenture
Trustee or the Transfer Agent and Registrar, as the case may be, shall be under a duty to receive the same.
ARTICLE 3.
ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
a. Issuance.
(i)Subject to satisfaction of the conditions precedent set forth in subsection (b) of this Section 3.1, on the Closing Date, the Issuer
will issue, (i) in accordance with Section 2.16 hereof, the initial Class A Notes in the aggregate initial principal amount equal to $116,000,000
and (ii) the Certificates constituting a subordinate residual interest in the Issuer.
(ii)The Securities issued on the Closing Date pursuant to subsection (a) above will be issued only upon satisfaction of each of the
following conditions with respect to such initial issuance:
1.
the amount of each Class A Note shall be equal to or greater than $100,000 (and in integral multiples of $1,000 in excess
thereof), and the percentage interest of each Certificate shall be equal to or greater than 5% (with no minimum incremental percentage
interests in excess thereof);
2.
such issuance and the application of the proceeds thereof shall not result in the occurrence of (1) an Administrator Default,
a Rapid Amortization Event or an Event of Default, or (2) an event or occurrence, which, with the passing of time or the giving of notice
thereof, or both, would become an Administrator Default, a Rapid Amortization Event or an Event of Default; and
3.
all required consents have been obtained and all other conditions precedent to the purchase of the Notes under the Note
Purchase Agreement shall have been satisfied.
(iii)Subject to satisfaction of the following conditions precedent, on the 2022-A Purchase Date, the Issuer will issue, in accordance
with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $20,907,000:
1.
such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
2.
the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the
accuracy of certain representations and warranties contained in the Note Purchase Agreement; and
3.
the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law,
Investment Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
(iv)Subject to satisfaction of the following conditions precedent, on the 2022-2 Purchase Date, the Issuer will issue, in accordance
with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $9,060,000:
43
4147-9029-0755.4
1.
such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the
accuracy of certain representations and warranties contained in the Note Purchase Agreement; and
the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law,
Investment Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
2.
3.
(v)Upon receipt of the proceeds of any issuance under this Section 3.1 by or on behalf of the Issuer, the Indenture Trustee shall, or
shall cause the Transfer Agent and Registrar to, indicate in the Register the amount thereof.
b. Certain Fees and Expenses. The Trustee Fees and Expenses, the Administration Fee and other fees, expenses and indemnity
amounts owed to the Indenture Trustee, Securities Intermediary and Depositary Bank, shall be paid by the cash flows from the Trust Estate and
in no event shall the Indenture Trustee be liable therefor. The foregoing amounts shall be payable to the Indenture Trustee, Securities
Intermediary and Depositary Bank, as applicable, solely to the extent amounts are available for distribution in respect thereof pursuant to
subsections 5.15(a)(i), (a)(ii) and (a)(viii), as applicable.
ARTICLE 4.
NOTEHOLDER LISTS AND REPORTS
a. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders . The Issuer will furnish or
cause the Transfer Agent and Registrar to furnish to the Indenture Trustee (a) not more than five (5) days after each Record Date a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders and Certificateholders as of such Record
Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Transfer Agent and Registrar, no such list shall be required to be furnished. The Issuer will furnish
or cause to be furnished by the Transfer Agent and Registrar to the Paying Agent (if not the Indenture Trustee) such list for payment of
distributions to Noteholders and Certificateholders.
b. Preservation of Information; Communications to Noteholders and Certificateholders.
(i)The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the
Noteholders and Certificateholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 4.1 and the names
and addresses of Noteholders and Certificateholders received by the Indenture Trustee in its capacity as Transfer Agent and Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such Section 4.1 upon receipt of a new list so furnished.
(ii)Noteholders and Certificateholders may communicate with other Noteholders and Certificateholders with respect to their rights
under this Indenture or under the Securities. If holders of Securities evidencing in aggregate not less than (i) 20% of the outstanding principal
balance of the Notes or (ii) a percentage interest in the Certificates of at least 15% (the
44
4147-9029-0755.4
“Applicants”) apply in writing to the Indenture Trustee, and furnish to the Indenture Trustee reasonable proof that each such Applicant has
owned a Security for a period of at least 6 months preceding the date of such application, and if such application states that the Applicants
desire to communicate with other Noteholders or Certificateholders with respect to their rights under this Indenture or under the Securities and
is accompanied by a copy of the communication which such Applicants propose to transmit, then the Indenture Trustee, after having been
indemnified by such Applicants for its costs and expenses, shall within five (5) Business Days after the receipt of such application afford or
shall cause the Transfer Agent and Registrar to afford such Applicants access during normal business hours to the most recent list of
Noteholders and Certificateholders held by the Indenture Trustee and shall give the Issuer notice that such request has been made within five
(5) Business Days after the receipt of such application. Such list shall be as of the most recent Record Date, but in no event more than forty-
five (45) days prior to the date of receipt of such Applicants’ request.
(iii)Every Noteholder and Certificateholder, by receiving and holding a Security, agrees with the Issuer and the Indenture Trustee
that neither the Issuer, the Indenture Trustee, the Transfer Agent and Registrar, nor any of their respective agents shall be held accountable by
reason of the disclosure of any such information as to the names and addresses of the Noteholders and Certificateholders in accordance with
this Section 4.2, regardless of the source from which such information was obtained.
c. Reports by Issuer.
(i)(i) The Issuer or the Administrator shall deliver to the Indenture Trustee, on the date, if any, the Issuer is required to file the
same with the Commission, electronic copies of the annual reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
1.
the Issuer or the Administrator shall file with the Indenture Trustee and the Commission in accordance with rules and
regulations prescribed from time to time by the Commission such additional information, documents and reports, if any, with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and
regulations;
2.
the Issuer or the Administrator shall supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail or
make available on via a website to all Noteholders and Certificateholders) such summaries of any information, documents and reports
required to be filed by the Issuer (if any) pursuant to clauses (i) and (ii) of this Section 4.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission; and
3.
the Administrator shall prepare and distribute any other reports required to be prepared by the Administrator under any
Transaction Documents.
(ii)Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.
d. [Reserved].
e. Reports and Records for the Indenture Trustee and Instructions.
45
4147-9029-0755.4
(i)On each Determination Date the Administrator shall forward to the Indenture Trustee a Monthly Report prepared by the
Administrator.
(ii)On each Payment Date, the Indenture Trustee or the Paying Agent shall make available in the same manner as the Monthly
Report to each Noteholder and Certificateholder of record of the outstanding Notes or Certificates, the Monthly Report with respect to such
Notes or Certificates.
ARTICLE 5.
ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
a. Rights of Noteholders and Certificateholders. The Securities shall be secured by the entire Trust Estate, including the right to
receive the Underlying Payments and other amounts at the times and in the amounts specified in this Article 5 to be deposited in the Trust
Accounts or to be paid to the Noteholders or Certificateholders of such Notes or Certificates, as applicable. In no event shall the grant of a
security interest in the entire Trust Estate be deemed to entitle any Noteholder to receive Underlying Payments or other proceeds of the Trust
Estate in excess of the amounts described in Article 5.
b. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may, but shall not be
obligated to, take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and
any right to proceed thereafter as provided in Article 9.
c. Establishment of Accounts.
(i)Securities Accounts. Each Securities Account shall be a securities account established and maintained with the Securities
Intermediary. The Indenture Trustee shall be the entitlement holder of each Securities Account
(ii)[Reserved].
(iii)The Payment Account. The Indenture Trustee, for the benefit of the Secured Parties, shall establish and maintain in the State of
New York or in the city in which the Corporate Trust Office is located, with a Qualified Institution, in the name of the Issuer for the benefit of
the Indenture Trustee on behalf of the Secured Parties, a non-interest bearing segregated trust account (the “Payment Account”) bearing a
designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Secured Parties. The Indenture Trustee
shall be the entitlement holder of the Payment Account, and shall possess all right, title and interest in all moneys, instruments, securities and
other property on deposit from time to time in the Payment Account and the proceeds thereof for the benefit of the Secured Parties. The
Payment Account will be established with the Securities Intermediary. Funds on deposit in the Payment Account that are not both deposited
and to be withdrawn within two Business Days shall be invested in Permitted Investments, in accordance with a direction from the Issuer
pursuant to Section 5.3(e)
46
4147-9029-0755.4
(iv)[Reserved].
(v)Administration of the Securities Accounts.
1.
Funds on deposit in the Payment Account that are not both deposited and to be withdrawn on the same date shall be
invested in Permitted Investments. Any such investment shall mature and such funds shall be available for withdrawal on or prior to the
day immediately preceding the Payment Date on which such funds are to be allocated or applied hereunder.
2.
Wilmington Trust, National Association is hereby appointed as the initial securities intermediary hereunder (the
“Securities Intermediary”) and accepts such appointment. The Securities Intermediary represents, warrants, and covenants, and the
parties hereto agree, that at all times prior to the termination of this Indenture: (i) the Securities Intermediary shall be a bank that in the
ordinary course of its business maintains securities accounts for others and is acting in that capacity hereunder; (ii) each Securities
Account shall be an account maintained with the Securities Intermediary to which financial assets may be credited and the Securities
Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise such financial assets; (iii) each item of
property credited to a Securities Account shall be treated as a financial asset; (iv) the Securities Intermediary shall comply with
entitlement orders originated by the Indenture Trustee without further consent by the Issuer or any other Person; (v) the Securities
Intermediary waives any Lien on each Securities Account and all property credited to or on deposit in any Securities Account, and (vi)
the Securities Intermediary agrees that its jurisdiction for purposes of Section 8-110 and Section 9-305(a)(3) of the UCC shall be New
York.
3.
The Securities Intermediary shall maintain for the benefit of the Secured Parties, possession or control of each other
Permitted Investment (including any negotiable instruments, if any, evidencing such Permitted Investments) not credited to or deposited
in a Trust Account (other than such as are described in clause (b) of the definition thereof); provided that no Permitted Investment shall
be disposed of prior to its maturity date if such disposition would result in a loss.
4.
Nothing herein shall impose upon the Securities Intermediary any duties or obligations other than those expressly set forth
herein and those applicable to a securities intermediary under the UCC. The Securities Intermediary shall be entitled to all of the
protections available to a securities intermediary under the UCC.
5.
At the end of each month, all interest and earnings (net of losses and investment expenses) on funds on deposit in the
Payment Account shall be treated as Investment Earnings. If at the end of a month losses and investment expenses on funds on deposit
in the Payment Account exceed interest and earnings on such funds during such month, losses and expenses to the extent of such excess
will be allocated among the Noteholders and the Issuer as provided in Section 5.15. Subject to the restrictions set forth above, the Issuer,
or a Person designated in writing by the Issuer, of which the Indenture Trustee shall have received written notification thereof, shall have
the authority to instruct the Indenture Trustee with respect to the investment of funds on deposit in the Payment Account.
Notwithstanding anything herein to the contrary, if the Issuer (or its designee) has not provided such direction, the funds in the Payment
Account will remain uninvested. Neither the Indenture Trustee nor the Securities Intermediary shall have any responsibility or liability
for any loss which may result from any investment or sale of investment made pursuant to this Indenture. Wilmington Trust, National
Association (in any capacity hereunder) is hereby authorized, in making or
47
4147-9029-0755.4
disposing of any investment permitted by this Indenture, to deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or any such affiliate is acting as agent of Wilmington Trust, National Association (acting in any capacity hereunder)
or for any third person or dealing as principal for its own account. The parties to the Transaction Documents acknowledge that
Wilmington Trust, National Association (individually and in any capacity hereunder) is not providing investment supervision,
recommendations, or advice.
(vi)Wilmington Trust, National Association shall be the depositary bank hereunder with respect to certain deposit accounts, which
shall be non-interest bearing trust accounts, as may be established from time to time (the “Depositary Bank”). For the avoidance of doubt, there
currently is no such deposit account established hereunder.
(vii)Qualified Institution. If, at any time, the institution holding any account established pursuant to this Section 5.3 ceases to be a
Qualified Institution, the Indenture Trustee shall, within ten (10) Business Days, establish a new account or accounts, as the case may be,
meeting the conditions specified above with a Qualified Institution, and shall transfer any cash or any investments to such new account or
accounts, as the case may be.
(viii)Each of the Securities Intermediary and the Depositary Bank shall be entitled to all the same rights, privileges, protections,
immunities and indemnities as are contained in Article 11 of this Indenture, all of which are incorporated into this Section 5.3 mutatis
mutandis, in addition to any such rights, privileges, protections, immunities and indemnities contained in this Section 5.3; provided, however;
that nothing contained in this Section 5.3 or in Article 11 shall (i) relieve the Securities Intermediary of the obligation to comply with
entitlement orders as provided in Section 5.3(e) or (ii) relieve the Depositary Bank of the obligation to comply with instructions directing
disposition of the funds as provided in Section 5.3(f).
d. Payments and Allocations.
(i)Underlying Payments in General. Until this Indenture is terminated pursuant to Section 12.1, the Issuer shall cause all
Underlying Payments due and to become due, as the case may be, to be transferred to the Payment Account as promptly as possible after the
date of receipt of such Underlying Payments (but in no event later than the Business Day of such receipt). All monies, instruments, cash and
other proceeds received in respect of the Trust Estate pursuant to this Indenture shall be deposited in the Payment Account as specified herein
and shall be applied as provided in this Article 5 and Article 6.
(ii)[Reserved].
(iii)[Reserved].
(iv)[Reserved].
(v)Disqualification of Institution Maintaining Payment Account. Upon and after the establishment of a new Payment Account with
a Qualified Institution, Oportun shall deposit or cause to be deposited all Underlying Payments as set forth in Section 5.3(a) into the new
Payment Account, and in no such event shall deposit or cause to be deposited any Underlying Payments thereafter into any account established,
held or maintained with the institution formerly maintaining the Payment Account (unless it later becomes a Qualified Institution or qualified
corporate trust department maintaining the Payment Account). Any new Payment Account shall be subject to an account control agreement in
favor of the Indenture Trustee, on behalf of each Secured Party.
48
4147-9029-0755.4
e. [Reserved].
f. [Reserved].
g. General Provisions Regarding Accounts . Subject to Section 11.1(c), the Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in any of the Trust Estate resulting from any loss on any Permitted Investment included therein except for losses
attributable to the Indenture Trustee’s failure to make payments on such Permitted Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with their terms.
h. [Reserved].
i.
j.
[Reserved].
[Reserved].
k. [Reserved].
l.
Determination of Monthly Interest.
(i)The amount of monthly interest payable on the Class A Notes on each Payment Date will be determined as of each
Determination Date and will be an amount equal to the product of (i) a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360, times (ii) the Class A Note Rate, times (iii) the daily average outstanding principal
balance of the Class A Notes during the related Interest Period (after giving effect to any payments of principal on the immediately preceding
Payment Date) (the “Class A Monthly Interest ”); provided, however, that the Class A Monthly Interest due and payable on the August 2022
Payment Date shall be $964,161.27.
In addition to the Class A Monthly Interest, an amount equal to the sum of (i) the amount of any unpaid Class A Deficiency
Amount, as defined below, plus (ii) an amount equal to the product (such product being herein called the “Class A Additional Interest ”) of (A)
a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, times (B) a
rate equal to the Class A Note Rate, times (C) any Class A Deficiency Amount, as defined below (or the portion thereof which has not
theretofore been paid to the Class A Noteholders), will also be payable to the Class A Noteholders on each Payment Date. The “Class A
Deficiency Amount” payable on each such Payment Date, as determined on the applicable Determination Date, shall be equal to the excess, if
any, of (x) the sum of (i) the Class A Monthly Interest and the Class A Additional Interest, in each case for the Interest Period ended
immediately prior to the preceding Payment Date, plus (ii) any Class A Deficiency Amount for the preceding period, over (y) the amount
actually paid in respect thereof on the preceding Payment Date; provided, however, that the Class A Deficiency Amount on the first
Determination Date shall be zero.
(ii)Upon the occurrence of a Benchmark Transition Event, Section 5.13(a) provides the mechanisms for determining an alternative
rate of interest. The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee and the
Paying Agent), pursuant to Section 5.13(e), of any change to the reference rate upon which the interest rate on Class A Notes is based. The
Noteholders, the Indenture Trustee and the Paying Agent do not warrant or accept any responsibility for, and shall not have any liability with
respect to, the administration, submission, performance or any other matter related to Term SOFR or with respect to any alternative or
successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate
49
4147-9029-0755.4
implemented pursuant to Section 5.13(a), and (ii) the implementation of any Conforming Changes pursuant to Section 5.13(b), including
without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to,
or produce the same value or economic equivalence of, Term SOFR or have the same volume or liquidity as did the London interbank offered
rate prior to its discontinuance or unavailability. The Noteholders, the Indenture Trustee, the Paying Agent and their respective affiliates and/or
other related entities may engage in transactions that affect the calculation of any successor or alternative rate (including any Benchmark
Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Issuer. The Required Noteholders may select
information sources or services in their reasonable discretion to ascertain any Benchmark or any component thereof, in each case pursuant to
the terms of this Indenture, and shall have no liability to the Issuer, any Noteholder or any other person or entity for damages of any kind,
including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or
otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such
information source or service.
m. Benchmark Replacement.
(i)Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its
related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then
(x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such
Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any
Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action
or consent of any other party to, this Indenture or any other Transaction Document and (y) if a Benchmark Replacement is determined in
accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark
Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark
setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is
provided to the Noteholders (with a copy to the Indenture Trustee and Paying Agent) without any amendment to, or further action or consent of
any other party to, this Indenture or any other Loan Document so long as the Issuer has not received, by such time, written notice of objection
to such Benchmark Replacement from Noteholders comprising the Required Noteholders.
(ii)In connection with the implementation of a Benchmark Replacement, the Required Noteholders will have the right to make
Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any
amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this
Indenture or any other Transaction Document; provided that no such amendment may adversely affect the rights, duties, immunities,
protections or indemnification rights of the Indenture Trustee, Paying Agent, Registrar, Depositary Bank or Securities Intermediary without its
written consent.
(iii)The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee and the
Paying Agent) of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the
effectiveness of any Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by any Noteholder (or group of Noteholders) pursuant to this Section 5.13, including any
determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence
50
4147-9029-0755.4
of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding
absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Indenture or any other
Transaction Document, except, in each case, as expressly required pursuant to this Section 5.13.
(iv)During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available
Tenor but a Benchmark Transition Event with respect to such Benchmark has not occurred, the Class A Note Rate shall be determined by the
Calculation Agent by reference to the Alternative Rate and communicated to the Administrator and the Issuer, by facsimile or e-mail.
n. [Reserved].
o. Monthly Payments.
(i)On each Underlying Payment Date, the Issuer will deposit, or cause to be deposited, into the Payment Account all Underlying
Payments received in respect of the Underlying Securities on such Underlying Payment Date.
(ii)On each Payment Date, the Indenture Trustee, acting in accordance with instructions provided by the Administrator in the form
of the Monthly Report for such Payment Date, shall apply Available Funds on deposit in the Payment Account for payment to the following
Persons in the following priority to the extent of funds available therefor:
1.
first, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis, an
amount equal to the Trustee Fees and Expenses for such Payment Date (plus any Trustee Fees and Expenses due but not paid on any
prior Payment Date);
2.
second, to the Administrator, an amount equal to the Administration Fee for such Payment Date (plus any Administration
Fee due but not paid on any prior Payment Date);
3.
third, to the Class A Noteholders, on a pari passu and pro rata basis, an amount equal to the sum of (A) the Class A
Monthly Interest for such Payment Date, (B) any Class A Deficiency Amount for such Payment Date and (C) any Class A Additional
Interest for such Payment Date;
4.
fourth, to the Class A Noteholders, on a pari passu and pro rata basis, (A) prior to the occurrence of a Rapid Amortization
Event, an amount equal to the sum of (I) the greater of the Scheduled Principal Payment Amount for such Payment Date and the
Minimum Principal Payment Amount for such Payment Date and (II) following the application under clause (I), the product of all
remaining Available Funds multiplied by the Additional Principal Payment Percentage for such Payment Date, until the outstanding
principal amount of the Class A Notes has been reduced to zero; and (B) following the occurrence of a Rapid Amortization Event, all
remaining Available Funds until the outstanding principal amount of the Class A Notes has been reduced to zero;
5.
fifth, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis,
any unreimbursed fees, expenses and indemnity amounts payable thereto (including due to the limitations set forth in the definition of
Trustee Fees and Expenses);
51
4147-9029-0755.4
6.
sixth, to the Class A Noteholders, on a pari passu and pro rata basis any other amounts (excluding the Note Principal
Amount) payable thereto on such Payment Date pursuant to the Transaction Documents; and
7.
seventh, the balance, if any, shall be distributed to the Certificateholders.
p. Failure to Make a Deposit or Payment. The Indenture Trustee shall not have any liability for any failure or delay in making the
payments or deposits described herein resulting from a failure or delay by the Issuer or the Administrator to make, or give instructions to make,
such payment or deposit in accordance with the terms herein. If the Issuer or the Administrator fails to make, or give instructions to make, any
payment, deposit or withdrawal required to be made or given by the Issuer or the Administrator at the time specified in this Indenture
(including applicable grace periods), the Indenture Trustee shall make such payment, deposit or withdrawal from the applicable Trust Account
without instruction from the Issuer or the Administrator. The Indenture Trustee shall be required to make any such payment, deposit or
withdrawal hereunder only to the extent that the Indenture Trustee has sufficient information to allow it to determine the amount thereof. the
Issuer or the Administrator shall, upon reasonable request of the Indenture Trustee, promptly provide the Indenture Trustee with all
information necessary and in its possession to allow the Indenture Trustee to make such payment, deposit or withdrawal. Such funds or the
proceeds of such withdrawal shall be applied by the Indenture Trustee in the manner in which such payment or deposit should have been made
(or instructed to be made) by the Issuer or the Administrator.
ARTICLE 6.
DISTRIBUTIONS AND REPORTS
a. Distributions.
(i)On each Payment Date, the Indenture Trustee shall distribute (in accordance with the Monthly Report delivered by the
Administrator on or before the related Underlying Payment Date pursuant to subsection 2.09(a) of the Servicing Agreement) to each
Noteholder of record on the immediately preceding Record Date (other than as provided in Section 12.5 respecting a final distribution), such
Noteholder’s pro rata share (based on the Note Principal Amount held by such Noteholder) of the amounts on deposit in the Payment Account
that are payable to the Noteholders pursuant to Section 5.15 by wire transfer to an account designated by such Noteholders, except that, with
respect to Notes registered in the name of the nominee of a Clearing Agency, such distribution shall be made in immediately available funds.
(ii)Notwithstanding anything to the contrary contained in this Indenture, if the amount distributable in respect of principal on the
Notes on any Payment Date is less than one dollar, then no such distribution of principal need be made on such Payment Date to the
Noteholders.
b. Monthly Report.
(i)On or before each Payment Date, the Indenture Trustee shall make available electronically to each Noteholder and
Certificateholder, the Monthly Report prepared by the Administrator and delivered to the Indenture Trustee on the preceding Determination
Date and setting forth, among other things, the following information:
1.
the amount of Underlying Payments received on the related Underlying Payment Date;
52
4147-9029-0755.4
2.
the amount of Available Funds on deposit in the Payment Account on the related Underlying Payment Date;
3.
the amount of Trustee Fees and Expenses, Administration Fee, Class A Monthly Interest, Class A Deficiency Amounts
and Additional Interest, respectively;
4.
5.
the total amount to be distributed to the Class A Noteholders on such Payment Date; and
the outstanding principal balance of the Class A Notes as of the end of the day on the Payment Date.
On or before each Payment Date, to the extent the Administrator provides such information to the Indenture Trustee, the Indenture Trustee will
make available the Monthly Report via the Indenture Trustee’s Internet website and, with the consent or at the direction of the Issuer, such
other information regarding the Securities and/or the Underlying Securities as the Indenture Trustee may have in its possession, but only with
the use of a password provided by the Indenture Trustee; provided, however, the Indenture Trustee shall have no obligation to provide such
information described in this Section 6.2 until it has received the requisite information from the Issuer or the Administrator and the applicable
Noteholder or Certificateholder has completed the information necessary to obtain a password from the Indenture Trustee. The Indenture
Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility
therefor.
(ii)The Indenture Trustee’s internet website shall be initially located at “www.wilmingtontrustconnect.com” or at such other
address as shall be specified by the Indenture Trustee from time to time in writing to the Noteholders and Certificateholders. In connection with
providing access to the Indenture Trustee’s internet website, the Indenture Trustee may require registration and the acceptance of a disclaimer.
The Indenture Trustee shall not be liable for information disseminated in accordance with this Indenture.
(iii)Annual Tax Statement. To the extent required by the Code or the Treasury regulations thereunder, on or before January 31 of
each calendar year, the Indenture Trustee shall distribute to each Person who at any time during the preceding calendar year was a Noteholder
or a Certificateholder, a statement prepared by the Administrator containing the information required to be contained in the regular monthly
report to Noteholders and Certificateholders, as set forth in subclauses (v) and (vi) above, aggregated for such calendar year, and a statement
prepared by Oportun or the Issuer with such other customary information (consistent with the treatment of the Notes as debt and the
Certificates as equity for tax purposes) required by applicable tax Law to be distributed to the Noteholders. Such obligations of the Indenture
Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Indenture
Trustee pursuant to any requirements of the Code as from time to time in effect.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
a. Representations and Warranties of the Issuer. The Issuer hereby represents and warrants to the Indenture Trustee and each of
the Secured Parties that:
(i)Organization and Good Standing, etc. The Issuer has been duly organized and is validly existing and in good standing under the
Laws of the State of Delaware, with power and authority to own its properties and to conduct its respective businesses as such properties are
53
4147-9029-0755.4
presently owned and such business is presently conducted. The Issuer is not organized under the Laws of any other jurisdiction or
Governmental Authority. The Issuer is duly licensed or qualified to do business as a foreign entity in good standing in the jurisdiction where its
principal place of business and chief executive office is located and in each other jurisdiction in which the failure to be so licensed or qualified
would be reasonably likely to have a Material Adverse Effect.
(ii)Power and Authority; Due Authorization . The Issuer has (a) all necessary power, authority and legal right to (i) execute, deliver
and perform its obligations under this Indenture and each of the other Transaction Documents to which it is a party and (b) duly authorized, by
all necessary action, the execution, delivery and performance of this Indenture and the other Transaction Documents to which it is a party and
the borrowing, and the granting of security therefor, on the terms and conditions provided herein.
(iii)No Violation. The consummation of the transactions contemplated by this Indenture and the other Transaction Documents and
the fulfillment of the terms hereof will not (a) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, (i) the organizational documents of the Issuer or (ii) any indenture, loan agreement,
pooling and servicing agreement, receivables purchase agreement, mortgage, deed of trust, or other agreement or instrument to which the
Issuer is a party or by which it or its properties is bound, (b) result in or require the creation or imposition of any Adverse Claim upon its
properties pursuant to the terms of any such indenture, loan agreement, pooling and servicing agreement, receivables purchase agreement,
mortgage, deed of trust, or other agreement or instrument, other than pursuant to the terms of the Transaction Documents, or (c) violate any
Law applicable to the Issuer or of any Governmental Authority having jurisdiction over the Issuer or any of its respective properties.
(iv)Validity and Binding Nature . This Indenture is, and the other Transaction Documents to which it is a party when duly executed
and delivered by the Issuer and the other parties thereto will be, the legal, valid and binding obligation of the Issuer enforceable in accordance
with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting creditors’ rights generally and by general principles of equity.
(v)Government Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority required for the due execution, delivery or performance by the Issuer of any Transaction Document to which it is a party remains
unobtained or unfiled, except for the filing of the UCC financing statements.
(vi)[Reserved].
(vii)Margin Regulations. The Issuer is not engaged in the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds with respect to the sale of the Notes, directly or indirectly, will be used for a purpose that violates, or would be
inconsistent with, Regulations T, U and X promulgated by the Federal Reserve Board from time to time.
(viii)Perfection.
1.
On and after the Closing Date and each Payment Date, the Issuer shall be the owner of all of the Underlying Securities
and proceeds with respect thereto, free and clear of all Adverse Claims. Within the time required pursuant to the Perfection
Representations, all financing statements and other documents required to be recorded or filed in order to perfect and protect the assets of
the Trust Estate against all creditors
54
4147-9029-0755.4
(other than Secured Parties) of, and purchasers (other than Secured Parties) from, the Issuer and the Seller will have been duly filed in
each filing office necessary for such purpose, and all filing fees and taxes, if any, payable in connection with such filings shall have been
paid in full;
2.
the Indenture constitutes a valid grant of a security interest to the Indenture Trustee for the benefit of the Secured Parties
in all right, title and interest of the Issuer in the Underlying Securities and all other assets of the Trust Estate, now existing or hereafter
created or acquired. Accordingly, to the extent the UCC applies with respect to the perfection of such security interest, upon the filing of
any financing statements described in Article 8 of the Indenture and the execution of the Transaction Documents, the Indenture Trustee
shall have a first priority perfected security interest in such property and the proceeds thereof (to the extent provided in Section 9-315),
subject to Permitted Encumbrances and, to the extent the UCC does not apply to the perfection of such security interest, all notices,
filings and other actions required by all applicable Law have been taken to perfect and protect such security interest or lien against and
prior to all Adverse Claims with respect to the Underlying Securities and all other assets of the Trust Estate. Except as otherwise
specifically provided in the Transaction Documents, neither the Issuer nor any Person claiming through or under the Issuer has any
claim to or interest in the Payment Account; and
3.
immediately prior to, and after giving effect to, the initial purchase of the Notes, the Issuer will be Solvent.
(ix)Offices. The principal place of business and chief executive office of the Issuer is located at the address referred to in
Section 15.4 (or at such other locations, notified to the Indenture Trustee in jurisdictions where all action required thereby has been taken and
completed).
(x)Tax Status. The Issuer has filed all tax returns (federal, state and local) required to be filed by it and has paid or made adequate
provision for the payment of all taxes (including all state franchise taxes), assessments and other governmental charges that have become due
and payable (including for such purposes, the setting aside of appropriate reserves for taxes, assessments and other governmental charges
being contested in good faith).
(xi)Use of Proceeds. No proceeds of any Notes will be used by the Issuer to acquire any security in any transaction which is subject
to Section 13 or 14 of the Exchange Act.
(xii)Compliance with Applicable Laws; Licenses, etc.
1.
The Issuer is in compliance with the requirements of all applicable Laws of all Governmental Authorities, a breach of any
of which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect.
2.
The Issuer has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of its business, which violation or failure to obtain would be reasonably likely to have a
Material Adverse Effect.
(xiii)No Proceedings. Except as described in Schedule 4:
1.
there is no order, judgment, decree, injunction, stipulation or consent order of or with any court or other government
authority to which the Issuer is subject, and there is no action, suit, arbitration, regulatory proceeding or investigation pending, or, to
55
4147-9029-0755.4
the knowledge of the Issuer, threatened, before or by any Governmental Authority, against the Issuer that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect; and
2.
there is no action, suit, proceeding, arbitration, regulatory or governmental investigation, pending or, to the knowledge of
the Issuer, threatened, before or by any Governmental Authority (A) asserting the invalidity of this Indenture, the Securities or any other
Transaction Document, (B) seeking to prevent the issuance of the Securities pursuant hereto or the consummation of any of the other
transactions contemplated by this Indenture or any other Transaction Document or (C) seeking to adversely affect the federal income tax
attributes of the Issuer.
(xiv)Investment Company Act; Covered Fund. The Issuer is not an “investment company” within the meaning of the Investment
Company Act and the Issuer relies on the exception from the definition of “investment company” set forth in Rule 3a-7 under the Investment
Company Act, although other exceptions or exclusions may be available to the Issuer. The Issuer is not a “covered fund” as defined in the final
regulations issued December 10, 2013 implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act), as amended.
(xv)[Reserved].
(xvi)[Reserved].
(xvii)ERISA. (i) Each of the Issuer the Seller and their respective ERISA Affiliates is in compliance in all material respects with
ERISA unless any failure to so comply could not reasonably be expected to have a Material Adverse Effect and (ii) no Lien exists in favor of
the Pension Benefit Guaranty Corporation on any of the Underlying Securities. No ERISA Event has occurred with respect to any Pension Plan
that could reasonably be expected to have a Material Adverse Effect.
(xviii)Accuracy of Information. All information heretofore furnished by, or on behalf of, the Issuer to the Indenture Trustee or any of
the Noteholders in connection with any Transaction Document, or any transaction contemplated thereby, was, at the time it was furnished, true
and accurate in every material respect (without omission of any information necessary to prevent such information from being materially
misleading).
(xix)No Material Adverse Change. Since September 30, 2021 there has been no material adverse change in the Issuer’s (i) financial
condition, business, operations or prospects or (ii) ability to perform its obligations under any Transaction Document.
(xx)Subsidiaries. The Issuer has no Subsidiaries and does not own or hold, directly or indirectly, any equity interest in any Person,
other than Permitted Investments; provided that, for the avoidance of doubt, this clause (t) shall not prohibit the Issuer from owning any
Underlying Security.
(xxi)Securities. The Securities have been duly and validly authorized, and, when executed and authenticated in accordance with the
terms of the Indenture, and delivered to and paid for in accordance with the Note Purchase Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Indenture.
(xxii)Sales by the Seller. Each sale of Underlying Securities by the Seller to the Issuer shall have been effected under, and in
accordance with the terms of, the applicable Purchase Agreement, including the payment by the Issuer to the Seller of an amount equal to the
purchase
56
4147-9029-0755.4
price therefor as described in such Purchase Agreement, and each such sale shall have been made for “reasonably equivalent value” (as such
term is used under Section 548 of the Federal Bankruptcy Code) and not for or on account of “antecedent debt” (as such term is used under
Section 547 of the Federal Bankruptcy Code) owed by the Issuer to such Seller.
b. Reaffirmation of Representations and Warranties by the Issuer. On the Closing Date and on each Business Day thereafter, the
Issuer shall be deemed to have certified that all representations and warranties described in Section 7.1 hereof are true and correct on and as of
such day as though made on and as of such day (except to the extent they relate to an earlier or later date, and then as of such earlier or later
date).
ARTICLE 8.
COVENANTS
a. Money for Payments To Be Held in Trust . At all times from the date hereof to the Indenture Termination Date, unless the
Required Noteholders shall otherwise consent in writing, all payments of amounts due and payable with respect to any Securities that are to be
made from amounts withdrawn from the applicable Payment Account shall be made on behalf of the Issuer by the Indenture Trustee or by
another Paying Agent, and no amounts so withdrawn from such Payment Account for payments of such Securities shall be paid over to the
Issuer except as provided in this Indenture.
b. Affirmative Covenants of Issuer. At all times from the date hereof to the Indenture Termination Date, unless the Required
Noteholders shall otherwise consent in writing, the Issuer shall:
(i)Payment of Notes. Duly and punctually pay or cause to be paid principal of (and premium, if any), interest and other amounts on
and with respect to the Notes pursuant to the provisions of this Indenture. Principal, interest and other amounts shall be considered paid on the
date due if the Indenture Trustee or the Paying Agent holds on that date money designated for and sufficient to pay all principal, interest and
other amounts then due. Amounts properly withheld under the Code by any Person from a payment to any Noteholder or Certificateholder of
interest, principal and/or other amounts shall be considered as having been paid by the Issuer to such Noteholder or Certificateholder for all
purposes of this Indenture.
(ii)Maintenance of Office or Agency. Maintain an office or agency (which may be an office of the Indenture Trustee, Transfer
Agent and Registrar or co-registrar) where Securities may be surrendered for registration of transfer or exchange, and where, at any time when
the Issuer is obligated to make a payment of principal and premium upon the Notes, the Notes may be surrendered for payment. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer will give prompt written notice to the
Indenture Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any
such required office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such presentations and surrenders may be
made at the Corporate Trust Office of the Indenture Trustee , and the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such presentations and surrenders.
The Issuer may also from time to time designate one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the
Indenture Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
57
4147-9029-0755.4
The Issuer hereby designates the Corporate Trust Office of the Indenture Trustee as one such office or agency of the Issuer.
(iii)Compliance with Laws, etc. Comply in all material respects with all applicable Laws.
(iv)Preservation of Existence. Preserve and maintain its existence rights, franchises and privileges in the jurisdiction of its
incorporation or organization, and qualify and remain qualified in good standing as a foreign entity in the jurisdiction where its principal place
of business and its chief executive office are located and in each other jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualifications would have a Material Adverse Effect.
(v)Custody of Underlying Securities. Unless otherwise consented to by the Required Noteholders, deposit and maintain in the
Custody Accounts the percentage interests of each Underlying Security specified on Schedule 2 hereto, in each case until the final distribution
is made on such Underlying Security or such Underlying Security is released from the Lien of this Indenture.
(vi)[Reserved].
(vii)Reporting Requirements of The Issuer. Until the Indenture Termination Date, furnish to the Indenture Trustee:
1.
Financial Statements. In each case solely to the extent such information is not made available publicly on the Parent’s
website or through the Parent’s filings with the Commission:
a.
as soon as available, and in any event within one hundred twenty (120) days after the end of each Fiscal Year of
the Issuer, a copy of the annual unaudited report for such Fiscal Year of the Issuer including a copy of the balance sheet of the
Issuer, in each case, as at the end of such Fiscal Year, together with the related statements of earnings and cash flows for such
Fiscal Year;
b.
as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of
Consolidated Parent, a balance sheet of Consolidated Parent as of the end of such year and statements of income and retained
earnings and of source and application of funds of Consolidated Parent, for the period commencing at the end of the previous
Fiscal Year and ending with the end of such year, in each case setting forth comparative figures for the previous Fiscal Year,
certified without material qualification by Deloitte & Touche LLP or other nationally recognized independent public accountants
with expertise in the preparation of such reports, together with a certificate of such accounting firm stating that in the course of
the regular audit of the business of Consolidated Parent, which audit was conducted in accordance with GAAP (as then in effect),
such accounting firm has obtained no knowledge that an Event of Default, Default or Rapid Amortization Event has occurred and
is continuing, or if, in the opinion of such accounting firm, such an Event of Default, Default or Rapid Amortization Event has
occurred and is continuing, a statement as to the nature thereof; and
c.
as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter, quarterly
balance sheets and quarterly statements of source and application of funds and quarterly statements of income
58
4147-9029-0755.4
and retained earnings of Consolidated Parent, certified by a Responsible Officer of Consolidated Parent (which certification shall
state that such balance sheets and statements fairly present the financial condition and results of operations for such fiscal quarter,
subject to year-end audit adjustments), delivery of which balance sheets and statements shall be accompanied by an Officer’s
Certificate of the Issuer to the effect that no Event of Default, Default or Rapid Amortization Event has occurred and is
continuing.
For so long as Consolidated Parent is subject to the reporting requirements of Section 13(a) of the Exchange Act, its filing of the annual
and quarterly reports required under the Exchange Act, on a timely basis, shall be deemed compliance with this Section 8.2(g)(i).
2.
Notice of Default, Event of Default or Rapid Amortization Event. Immediately, and in any event within one (1) Business
Day after the Issuer obtains knowledge of the occurrence of each Default, Event of Default or Rapid Amortization Event a statement of a
Responsible Officer of the Issuer setting forth details of such Default, Event of Default or Rapid Amortization Event and the action
which the Issuer proposes to take with respect thereto;
3.
ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any ERISA Event
which either (i) the Issuer, the Seller or any of their respective ERISA Affiliates files under ERISA with the Internal Revenue Service,
the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or (ii) the Issuer, the Seller or any of their respective ERISA
Affiliates receives from the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor. The
Issuer shall give the Indenture Trustee and each Noteholder prompt written notice of any event that could result in the imposition of a
Lien on the assets of the Issuer or any of its ERISA Affiliates under Section 430(k) of the Code or Section 303(k) or 4068 of ERISA;
and
4.
If a Responsible Officer of the Issuer shall have actual knowledge of the occurrence of an Administrator Default, notice
thereof to the Indenture Trustee, which notice shall specify the action, if any, the Issuer is taking in respect of such default. If an
Administrator Default shall arise from the failure of the Administrator to perform any of its duties or obligations under the
Administrative Services Agreement, the issuer shall take all reasonable steps available to it to remedy such failure, including any action
reasonably requested by the Indenture Trustee.
5.
On or before April 1, 2022 and on or before April 1 of each year thereafter, an Officer’s Certificate of the Issuer stating, as
to the Responsible Officer signing such Officer’s Certificate, that:
a.
a review of the activities of the Issuer during such year and of performance under this Indenture has been made
under such Responsible Officer’s supervision; and
b.
to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout such year, or, if there has been a Default, Event of Default or Rapid
Amortization Event specifying each such Default, Event of Default or Rapid Amortization Event known to such Responsible
Officer and the nature and status thereof.
59
4147-9029-0755.4
(viii)[Reserved].
(ix)Protection of Trust Estate. At its expense, perform all acts and execute all documents necessary and desirable at any time to
evidence, perfect, maintain and enforce the title or the security interest of the Indenture Trustee in the Trust Estate and the priority thereof. The
Issuer will prepare, deliver and authorize the filing of financing statements relating to or covering the Trust Estate sold to the Issuer and
subsequently conveyed to the Indenture Trustee (which financing statements may cover “all assets” of the Issuer).
(x)Inspection of Records. Permit the Indenture Trustee, any one or more of the Notice Persons or their duly authorized
representatives, attorneys or auditors to inspect the Records at such times as such Person may reasonably request. Upon instructions from the
Indenture Trustee, the Required Noteholders or their duly authorized representatives, attorneys or auditors, the Issuer shall release any
document related to the Underlying Securities to such Person.
(xi)Furnishing of Information. Provide such cooperation, information and assistance, and prepare and supply the Indenture Trustee
with such data regarding the performance by the Issuer and Administrator of their respective obligations under the Transaction Documents, as
may be reasonably requested by the Indenture Trustee or any Notice Person from time to time.
(xii)[Reserved].
(xiii)[Reserved].
(xiv)Enforcement of Transaction Documents. Use commercially reasonable efforts to enforce all rights held by it under any of the
Transaction Documents, shall not amend, supplement or otherwise modify any of the Transaction Documents and shall not waive any breach of
any covenant contained thereunder without the prior written consent of the Required Noteholders. The Issuer shall take all actions necessary
and desirable to enforce the Issuer’s rights and remedies under the Transaction Documents. The Issuer agrees that it will not waive timely
performance or observance by the Administrator or the Seller of their respective duties under the Transaction Documents if the effect thereof
would adversely affect any of the Secured Parties.
(xv)Separate Legal Entity. The Issuer hereby acknowledges that the Indenture Trustee and the Noteholders are entering into the
transactions contemplated by this Indenture and the other Transaction Documents in reliance upon the Issuer’s identity as a legal entity separate
from any other Person. Therefore, from and after the date hereof, the Issuer shall take all reasonable steps to continue the Issuer’s identity as a
separate legal entity and to make it apparent to third Persons that the Issuer is an entity with assets and liabilities distinct from those of any
other Person, and is not a division of any other Person. Without limiting the generality of the foregoing and in addition to and consistent with
the covenant set forth herein, the Issuer shall take such actions as shall be required in order to remain in compliance with Section 9(j)(iv) of the
Issuer LLC Agreement.
(xvi)[Reserved].
(xvii)Income Tax Characterization. For purposes of U.S. federal income, state and local income and franchise taxes, unless otherwise
required by the relevant Governmental Authority, the Issuer will treat the Notes as debt.
c. Negative Covenants. So long as any Securities are outstanding, the Issuer shall not, unless the Required Noteholders shall
otherwise consent in writing:
60
4147-9029-0755.4
(i)Sales, Liens, etc. Except pursuant to, or as contemplated by, the Transaction Documents, the Issuer shall not sell, transfer,
exchange, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or, for a period in excess of
thirty (30) days, involuntarily any Adverse Claims upon or with respect to any of its assets, including, without limitation, the Trust Estate, any
interest therein or any right to receive any amount from or in respect thereof.
(ii)Claims, Deductions. Claim any credit on, or make any deduction from the principal or interest payable in respect of, the
Securities (other than amounts properly withheld from such payments under the Code or other applicable Law) or assert any claim against any
present or former Noteholder or Certificateholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate.
(iii)Mergers, Acquisitions, Sales, Subsidiaries, etc. The Issuer shall not:
1.
be a party to any merger or consolidation, or directly or indirectly purchase or otherwise acquire all or substantially all of
the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, except for Permitted Investments,
or sell, transfer, assign, convey or lease any of its property and assets (or any interest therein) other than pursuant to, or as contemplated
by, this Indenture or the other Transaction Documents;
2.
make, incur or suffer to exist an investment in, equity contribution to, loan or advance to, or payment obligation in respect
of the deferred purchase price of property from, any other Person, except for Permitted Investments or pursuant to the Transaction
Documents;
3.
create any direct or indirect Subsidiary or otherwise acquire direct or indirect ownership of any equity interests in any
other Person other than pursuant to the Transaction Documents; or
4.
enter into any transaction with any Affiliate except for the transactions contemplated by the Transaction Documents
and other transactions upon fair and reasonable terms materially no less favorable to the Issuer than would be obtained in a comparable
arm’s length transaction with a Person not an Affiliate.
(iv)Change in Business Policy. The Issuer shall not make any change in the character of its business which would have a Material
Adverse Effect.
(v)Other Debt. Except as provided for herein, the Issuer shall not create, incur, assume or suffer to exist any Indebtedness whether
current or funded, other than (i) the Notes, (ii) Indebtedness of the Issuer representing fees, expenses and indemnities arising hereunder or
under any Purchase Agreement for the purchase price of the applicable Underlying Securities under any such Purchase Agreement and (iii)
other Indebtedness permitted pursuant to Section 8.3(h).
(vi)Certificate of Formation and Issuer LLC Agreement. The Issuer shall not amend its certificate of formation or the Issuer LLC
Agreement unless the Required Noteholders have agreed to such amendment.
(vii)Financing Statements. The Issuer shall not authorize the filing of any financing statement (or similar statement or instrument of
registration under the Laws of any jurisdiction) or statements relating to the Trust Estate other than the financing statements authorized and
filed in connection with and pursuant to the Transaction Documents.
61
4147-9029-0755.4
(viii)Business Restrictions. The Issuer shall not (i) engage in any business or transactions, or be a party to any documents, agreements
or instruments, other than the Transaction Documents or those incidental to the purposes thereof, or (ii) make any expenditure for any assets
(other than the Trust Estate) if such expenditure, when added to other such expenditures made during the same calendar year would, in the
aggregate, exceed Ten Thousand Dollars ($10,000); provided, however, that the foregoing will not restrict the Issuer’s ability to pay servicing
compensation as provided herein and, so long as no Default, Event of Default or Rapid Amortization Event shall have occurred and be
continuing, the Issuer’s ability to make payments or distributions legally made to the Issuer’s members.
(ix)ERISA Matters.
1.
To the extent applicable, the Issuer will not (A) engage or permit any of its respective ERISA Affiliates, in each case over
which the Issuer has control, to engage in any prohibited transaction (as defined in Section 4975 of the Code and Section 406 of ERISA)
for which an exemption is not available or has not previously been obtained from the U.S. Department of Labor; (B) fail to make, or
permit the Seller, or any of its ERISA Affiliates, in each case over which the Issuer has control, to fail to make, any payments to any
Multiemployer Plan that the Issuer, the Seller or any of their respective ERISA Affiliates is required to make under the agreement
relating to such Multiemployer Plan or any Law pertaining thereto; (C) terminate, or permit the Seller, or any of its ERISA Affiliates, in
each case over which the Issuer has control, to terminate, any Pension Plan so as to result in any liability to the Issuer, the Seller or any
of their ERISA Affiliates; or (D) permit to exist any occurrence of any reportable event described in Title IV of ERISA with respect to a
Pension Plan, if such prohibited transactions, failures to make payment, terminations and reportable events described in clauses (A), (B),
(C) and (D) above would in the aggregate have a Material Adverse Effect.
The Issuer will not permit to exist any failure to satisfy the minimum funding standard (as described in Section 302 of
ERISA and Section 412 of the Code) with respect to any Pension Plan.
The Issuer will not cause or permit, nor permit any of its ERISA Affiliates over which the Issuer has control, to cause or
permit, the occurrence of an ERISA Event with respect to any Pension Plans that could result in a Material Adverse Effect.
2.
3.
(x)Name; Jurisdiction of Organization. The Issuer will not change its name or its jurisdiction of organization (within the meaning
of the applicable UCC) without prior written notice to the Indenture Trustee. Prior to or upon a change of its name, the Issuer will make all
filings (including filings of financing statements on form UCC-1) and recordings necessary to maintain the perfection of the interest of the
Indenture Trustee in the Trust Estate pursuant to this Indenture. The Issuer further agrees that it will not become or seek to become organized
under the Laws of more than one jurisdiction. In the event that the Issuer desires to so change its jurisdiction of organization or change its
name, the Issuer will make any required filings and prior to actually making such change the Issuer will deliver to the Indenture Trustee (i) an
Officer’s Certificate and an Opinion of Counsel confirming that all required filings have been made to continue the perfected interest of the
Indenture Trustee in the Trust Estate in respect of such change and (ii) copies of all such required filings with the filing information duly noted
thereon by the office in which such filings were made.
(xi)Tax Matters. The Issuer will not take any action that could cause, and will not omit to take any action, which omission could
cause, the Issuer to become taxable as a corporation for U.S. federal income tax purposes.
62
4147-9029-0755.4
(xii)Accounts. The Issuer shall not maintain any bank accounts other than the Trust Accounts; provided, however, that the Issuer
may maintain a general bank account to, among other things, receive and hold funds distributed to it, and to pay ordinary-course operating
expenses, as applicable. The Issuer shall not add any additional Trust Accounts unless the Indenture Trustee (subject to Section 15.1 hereto)
shall have consented thereto and received a copy of any documentation with respect thereto. The Issuer shall not terminate any Trust Accounts
or close any Trust Accounts unless the Indenture Trustee shall have received at least thirty (30) days’ prior notice of such termination and
(subject to Section 15.1 hereto) shall have consented thereto.
d. Further Instruments and Acts. The Issuer will execute and deliver such further instruments, furnish such other information and
do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
e. [Reserved].
f. Perfection Representations. The parties hereto agree that the Perfection Representations shall be a part of this Indenture for all
purposes.
ARTICLE 9.
RAPID AMORTIZATION EVENTS AND REMEDIES
a. Rapid Amortization Events. A “Rapid Amortization Event,” wherever used herein, means any one of the following events:
(i)default in the payment of any interest on the Notes on any Payment Date, and such default shall continue (and shall not have
been waived by the Required Noteholders) for a period of three (3) Business Days after receipt of notice thereof from the Indenture Trustee or
the Required Noteholders;
(ii)default in the payment of the principal of or any installment of the principal of the Notes when the same becomes due and
payable, and such default shall continue (and shall not have been waived by the Required Noteholders) for a period of three (3) Business Days
after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(iii)commencing with the three (3) consecutive Payment Dates ending with the March 2023 Payment Date, the Three-Month
Average Underlying Loss Percentage shall have been greater than 13.0% on three (3) consecutive Payment Dates;
(iv)a “Rapid Amortization Event” (as defined in the applicable Underlying Indenture) shall have occurred with respect to any
Underlying Issuer;
(v)the failure of the Issuer to maintain any Financial Covenant;
(vi)the failure of the Issuer to provide, or cause to be provided, the Monthly Report when due, which failure shall continue
unremedied for a period of three (3) days after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(vii)a failure on the part of the Seller duly to observe or perform any other covenants or agreements of the Seller set forth in any
Purchase Agreement or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as
reasonably determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on which
notice of such failure, requiring the same to be
63
4147-9029-0755.4
remedied, shall have been given by registered or certified mail to the Seller by the Indenture Trustee, or to the Seller and the Indenture Trustee
by the Required Noteholders;
(viii)any representation, warranty or certification made by the Seller in any Purchase Agreement, in the other Transaction Documents
or in any certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such inaccuracy has a
material adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues unremedied for a
period of thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring the same to be
remedied, shall have been given by registered or certified mail to the Seller by the Indenture Trustee, or to the Seller and the Indenture Trustee
by the Required Noteholders; or
(ix)the occurrence of an Administrator Default that continues unremedied for a period of three (3) days after receipt of notice
thereof from the Indenture Trustee or the Required Noteholders;
(x)the occurrence of an Event of Default;
The Required Noteholders may waive any Rapid Amortization Event and its consequences.
ARTICLE 10.
REMEDIES
a. Events of Default. An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative or governmental body):
1.
the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer, the Seller, or
any substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other
similar Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Issuer or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty (60) consecutive days;
2.
the commencement by the Issuer or the Seller of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar Law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such Law, or the consent by the Issuer to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by
the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of any of the foregoing;
3.
a failure on the part of the Issuer duly to observe or perform any other covenants or agreements of the Issuer set forth in
this Indenture or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as
reasonably determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on
which notice of
64
4147-9029-0755.4
such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Issuer by the Indenture
Trustee, or to the Issuer and the Indenture Trustee by the Required Noteholders;
4.
any representation, warranty or certification made by the Issuer in this Indenture, in the other Transaction Documents or in
any certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such inaccuracy has a
material adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues unremedied for
a period of thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring the same
to be remedied, shall have been given by registered or certified mail to the Issuer by the Indenture Trustee, or to the Issuer and the
Indenture Trustee by the Required Noteholders;
Estate;
5.
6.
the Indenture Trustee shall cease to have a first-priority perfected security interest in all or a material portion of the Trust
the Issuer shall have become subject to regulation by the Securities and Exchange Commission as an “investment
company” under the Investment Company Act;
the Issuer shall become taxable as an association or a publicly traded partnership taxable as a corporation for U.S. federal
a lien shall be filed pursuant to Section 430 or Section 6321 of the Code with regard to the Issuer and such lien shall not
income tax purposes; or
7.
8.
have been released within thirty (30) days.
b. Rights of the Indenture Trustee Upon Events of Default.
(i)If and whenever an Event of Default (other than in clause (i) and (ii) of Section 10.1) shall have occurred and be continuing, the
Indenture Trustee may, and at the written direction of the Required Noteholders shall, cause (x) the principal amount of all Notes outstanding
to be immediately due and payable at par, together with interest thereon and (y) all remaining amounts payable on the Certificates to be
immediately due and payable. If an Event of Default with respect to the Issuer specified in clause (i) or (ii) of Section 10.1 shall occur, all
unpaid principal of and accrued interest on all the Notes outstanding and all remaining amounts payable shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of the Indenture Trustee or any Noteholder or Certificateholder. If
an Event of Default shall have occurred and be continuing, the Indenture Trustee may exercise from time to time any rights and remedies
available to it under applicable Law and Section 10.4. Any amounts obtained by the Indenture Trustee on account of or as a result of the
exercise by the Indenture Trustee of any right shall be held by the Indenture Trustee as additional collateral for the repayment of the Secured
Obligations and shall be applied in accordance with Article 5 hereof.
(ii)If an Event of Default shall have occurred and be continuing, then at any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this
Article 10 provided, the Required Noteholders, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
1.
the Issuer has paid to or deposited with the Indenture Trustee a sum sufficient to pay
65
4147-9029-0755.4
a.
all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or
upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and
b.
all sums paid by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements of the
Indenture Trustee and its agents and counsel; and
2.
all Events of Default, other than the nonpayment of the principal of the Notes and amounts payable on the Certificates
that have become due solely by such acceleration, have been cured or waived as provided in Section 10.6.
No such rescission shall affect any subsequent default or impair any right consequent thereto.
(iii)Additional Remedies. In addition to any rights and remedies now or hereafter granted hereunder or under applicable Law with
respect to the Trust Estate, the Indenture Trustee shall have all of the rights and remedies of a secured party under the UCC as enacted in any
applicable jurisdiction.
c. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
(i)The Issuer covenants that if (i) default is made in the payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five (5) days, or (ii) default is made in the payment of the principal of any Note when the
same becomes due and payable on the Legal Final Payment Date, the Issuer will pay to it, for the benefit of the Noteholders and
Certificateholders, the whole amount then due and payable on the Notes and Certificates for principal, interest and other amounts, with interest
upon the overdue principal, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of
interest, at the applicable Note Rate and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.
(ii)If an Event of Default occurs and is continuing, the Indenture Trustee may (in its discretion) and, at the written direction of the
Required Noteholders, shall proceed to protect and enforce its rights and the rights of the Secured Parties by such appropriate Proceedings to
protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by Law; provided, however, that the Indenture Trustee shall sell or otherwise liquidate the Trust Estate or any portion thereof only
in accordance with Section 10.4(d) and Section 10.5.
(iii)In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of
this Indenture), the Indenture Trustee shall be held to represent all the Secured Parties, and it shall not be necessary to make any such Person a
party to any such Proceedings.
(iv)In case there shall be pending, relative to the Issuer or any other obligor upon the Securities or any Person having or claiming an
ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar Law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or
66
4147-9029-0755.4
in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of
the Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal or other amount of any Securities shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise:
1.
to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in
respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made,
by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, bad faith or willful misconduct) and
of the Secured Parties allowed in such Proceedings;
2.
unless prohibited by applicable Law, to vote on behalf of the Secured Parties in any election of a trustee, a standby trustee
or Person performing similar functions in any such Proceedings;
3.
to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Secured Parties and of the Indenture Trustee on their behalf; and
4.
to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee or the Secured Parties allowed in any judicial Proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Secured
Parties to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly
to such Secured Parties, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence, bad faith or willful
misconduct.
(v)Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or
adopt on behalf of any Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights
of any Secured Party or to authorize the Indenture Trustee to vote in respect of the claim of any Secured Party in any such Proceeding except,
as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
(vi)All rights of action and of asserting claims under this Indenture or under any of the Securities may be enforced by the Indenture
Trustee without the possession of any of the Securities or the production thereof in any Proceedings relative thereto, and any such action or
Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the Secured Parties.
67
4147-9029-0755.4
d. Remedies. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may and, at the written direction
of the Required Noteholders, shall do one or more of the following:
(i)institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable under the
Transaction Documents, enforce any judgment obtained, and collect from the Issuer and any other obligor under the Transaction Documents
moneys adjudged due;
(ii)subject to Section 10.5, institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with
respect to the Trust Estate;
(iii)subject to the limitations set forth in clause (d) below and Section 10.5, exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Secured Parties; and
(iv)subject to Section 10.5, sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private
sales called and conducted in any manner permitted by Law; provided, however, that the Indenture Trustee may not sell or otherwise liquidate
the Trust Estate following an Event of Default unless:
1.
the Holders of 100% of the outstanding Notes direct such sale and liquidation,
2.
the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then
due and unpaid with respect to all outstanding Notes for principal and interest and any other amounts due Noteholders, or
3.
the Indenture Trustee determines that the proceeds of the Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on all outstanding Notes as such amounts would have become due if such Notes had not been
declared due and payable and the Required Noteholders direct such sale and liquidation.
In determining such sufficiency or insufficiency with respect to clauses (d)(ii) and (d)(iii), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Underlying Securities in the Trust Estate for such purpose.
The Indenture Trustee may maintain a Proceeding even if it does not possess any of the Notes or does not produce any of them
in the Proceeding, and any such Proceeding instituted by the Indenture Trustee shall be in its own name as trustee. All remedies are cumulative
to the extent permitted by Law.
e. Priority of Remedies Exercised Against the Underlying Securities. Notwithstanding any other provision of this Indenture, if any
remedies available under this Article X are to be exercised against the Trust Estate consisting of the Underlying Securities, such remedies shall
be exercised first against the Underlying Securities in the First Priority Custody Account and shall only by exercised against the Underlying
Securities in the Second Priority Custody Account if the proceeds of exercising remedies against the Underlying Securities in the First Priority
Custody Account are insufficient to discharge in full all amounts then due and unpaid with respect to all outstanding Notes for principal and
interest and any other amounts due Noteholders (such sufficiency being determined in accordance with Section
68
4147-9029-0755.4
10.4(d)). For the avoidance of doubt, the agreement to exercise any such remedies against the Underlying Securities in accordance with this
Section 10.5, shall in no way mitigate, minimize, waive and/or otherwise affect the remedies available under this Article X.
f. Waiver of Past Events. If an Event of Default shall have occurred and be continuing, prior to the declaration of the acceleration
of the maturity of the Notes as provided in Section 10.2(a), the Required Noteholders may waive any past Default or Event of Default and its
consequences except a Default in payment of principal of any of the Notes. In the case of any such waiver, the Issuer, the Indenture Trustee
and the Holders of the Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any
Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
g. Limitation on Suits. No Noteholder or Certificateholder have any right to institute any Proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
1.
Default;
such Noteholder or Certificateholder previously has given written notice to the Indenture Trustee of a continuing Event of
2.
the Holders of not less than 25% of the outstanding principal amount of all Notes (or, if all Notes have been paid in full,
Certificateholders representing 25% of the Certificates) have made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee hereunder;
3.
such Noteholder has offered and provided to the Indenture Trustee indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred in complying with such request;
4.
the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to
institute such Proceedings; and
5.
no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60) day
period by the Required Noteholders;
it being understood and intended that no one or more Noteholder or Certificateholder shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Noteholder or Certificateholder or to
obtain or to seek to obtain priority or preference over any other Noteholder or Certificateholder or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of
Secured Parties, each representing less than the Required Noteholders, the Indenture Trustee shall proceed in accordance with the request of
the greater majority of the outstanding principal amount or par value of the Notes, as determined by reference to such requests.
69
4147-9029-0755.4
h. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
(i)Notwithstanding any other provision of this Indenture except as provided in Section 10.8(b) and (c), the right of any Noteholder
or Certificateholder to receive payment of principal, interest or other amounts, if any, on the Securities, on or after the respective due dates
expressed in the Securities or in this Indenture (or, in the case of redemption, on or after the Redemption Date), or to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without
the consent of the Noteholder or Certificateholder .
(ii)Promptly upon request, each Noteholder or Certificateholder shall provide to the Indenture Trustee and/or the Issuer (or other
person responsible for withholding of taxes, including but not limited to FATCA Withholding Tax, or delivery of information under FATCA)
with the Tax Information.
(iii)The Paying Agent shall (or if the Indenture Trustee is not the Paying Agent, the Indenture Trustee shall cause the Paying Agent
to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee that such
Paying Agent shall) comply with the provisions of this Indenture applicable to it, comply with all requirements of the Code with respect to the
withholding from any payments to Noteholders or Certificateholders, including FATCA Withholding Tax (including obtaining and retaining
from Persons entitled to payments with respect to the Notes or Certificates any Tax Information and making any withholdings with respect to
the Notes or Certificates as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate Governmental
Authority), comply with respect to any applicable reporting requirements in connection with any payments to Noteholders or
Certificateholders, and, upon request, provide any Tax Information to the Issuer.
i.
Restoration of Rights and Remedies. If any Noteholder or Certificateholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee or to such Noteholder or Certificateholder, then and in every such case the Issuer, the Indenture Trustee, the Noteholders and
Certificateholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders and Certificateholders shall continue as though
no such Proceeding had been instituted.
j.
The Indenture Trustee May File Proofs of Claim. The Indenture Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel) and the Noteholders and
Certificateholders allowed in any judicial Proceedings relative to the Issuer (or any other obligor upon the Securities), its creditors or its
property, and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such
claim and any custodian in any such judicial Proceeding is hereby authorized by each Noteholder and Certificateholder to make such payments
to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of such payments directly to the Noteholders
and Certificateholders to pay the Indenture Trustee any amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, and any other amounts due the Indenture Trustee under Section 11.6 and 11.17. To
the extent that the payment of any such compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel,
and any other amounts due the Indenture Trustee under Section 11.6 and 11.17 out of the estate in any such Proceeding, shall be denied for any
reason, payment of the same shall be
70
4147-9029-0755.4
secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, notes and other properties which the Noteholders
and Certificateholders may be entitled to receive in such Proceeding whether in liquidation or under any plan of reorganization or arrangement
or otherwise. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or accept or adopt on
behalf of any Noteholder or Certificateholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or
the rights of any Noteholder or Certificateholder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder
or Certificateholder in any such Proceeding.
k. Priorities. Following the declaration of an Event of Default or a Rapid Amortization Event pursuant to Section 9.1 or 10.2, all
amounts in any Payment Account, including any money or property collected pursuant to Section 10.4 (after deducting the reasonable costs and
expenses of such collection), shall be applied by the Indenture Trustee on the related Payment Date in accordance with the provisions of Article
5.
The Indenture Trustee may fix a record date and payment date for any payment to Secured Parties pursuant to this Section. At
least fifteen (15) days before such record date the Issuer shall mail to each Secured Party and the Indenture Trustee a notice that states the
record date, the payment date and the amount to be paid.
l.
Undertaking for Costs. All parties to this Indenture agree, and each Secured Party shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the
Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of the aggregate outstanding principal balance of the Notes on the
date of the filing of such action, (c) any suit instituted by any Certificateholder, or group of Certificateholders, in each case holding in the
aggregate more than 10% of the Certificates on the date of the filing of such action, (d) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date) or (e) any suit instituted by any Certificateholder for the
enforcement of the payment of any amount on any Certificate on or after the respective due dates expressed in such Certificate and in this
Indenture.
m. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the
Secured Parties is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by Law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
n. Delay or Omission Not Waiver. No delay or omission of the Indenture Trustee or any Secured Party to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or
Event of Default or an acquiescence therein. Every right and remedy given by this Article 10 or by Law to the Indenture Trustee or to the
Secured Parties may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Secured
Parties, as the case may be.
71
4147-9029-0755.4
o. Control by Noteholders. The Required Noteholders shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that:
1.
such direction shall not be in conflict with any Law or with this Indenture;
2.
subject to the express terms of Section 10.4 and Section 10.5, any direction to the Indenture Trustee to sell or liquidate the
Underlying Securities shall be by the Holders of Notes representing not less than 100% of the aggregate outstanding principal balance of
all the Notes;
3.
the Indenture Trustee shall have been provided with indemnity satisfactory to it; and
4.
direction;
the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such
provided, however, that, subject to Section 11.1, the Indenture Trustee need not take any action that it determines might involve it in liability or
might materially adversely affect the rights of any Noteholders not consenting to such action.
p. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension Law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such Law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such
Law had been enacted.
q. Action on Securities. The Indenture Trustee’s right to seek and recover judgment on the Securities or under this Indenture shall
not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this
Indenture nor any rights or remedies of the Indenture Trustee or the Secured Parties shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of
the assets of the Issuer.
r. Performance and Enforcement of Certain Obligations.
(i)The Issuer agrees to take all such lawful action as is necessary and desirable to compel or secure the performance and
observance by the Seller and the Parent, as applicable, of each of their obligations to the Issuer under or in connection with the Transaction
Documents in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Transaction Documents, including the transmission of notices of default on the part of the Seller or the
Parent thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance by the Seller or the
Parent of each of their obligations under the Transaction Documents.
(ii)If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction shall be
in writing) of the Required Noteholders shall, subject to Section 10.2(b), exercise all rights, remedies, powers, privileges and claims of the
72
4147-9029-0755.4
Issuer against the Seller or the Parent under or in connection with the Transaction Documents, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Parent of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the Transaction Documents, and any right of the Issuer to take such
action shall be suspended.
s. Reassignment of Surplus. Promptly after termination of this Indenture and the payment in full of the Secured Obligations, any
proceeds of all the Underlying Securities and other assets in the Trust Estate received or held by the Indenture Trustee shall be turned over to
the Issuer and the Underlying Securities and other assets in the Trust Estate shall be released to the Issuer by the Indenture Trustee without
recourse to the Indenture Trustee and without any representations, warranties or agreements of any kind.
ARTICLE 11.
THE INDENTURE TRUSTEE
a. Duties of the Indenture Trustee.
(i)If an Event of Default has occurred and is continuing, and of which a Trust Officer of the Indenture Trustee has written notice,
the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture and any related document, and use the same
degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s
own affairs; provided, however, that the Indenture Trustee shall have no liability in connection with any action or inaction taken, or not taken,
by it upon the deemed occurrence of an Event of Default of which a Trust Officer has not received written notice; and provided, further that the
preceding sentence shall not have the effect of insulating the Indenture Trustee from liability arising out of the Indenture Trustee’s negligence
or willful misconduct.
(ii)Except during the occurrence and continuance of an Event of Default of which a Trust Officer of the Indenture Trustee has
written notice:
1.
the Indenture Trustee undertakes to perform only those duties that are specifically set forth in this Indenture and no others,
and no implied covenants or obligations shall be read into this Indenture or any related document against the Indenture Trustee; and
2.
in the absence of bad faith on its part, the Indenture Trustee may conclusively rely (without independent confirmation,
verification, inquiry or investigation of the contents thereof), as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture;
provided, however, in the case of any such certificates or opinions which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and, if applicable, the Transaction Documents to which the Indenture Trustee is a party,
provided, further, that the Indenture Trustee shall not be responsible for the accuracy or content of any of the aforementioned documents
and the Indenture Trustee shall have no obligation to verify or recompute any numeral information provided to it pursuant to the
Transaction Documents.
73
4147-9029-0755.4
(iii)No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct except that:
1.
this clause does not limit the effect of clause (b) of this Section 11.1;
2.
the Indenture Trustee shall not be personally liable for any error of judgment made in good faith by a Trust Officer or
Trust Officers of the Indenture Trustee, unless it is conclusively determined by the final judgment of a court of competent jurisdiction,
no longer subject to appeal or review that the Indenture Trustee was negligent in ascertaining the pertinent facts; or
3.
the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to the terms of this Indenture or the Transaction Documents.
(iv)Notwithstanding anything to the contrary contained in this Indenture or any of the Transaction Documents, no provision of this
Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of any of its rights and powers, if there is reasonable ground (as determined by the Indenture Trustee in
its sole discretion) for believing that the repayment of such funds or adequate indemnity against such risk is not reasonably assured to it by the
security afforded to it by the terms of this Indenture.
(v)Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture
Trustee shall be subject to the provisions of this Article .
(vi)The Indenture Trustee shall, and hereby agrees that it will, perform all of the obligations and duties required of it under the
Servicing Agreement.
(vii)Without limiting the generality of this Section 11.1 and subject to the other provisions of this Indenture, the Indenture Trustee
shall have no duty (i) to see to any recording, filing or depositing of this Indenture or any agreement referred to herein, or to see to the
maintenance of any such recording or filing or depositing or to any recording, refiling or redepositing of any thereof or to see to the validity,
perfection, continuation, or value of any lien or security interest created herein, (ii) to see to the payment or discharge of any tax, assessment or
other governmental Lien owing with respect to, assessed or levied against any part of the Issuer, (iii) to confirm or verify the contents of any
reports or certificates delivered to the Indenture Trustee pursuant to this Indenture or the Servicing Agreement believed by the Indenture
Trustee to be genuine and to have been signed or presented by the proper party or parties, or (iv) to confirm or effect the acquisition or
maintenance of any insurance. The Indenture Trustee shall be authorized to, but shall in no event have any duty or responsibility to, file any
financing or continuation statements or record any documents or instruments in any public office at any time or times or otherwise perfect or
maintain any security interest in the Trust Estate.
(viii)Subject to Section 11.1(d), in the event that the Paying Agent or the Transfer Agent and Registrar (if other than the Indenture
Trustee) shall fail to perform any obligation, duty or agreement in the manner or on the day required to be performed by the Paying Agent or
the Transfer Agent and Registrar, as the case may be, under this Indenture, the Indenture Trustee shall be obligated as soon as practicable upon
written notice to a Trust Officer thereof and receipt of appropriate records and information, if any, to perform such obligation, duty or
agreement in the manner so required.
74
4147-9029-0755.4
(ix)[Reserved].
(x)Subject to Section 11.4, all moneys received by the Indenture Trustee shall, until used or applied as herein provided, be held in
trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by Law or the
Transaction Documents.
(xi)Nothing contained herein shall be deemed to authorize the Indenture Trustee to engage in any business operations or any
activities other than those set forth in this Indenture. Specifically, the Indenture Trustee shall have no authority to engage in any business
operations, acquire any assets other than those specifically included in the Trust Estate under this Indenture or otherwise vary the assets held by
the Issuer. Similarly, the Indenture Trustee shall have no discretionary duties other than performing those ministerial acts set forth above
necessary to accomplish the purpose of this Indenture.
(xii)The Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of any Default or Event of
Default unless a Trust Officer of the Indenture Trustee shall have received written notice thereof. In the absence of receipt of such notice, the
Indenture Trustee may conclusively assume that there is no Default or Event of Default.
(xiii)[Reserved].
(xiv)The Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Issuer, Oportun and/or a specified percentage of Noteholders or Certificateholders under circumstances in which such
direction is required or permitted by the terms of this Indenture or other Transaction Document.
(xv)The enumeration of any permissive right or power herein or in any other Transaction Document available to the Indenture
Trustee shall not be construed to be the imposition of a duty.
(xvi)The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may separately
agree in writing with the Issuer.
(xvii)Every provision of the Indenture or any related document relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this Article.
b. Rights of the Indenture Trustee. Except as otherwise provided by Section 11.1:
(i)The Indenture Trustee may conclusively rely on and shall be protected in acting upon or refraining from acting upon and in
accord with, without any duty to verify the contents or recompute any calculations therein, any document (whether in its original or facsimile
form), including the annual certificate, the monthly payment instructions and notification to the Indenture Trustee, the Monthly Report, any
resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document, believed by it to be genuine and to have been signed by or presented by the proper Person.
Without limiting the Indenture Trustee’s obligations to examine pursuant to Section 11.1(b)(ii), the Indenture Trustee need not investigate any
fact or matter stated in the document.
(ii)Before the Indenture Trustee acts or refrains from acting, the Indenture Trustee may require an Officer’s Certificate or an
Opinion of Counsel or consult with counsel of its
75
4147-9029-0755.4
selection and the Officer’s Certificate or the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(iii)The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, custodians and nominees and the Indenture Trustee shall not be liable for any misconduct or negligence on the
part of, or for the supervision of, any such agent or attorneys, custodian or nominee so long as such agent, custodian or nominee is appointed
with due care.
(iv)The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized
or within its rights or powers conferred upon it by this Indenture; provided, however, that the Indenture Trustee’s conduct does not constitute
willful misconduct or negligence.
(v)The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at the request, order or direction of any of the Noteholders or
Certificateholders, pursuant to the provisions of this Indenture, unless such Noteholders or Certificateholders shall have offered to the
Indenture Trustee security or indemnity satisfactory to the Indenture Trustee (in its sole discretion) against the costs, expenses (including
attorneys’ fees and expenses) and liabilities which may be incurred therein or thereby; nothing contained herein shall, however, relieve the
Indenture Trustee of the obligations, upon the occurrence of an Event of Default (which has not been cured or waived), to exercise such of the
rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.
(vi)The Indenture Trustee shall not be bound to make any investigation into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document (including, the annual
certificate, the monthly payment instructions and notification to the Indenture Trustee or the Monthly Report), unless requested in writing so to
do by the Holders of Securities evidencing not less than 25% of the aggregate outstanding principal balance or par value of the Securities, but
the Indenture Trustee may, but is not obligated to, make such further inquiry or investigation into such facts or matters as it may see fit, and, if
the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any
kind by reason of such inquiry or investigation; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not
assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require indemnity
satisfactory to it against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall
be paid by the Person making such request, or, if paid by the Indenture Trustee, shall be reimbursed by the Person making such request.
(vii)The Indenture Trustee shall have no liability for the selection of Permitted Investments and shall not be liable for any losses or
liquidation penalties in connection with Permitted Investments, unless such losses or liquidation penalties were incurred through the Indenture
Trustee’s own willful misconduct or negligence. The Indenture Trustee shall have no obligation to invest or reinvest any amounts except as
directed by the Issuer (or the Administrator) in accordance with this Indenture.
76
4147-9029-0755.4
(viii)The Indenture Trustee shall not be liable for the acts or omissions of any successor to the Indenture Trustee so long as such acts
or omissions were not the result of the negligence, bad faith or willful misconduct of the predecessor Indenture Trustee.
(ix)The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee and the entity serving as Indenture Trustee (a) in each of
its capacities hereunder and under the Transaction Documents, and to each agent, custodian and other Person employed to act hereunder or
thereunder and (b) in each document to which it is a party (in any capacity) whether or not specifically set forth herein or therein; provided that
the Securities Intermediary and the Depositary Bank shall comply with Section 5.3.
(x)Except as may be required by Sections 11.1(b)(ii), 11.2(a) and 11.2(f), the Indenture Trustee shall not be required to make any
initial or periodic examination of any documents or records related to the Trust Estate for the purpose of establishing the presence or absence of
defects, the compliance by the Seller, the Parent or the Administrator with their respective representations and warranties or for any other
purpose.
(xi)Without limiting the Indenture Trustee’s obligation to examine pursuant to Section 11.1(b)(ii), the Indenture Trustee shall not be
bound to make any investigation into (i) the performance or observance by the Issuer or any other Person of any of the covenants, agreements
or other terms or conditions set forth in this Indenture or in any related document, (ii) the occurrence of any default, or the validity,
enforceability, effectiveness or genuineness of this Indenture, any related document or any other agreement, instrument or document, (iii) the
creation, perfection or priority of any Lien purported to be created by this Indenture or any related document, (iv) the value or the sufficiency of
any collateral or (v) the satisfaction of any condition set forth in this Indenture or any related document, but the Indenture Trustee, in its
discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally
or by agent or attorney, and shall incur no liability of any kind by reason of such inquiry or investigation.
(xii)In no event shall the Indenture Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of
any kind whatsoever (including, but not limited to, loss of profit), even if the Indenture Trustee has been advised of the likelihood of such loss
or damage and regardless of the form of action.
(xiii)The Indenture Trustee may, from time to time, request that the Issuer and any other applicable party deliver a certificate (upon
which the Indenture Trustee may conclusively rely) setting forth the names of individuals and/or titles of officers authorized at such time to
take specified actions pursuant to this Indenture or any related document together with a specimen signature of such authorized officers;
provided, however, that from time to time, the Issuer or such other applicable party may, by delivering to the Indenture Trustee a revised
certificate, change the information previously provided by it pursuant to the Indenture, but the Indenture Trustee shall be entitled to
conclusively rely on the then current certificate until receipt of a superseding certificate.
(xiv)The right of the Indenture Trustee to perform any discretionary act enumerated in this Indenture or any related document shall
not be construed as a duty.
(xv)Except for notices, reports and other documents expressly required to be furnished to the Holders by the Indenture Trustee
hereunder, the Indenture Trustee shall not have any duty or responsibility to provide any Holder with any other information concerning the
Issuer or any
77
4147-9029-0755.4
other parties to any related documents which may come into the possession of the Indenture Trustee or any of its officers, directors, employees,
agents, representatives or attorneys-in-fact.
(xvi)If the Indenture Trustee requests instructions from the Issuer, the Administrator or the Holders with respect to any action or
omission in connection with this Indenture, the Indenture Trustee shall be entitled (without incurring any liability therefor) to refrain from
taking such action and continue to refrain from acting unless and until the Indenture Trustee shall have received written instructions from the
Issuer, the Administrator or the Holders, as applicable, with respect to such request.
(xvii)In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking
institutions, including those relating to the funding of terrorist activities and money laundering (“Applicable Law”), the Indenture Trustee is
required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the
Indenture Trustee. Accordingly, each of the parties agrees to provide to the Indenture Trustee upon its request from time to time such
identifying information and documentation as may be available for such party in order to enable the Indenture Trustee to comply with
Applicable Law.
(xviii)In no event shall the Indenture Trustee be liable for any failure or delay in the performance of its obligations under this
Indenture or any related documents because of circumstances beyond the Indenture Trustee’s control, including, but not limited to, a failure,
termination, or suspension of a clearing house, securities depositary, settlement system or central payment system in any applicable part of the
world or acts of God, flood, war (whether declared or undeclared), civil or military disturbances or hostilities, nuclear or natural catastrophes,
political unrest, explosion, severe weather or accident, earthquake, terrorism, fire, riot, labor disturbances, strikes or work stoppages for any
reason, embargo, government action, including any laws, ordinances, regulations or the like (whether domestic, federal, state, county or
municipal or foreign) which delay, restrict or prohibit the providing of the services contemplated by this Indenture or any related documents, or
the unavailability of communications or computer facilities, the failure of equipment or interruption of communications or computer facilities,
or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or any other causes beyond the
Indenture Trustee’s control whether or not of the same class or kind as specified above.
(xix)The Indenture Trustee shall not be liable for failing to comply with its obligations under this Indenture in so far as the
performance of such obligations is dependent upon the timely receipt of instructions and/or other information from any other Person which are
not received or not received by the time required.
(xx)The Indenture Trustee shall be fully justified in failing or refusing to take any action under this Indenture or any other related
document if such action (A) would, in the reasonable opinion of the Indenture Trustee, in good faith (which may be based on the advice or
opinion of counsel), be contrary to applicable Law, this Indenture or any other related document, or (B) is not provided for in the Indenture or
any other related document.
(xxi)The Indenture Trustee shall not be required to take any action under this Indenture or any related document if taking such action
(A) would subject the Indenture Trustee to a tax in any jurisdiction where it is not then subject to a tax, or (B) would require the Indenture
Trustee to qualify to do business in any jurisdiction where it is not then so qualified.
(xxii)The Indenture Trustee shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any other
agreement, instrument or document other
78
4147-9029-0755.4
than this Indenture or any other Transaction Document to which it is a party, whether or not an original or a copy of such agreement has been
provided to the Indenture Trustee.
(xxiii)The Indenture Trustee shall have no obligation or duty to determine or otherwise monitor any Person’s compliance with the
Credit Risk Retention Rules or any other laws, rules or regulations of any other jurisdiction related to risk retention.
(xxiv)Notwithstanding anything contained in this Indenture or any other Transaction Document to the contrary, the Indenture Trustee
shall be under no obligation (i) to monitor, determine or verify the unavailability or cessation of any applicable benchmark interest rate, or
whether or when there has occurred, or to give notice to any other Person of the occurrence of, any date on which such rate may be required to
be transitioned or replaced in accordance with the terms of the Transaction Documents, applicable law or otherwise, (ii) to select, determine or
designate any replacement to such rate, or other successor or replacement benchmark index, or whether any conditions to the designation of
such a rate have been satisfied, (iii) to select, determine or designate any modifier to any replacement or successor index, or (iv) to determine
whether or what any amendments to this Indenture or the other Transaction Documents are necessary or advisable, if any, in connection with
any of the foregoing.
c. Indenture Trustee Not Liable for Recitals in Securities. The Indenture Trustee assumes no responsibility for the correctness of
the recitals contained in this Indenture and in the Securities (other than the signature and authentication of the Indenture Trustee on the
Securities). Except as set forth in Section 11.16, the Indenture Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities (other than the signature and authentication of the Indenture Trustee on the Securities) or of any asset of the Trust
Estate or related document. The Indenture Trustee shall not be accountable for the use or application by the Issuer or the Seller of any of the
Securities or of the proceeds of such Securities, or for the use or application of any funds paid to the Seller or to the Issuer in respect of the
Trust Estate or deposited in or withdrawn from the Payment Account by Oportun.
d. Individual Rights of the Indenture Trustee; Multiple Capacities. The Indenture Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the Issuer or an Affiliate of the Issuer with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Transfer Agent and Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections 11.9 and 11.11. It is expressly acknowledged, agreed and
consented to that Wilmington Trust, National Association will be acting in the capacities of Indenture Trustee, Paying Agent, Depositary Bank
and Securities Intermediary. Wilmington Trust, National Association may, in such multiple capacities, discharge its separate functions fully,
without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any
such conflict or breach arises from the performance by Wilmington Trust, National Association of express duties set forth in this Indenture or
any other Transaction Documents in any such capacities, all of which defenses, claims or assertions are hereby expressly waived by the Issuer,
the Holders and any other Person having rights pursuant hereto or thereto and to disclaim any potential liability. For the avoidance of doubt,
any actions taken by the Securities Intermediary with respect to the First Priority Custody Account or the Second Priority Custody Account
shall be taken pursuant to the terms of the Custody Agreement and, so long as this Indenture is in effect, the provisions of this Indenture
applicable to the Securities Intermediary; it being understood that any such actions shall be taken solely in accordance with the Custody
Agreement and, so long as this Indenture is in effect, the provisions of this Indenture applicable to the Securities Intermediary, and Wilmington
Trust, National Association will discharge its separate functions fully, without hindrance or regard to conflict of interest principles, duty of
loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wilmington
Trust,
79
4147-9029-0755.4
National Association of express duties set forth in this Indenture or any other Transaction Documents in any such capacities, all of which
defenses, claims or assertions are hereby expressly waived by the Issuer, the Holders and any other Person having rights pursuant hereto or
thereto and to disclaim any potential liability.
e. Notice of Defaults. If a Default, Event of Default or Rapid Amortization Event occurs and is continuing and if a Trust Officer of
the Indenture Trustee receives written notice or has actual knowledge thereof, the Indenture Trustee shall promptly provide each Notice Person
(and, with respect to any Event of Default or Rapid Amortization Event, each Noteholder and Certificateholder), to the extent possible by email
or facsimile, and, otherwise, by first class mail at their respective addresses appearing in the Register.
f. Compensation.
(i)To the extent not otherwise paid pursuant to the Indenture, the Issuer covenants and agrees to pay to the Indenture Trustee from
time to time, and the Indenture Trustee shall be entitled to receive, such compensation as the Issuer and the Indenture Trustee shall agree in
writing from time to time (which compensation shall not be limited by any provision of Law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Indenture Trustee, and, the Issuer will pay or reimburse the Indenture Trustee (without reimbursement from
the Payment Account or otherwise) all reasonable expenses, disbursements and advances (including legal fees and costs and costs of persons
not regularly employed by the Indenture Trustee) incurred or made by the Indenture Trustee in accordance with any of the provisions of this
Indenture except any such expense, disbursement or advance as may arise from its own willful misconduct or negligence.
(ii)The obligations of the Issuer under this Section 11.6 shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee.
g. Replacement of the Indenture Trustee.
(i)A resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee shall become effective only
upon the successor Indenture Trustee’s acceptance of appointment as provided in this Section 11.7.
(ii)The Indenture Trustee may, after giving sixty (60) days’ prior written notice to the Issuer, resign at any time and be discharged
from the trust hereby created; provided, however, that no such resignation of the Indenture Trustee shall be effective until a successor trustee
has assumed the obligations of the Indenture Trustee hereunder. The Issuer may remove the Indenture Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor trustee if:
1.
the Indenture Trustee fails to comply with Section 11.9;
2.
a court or federal or state bank regulatory agency having jurisdiction in the premises in respect of the Indenture Trustee
shall have entered a decree or order granting relief or appointing a receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s property, or ordering the
winding-up or liquidation of the Indenture Trustee’s affairs;
3.
the Indenture Trustee consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other
80
4147-9029-0755.4
similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s property, or makes any assignment for the
benefit of creditors or fails generally to pay its debts as such debts become due or takes any corporate action in furtherance of any of the
foregoing; or
4.
the Indenture Trustee becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the Indenture Trustee for any reason, the
Issuer shall promptly appoint a successor Indenture Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered
to the resigning and one copy to the successor trustee.
(iii)If a successor Indenture Trustee does not take office within thirty (30) days after the retiring Indenture Trustee provides written
notice of its resignation or is removed, the retiring Indenture Trustee may petition any court of competent jurisdiction for the appointment of a
successor trustee.
A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring or removed Indenture Trustee
and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders and Certificateholders. The retiring
Indenture Trustee shall, at the expense of the Issuer, promptly transfer to the successor Indenture Trustee all property held by it as Indenture
Trustee and all documents and statements held by it hereunder; provided, however, that all sums owing to the retiring Indenture Trustee
hereunder (and its agents and counsel) have been paid, and the Issuer and the predecessor Indenture Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Indenture
Trustee all such rights, powers, duties and obligations. Notwithstanding replacement of the Indenture Trustee pursuant to this Section 11.7, the
Issuer’s obligations under Sections 11.6 and 11.17 shall continue for the benefit of the retiring Indenture Trustee.
(iv)Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of the
provisions of this Section 11.7 shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to this
Section 11.7 and payment of all fees and expenses owed to the retiring Indenture Trustee.
(v)No successor Indenture Trustee shall accept appointment as provided in this Section 11.7 unless at the time of such acceptance
such successor Indenture Trustee shall be eligible under the provisions of Section 11.9 hereof.
h. Successor Indenture Trustee by Merger, etc . Any Person into which the Indenture Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any Person succeeding to the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee
hereunder, provided such Person shall be eligible under the provisions of Section 11.9 hereof, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the
81
4147-9029-0755.4
Indenture Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Indenture Trustee may
authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all
such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of
the Indenture Trustee shall have.
i.
Eligibility: Disqualification. The Indenture Trustee hereunder shall at all times be organized and doing business under the Laws
of the United States of America or any State thereof authorized under such Laws to exercise corporate trust powers, having a long-term
unsecured debt rating of at least BBB- (or the equivalent thereof) by a Rating Agency, having, in the case of an entity that is subject to risk-
based capital adequacy requirements, risk-based capital of at least $50,000,000 or, in the case of an entity that is not subject to risk-based
capital adequacy requirements, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to Law, then for the purpose of this
Section 11.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section 11.9, the
Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 11.7.
j.
Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(i)Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any
part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this Section 11.10 such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 11.9 and no notice to Noteholders or Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.7. No co-trustee shall be appointed without the consent of the Issuer unless such
appointment is required as a matter of Law or to enable the Indenture Trustee to perform its functions hereunder. The appointment of any co-
trustee or separate trustee shall not relieve the Indenture Trustee of any of its obligations hereunder.
(ii)Every separate trustee and co-trustee shall, to the extent permitted by Law, be appointed and act subject to the following
provisions and conditions:
1.
the Securities shall be authenticated and delivered solely by the Indenture Trustee or an authenticating agent appointed by
the Indenture Trustee;
2.
all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent
that under any Law (whether as Indenture Trustee hereunder), the Indenture Trustee shall be incompetent or
82
4147-9029-0755.4
unqualified to perform, such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-
trustee, but solely at the direction of the Indenture Trustee;
3.
no trustee hereunder shall be personally liable by reason of any act or omission of any other trustees, hereunder, including
acts or omissions of predecessor or successor trustees;
4.
5.
the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee; and
the Indenture Trustee shall remain primarily liable for the actions of any co-trustee.
(iii)Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall
refer to this Indenture and the conditions of this Article 11. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to Oportun.
(iv)Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by Law, to do any lawful act under or in respect to this Indenture on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by Law, without the appointment of a new or successor
Indenture Trustee.
k. [Reserved].
l.
Taxes. The Indenture Trustee shall not be liable for any liabilities, costs or expenses of the Issuer, the Noteholders, the Note
Owners or the Certificateholders arising under any tax Law, including without limitation federal, state, local or foreign income or franchise
taxes or any other tax imposed on or measured by income (or any interest or penalty with respect thereto or arising from a failure to comply
therewith).
m. [Reserved].
n. Suits for Enforcement. If an Event of Default shall occur and be continuing, the Indenture Trustee, may (but shall not be
obligated to) subject to the provisions of Section 2.01 of the Servicing Agreement, proceed to protect and enforce its rights and the rights of
any Secured Party under this Indenture or any other Transaction Document by a Proceeding, whether for the specific performance of any
covenant or agreement contained in this Indenture or such other Transaction Document or in aid of the execution of any power granted in this
Indenture or such other Transaction Document or for the enforcement of any other legal, equitable or other remedy as the Indenture Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee or any Secured Party.
83
4147-9029-0755.4
o. Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver to each Noteholder and Certificateholder such
information as may be expressly required by the Code.
p. Representations and Warranties of Indenture Trustee. The Indenture Trustee represents and warrants to the Issuer and the
Secured Parties that:
1.
the Indenture Trustee is a national banking association with trust powers duly organized, existing and authorized to engage
in the business of banking under the Laws of the United States;
2.
the Indenture Trustee has full power, authority and right to execute, deliver and perform this Indenture and to authenticate
the Securities, and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and to
authenticate the Securities;
3.
4.
this Indenture has been duly executed and delivered by the Indenture Trustee; and
the Indenture Trustee meets the requirements of eligibility hereunder set forth in Section 11.9.
q. The Issuer Indemnification of the Indenture Trustee. The Issuer shall fully indemnify, defend and hold harmless the Indenture
Trustee (and any predecessor Indenture Trustee) and its directors, officers, agents and employees from and against any and all loss, liability,
claim, expense, damage or injury suffered or sustained of whatever kind or nature regardless of their merit, demanded, asserted, or claimed
directly or indirectly relating to any acts, omissions or alleged acts or omissions arising out of the activities of the Indenture Trustee pursuant to
this Indenture and any other Transaction Document to which it is a party or any transaction contemplated hereby or thereby, including but not
limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of
any actual or threatened action, Proceeding or claim; provided, however, that the Issuer shall not indemnify the Indenture Trustee or its
directors, officers, employees or agents if such acts, omissions or alleged acts or omissions constitute negligence or willful misconduct by the
Indenture Trustee. The indemnity provided herein shall (i) survive the termination of this Indenture and the resignation and removal of the
Indenture Trustee, and (ii) apply to the Indenture Trustee (including (a) in its capacity as Agent and (b) Wilmington Trust, National
Association, as Securities Intermediary and Depositary Bank).
r. Indenture Trustee’s Application for Instructions from the Issuer . Any application by the Indenture Trustee for written
instructions from the Issuer or the Administrator may, at the option of the Indenture Trustee, set forth in writing any action proposed to be
taken or omitted by the Indenture Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission
shall be effective. Subject to Section 11.1, the Indenture Trustee shall not be liable for any action taken by, or omission of, the Indenture
Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be
less than thirty (30) days after the date any Responsible Officer of the Issuer or the Administrator actually receives such application, unless any
such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an
omission), the Indenture Trustee shall have received written instructions in response to such application specifying the action to be taken or
omitted.
s. [Reserved].
84
4147-9029-0755.4
t.
Maintenance of Office or Agency. The Indenture Trustee will maintain an office or offices, or agency or agencies, where
notices and demands to or upon the Indenture Trustee in respect of the Securities and this Indenture may be served. The Indenture Trustee
initially appoints its Corporate Trust Office as its office for such purposes. The Indenture Trustee will give prompt written notice to the Issuer,
Oportun, the Noteholders and the Certificateholders of any change in the location of the Register or any such office or agency.
u. Concerning the Rights of the Indenture Trustee . The rights, privileges and immunities afforded to the Indenture Trustee in the
performance of its duties under this Indenture shall apply equally to the performance by the Indenture Trustee of its duties under each other
Transaction Document to which it is a party.
v. Direction to the Indenture Trustee. The Issuer hereby directs the Indenture Trustee to enter into the Transaction Documents.
ARTICLE 12.
DISCHARGE OF INDENTURE
a. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Securities except as
to (i) rights of Noteholders to receive payments of principal thereof and interest thereon and any other amount due to Noteholders, (ii) rights of
Certificateholders to receive payments of amount distributable to Certificateholders, (iii) Sections 8.1, 11.6, 11.12, 11.17, 12.2, 12.5(b), 15.16
and 15.17, (iv) the rights, obligations under Sections 12.2 and 15.17 and immunities of the Indenture Trustee hereunder (including the rights of
the Indenture Trustee under Sections 11.6 and 11.17) and (v) the rights of Noteholders and Certificateholders as beneficiaries hereof with
respect to the property deposited with the Indenture Trustee as described below payable to all or any of them, and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Securities (and their related Secured Parties), on the Payment Date (the “Indenture Termination Date”) on which the Issuer has
paid, caused to be paid or irrevocably deposited or caused to be irrevocably deposited in the applicable Payment Account funds sufficient to
pay in full all Secured Obligations, and the Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel,
each meeting the applicable requirements of Section 15.1(a) and each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
After any irrevocable deposit made pursuant to Section 12.1 and satisfaction of the other conditions set forth herein, the
Indenture Trustee promptly upon request shall acknowledge in writing the discharge of the Issuer’s obligations under this Indenture except for
those surviving obligations specified above.
b. Application of Issuer Money. All moneys deposited with the Indenture Trustee pursuant to Section 12.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying
Agent to the Noteholder or Certificateholders of the particular Securities for the payment or redemption of which such moneys have been
deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and other amounts; but such moneys
need not be segregated from other funds except to the extent required herein or in the other Transaction Documents or required by Law.
The provisions of this Section 12.2 shall survive the expiration or earlier termination of this Indenture.
85
4147-9029-0755.4
c. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to
the Securities, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to
such Securities shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 8.1 and thereupon
such Paying Agent shall be released from all further liability with respect to such moneys.
d. [Reserved].
e. Final Payment.
(i)Written notice of any termination, specifying the Payment Date upon which the Noteholders or Certificateholders may surrender
their Securities for final payment and cancellation, shall be given (subject to at least two (2) Business Days’ prior notice from the Issuer to the
Indenture Trustee) by the Indenture Trustee to Noteholders or Certificateholders mailed not later than five (5) Business Days preceding such
final payment specifying (i) the Payment Date (which shall be the Payment Date in the month in which the Termination Date occurs) upon
which final payment of such Securities will be made upon presentation and surrender of such Securities at the office or offices therein
designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the Securities at the office or offices therein specified. The Issuer’s
notice to the Indenture Trustee in accordance with the preceding sentence shall be accompanied by an Officer’s Certificate of the Issuer setting
forth the information specified in Article 6 of this Indenture covering the period during the then current calendar year through the date of such
notice and setting forth the date of such final distribution. The Indenture Trustee shall give such notice to the Transfer Agent and the Paying
Agent at the time such notice is given to such Noteholders or Certificateholders.
(ii)Notwithstanding the termination or discharge of the trust of the Indenture pursuant to Section 12.1 or the occurrence of the
Termination Date, all funds then on deposit in the Payment Account shall continue to be held in trust for the benefit of the Noteholders or
Certificateholders and the Paying Agent or the Indenture Trustee shall pay such funds to the Noteholders or Certificateholders upon surrender
of their Securities. In the event that all of the Noteholders or Certificateholders shall not surrender their Securities for cancellation within six
(6) months after the date specified in the above-mentioned written notice, the Indenture Trustee shall give second written notice to the
remaining Noteholders or Certificateholders upon receipt of the appropriate records from the Transfer Agent and Registrar to surrender their
Securities for cancellation and receive the final distribution with respect thereto. If within one and one-half years after the second notice all the
Securities shall not have been surrendered for cancellation, the Indenture Trustee may take appropriate steps or may appoint an agent to take
appropriate steps, to contact the remaining Noteholders or Certificateholders concerning surrender of their Securities, and the cost thereof shall
be paid out of the funds in the Payment Account held for the benefit of such Noteholders or Certificateholders. The Indenture Trustee and the
Paying Agent shall pay to the Issuer upon request any monies held by them for the payment of principal or interest which remains unclaimed
for two (2) years. After such payment to the Issuer, Noteholders or Certificateholders entitled to the money must look to the Issuer for payment
as general creditors unless an applicable abandoned property Law designates another Person.
(iii)All Securities surrendered for payment of the final distribution with respect to such Securities and cancellation shall be cancelled
by the Transfer Agent and Registrar and be disposed of in a manner satisfactory to the Indenture Trustee and the Issuer.
f. Termination Rights of Issuer. Upon the termination of the Lien of the Indenture pursuant to Section 12.1, and after payment of
all amounts due hereunder on or prior to such
86
4147-9029-0755.4
termination, the Indenture Trustee shall execute a written release and reconveyance substantially in the form of Exhibit A hereto pursuant to
which it shall release the Lien of the Indenture and reconvey to the Issuer (without recourse, representation or warranty) all right, title and
interest in the Trust Estate, whether then existing or thereafter created, all moneys due or to become due with respect to such Trust Estate and
all proceeds of the Trust Estate, except for amounts held by the Indenture Trustee or any Paying Agent pursuant to Section 12.5(b). The
Indenture Trustee shall execute and deliver such instruments of transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Issuer to vest in the Issuer all right, title and interest in the Trust Estate.
g. Repayment to the Issuer. The Indenture Trustee and the Paying Agent shall promptly pay to the Issuer upon written request any
excess money or, pursuant to Sections 2.10 and 2.13, return any Securities held by them at any time.
ARTICLE 13.
AMENDMENTS
a. Supplemental Indentures without Consent of the Noteholders. Without the consent of the Holders of any Notes, and, if the
Certificateholders’ rights and/or obligations are materially and adversely affected thereby, with the consent of the Required Certificateholders,
the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more
indenture supplements or amendments hereto, in form satisfactory to the Indenture Trustee for any of the following purposes:
(i)to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject to the Lien of
this Indenture additional property;
(ii)to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in the Securities;
(iii)to add to the covenants of the Issuer for the benefit of any Secured Parties or to surrender any right or power herein conferred
upon the Issuer;
(iv)to convey, transfer, assign, mortgage or pledge to the Indenture Trustee any property or assets as security for the Secured
Obligations and to specify the terms and conditions upon which such property or assets are to be held and dealt with by the Indenture Trustee
and to set forth such other provisions in respect thereof as may be required by this Indenture or as may, consistent with the provisions of this
Indenture, be deemed appropriate by the Issuer and the Indenture Trustee, or to correct or amplify the description of any such property or assets
at any time so mortgaged, pledged, conveyed and transferred to the Indenture Trustee;
(v)to cure any ambiguity, or correct or supplement any provision of this Indenture which may be inconsistent with any other
provision of this Indenture;
(vi)to make any other provisions of this Indenture with respect to matters or questions arising under this Indenture; provided,
however, that such action shall not adversely affect the interests of any Holder of the Notes in any material respect without consent being
provided as set forth in Section 13.2; or
87
4147-9029-0755.4
(vii)to evidence and provide for the acceptance of appointment hereunder by a successor Indenture Trustee with respect to the
Securities or to add to or change any of the provisions of this Indenture as shall be necessary and permitted to provide for or facilitate the
administration of the trusts hereunder by more than one trustee pursuant to the requirements of Article 11;
provided, however, that no amendment or supplement shall be permitted unless a Tax Opinion is delivered to the Indenture Trustee.
Upon the request of the Issuer, the Indenture Trustee shall join with the Issuer in the execution of any supplemental indenture or
amendment authorized or permitted by the terms of this Indenture and shall make any further appropriate agreements and stipulations that may
be therein contained, but the Indenture Trustee shall not be obligated to enter into such supplemental indenture or amendment that affects its
own rights, duties or immunities under this Indenture or otherwise.
b. Supplemental Indentures with Consent of Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with the consent of the Required Noteholders and, if the Certificateholders’ rights and/or obligations are materially and
adversely affected thereby, the Required Certificateholders enter into one or more indenture supplements or amendments hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such indenture supplement or amendment shall,
without the consent of the Required Noteholders and without the consent of the Holder of each outstanding Note affected thereby (and in the
case of clause (iii) below, the consent of each Secured Party):
1.
change the date of payment of any installment of principal of or interest on, or any premium payable upon the redemption
of, any Note or reduce in any manner the principal amount thereof, the interest rate thereon or the Redemption Price with respect
thereto, modify the provisions of this Indenture relating to the application of payments on, or the proceeds of the sale of, the Trust Estate
to payment of principal of, or interest on, the Notes, or change any place of payment where, or the coin or currency in which, any Note
or the interest thereon is payable;
2.
change the Noteholder voting requirements with respect to any Transaction Document;
3.
impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article 9, to the payment of any such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption Date);
4.
reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required for any such indenture supplement or amendment, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;
5.
of the foregoing;
modify or alter the provisions of this Indenture regarding the voting of Notes held by the Issuer, the Seller or an Affiliate
6.
reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required to direct the Indenture Trustee to
88
4147-9029-0755.4
sell or liquidate the Trust Estate pursuant to Section 10.4 if the proceeds of such sale would be insufficient to pay the principal amount
and accrued but unpaid interest on the outstanding Notes;
7.
modify any provision of this Section 13.2, except to increase any percentage specified herein or to provide that certain
additional provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note
affected thereby;
8.
modify any of the provisions of this Indenture in such manner as to affect in any material respect the calculation of the
amount of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual
components of such calculation), to alter the application of payments or to affect the rights of the Holders of Notes to the benefit of any
provisions for the mandatory redemption of the Notes contained in this Indenture; or
9.
permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the
Trust Estate for the Notes (except for Permitted Encumbrances) or, except as otherwise permitted or contemplated in this Indenture,
terminate the Lien of this Indenture on any such collateral at any time subject hereto or deprive any Secured Party of the security
provided by the Lien of this Indenture.
The Indenture Trustee may, but shall not be obligated to, enter into any such amendment or supplement that affects the
Indenture Trustee’s rights, duties or immunities under this Indenture or otherwise.
It shall not be necessary for any consent of Noteholders or Certificateholders under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Additionally, with respect to
a Book-Entry Note, such consent may be provided directly by the Note Owner or indirectly through a Clearing Agency.
The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Note shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture or amendment to this
Indenture pursuant to this Section, the Indenture Trustee shall mail to each Holder of the Securities a copy of such supplemental indenture or
amendment. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture or amendment.
c. Execution of Supplemental Indentures. In executing any amendment or supplemental indenture permitted by this Article 13 or
the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Section 11.1,
shall be fully protected in relying upon, an Officer’s Certificate of the Issuer and an Opinion of Counsel stating that the execution of such
amendment or supplemental indenture is authorized, permitted or not prohibited (as the case may be) by this Indenture and all conditions
precedent to the execution of such amendment or supplemental indenture have been satisfied. Such Opinion of Counsel may be subject to
reasonable qualifications and assumptions of fact. The Indenture Trustee may, but shall not be obligated to, enter into any such amendment or
supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or
89
4147-9029-0755.4
immunities under this Indenture or otherwise. No amendment or supplemental indenture may adversely affect the rights, duties, immunities,
protections or indemnification rights of any Agent, the Depositary Bank or the Securities Intermediary without its consent.
d. Effect of Supplemental Indenture. Upon the execution of any amendment or supplemental indenture pursuant to the provisions
hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Securities affected
thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture
Trustee, the Issuer and the Holders of the Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modifications and amendments, and all the terms and conditions of any such amendment or supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
e. [Reserved].
f. [Reserved].
g. [Reserved].
h. Revocation and Effect of Consents. Until an amendment, supplemental indenture or waiver becomes effective, a consent to it
by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Note that evidences
the same debt or other amount payable as the consenting Holder’s Security, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to such Holder’s Security or portion of a Security if the Indenture
Trustee receives written notice of revocation before the date the amendment, supplemental indenture or waiver becomes effective. An
amendment, supplemental indenture or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Issuer
may fix a record date for determining which Holders must consent to such amendment, supplemental indenture or waiver.
i.
Notation on or Exchange of Securities Following Amendment. The Indenture Trustee may place an appropriate notation about
an amendment, supplemental indenture or waiver on any Security thereafter authenticated. If the Issuer shall so determine, new Securities so
modified as to conform to any such amendment, supplemental indenture or waiver may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee (upon receipt of an Issuer Order) in exchange for outstanding Securities. Failure to make
the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplemental indenture or waiver.
j.
The Indenture Trustee to Sign Amendments, etc. The Indenture Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 13 if the amendment or supplemental indenture does not adversely affect in any material respect the rights,
duties, liabilities or immunities of the Indenture Trustee. If any amendment or supplemental indenture does have such a materially adverse
effect, the Indenture Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Indenture Trustee shall be
entitled to receive, if requested, an indemnity reasonably satisfactory to it and to receive and, subject to Section 11.1, shall be fully protected in
relying upon, an Officer’s Certificate of the Issuer and an Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized, permitted or not prohibited (as the case may be) by this Indenture and that it will be valid and binding upon the Issuer
in accordance with its terms and all conditions precedent to the execution of such amendment or supplemental indenture have been satisfied.
90
4147-9029-0755.4
ARTICLE 14.
REDEMPTION AND REFINANCING OF NOTES
a. Redemption and Refinancing.
(i)The Notes are subject to redemption by the Issuer, at its option, in accordance with the terms of this Article 14, in full or in part,
on any Payment Date; provided that the Issuer has available funds sufficient to pay the Redemption Price. If the Notes are to be redeemed
pursuant to this Section 14.1, the Issuer shall furnish notice of such election to the Indenture Trustee and the Noteholders not later than fifteen
(15) days prior to the Redemption Date and the Issuer shall deposit with the Indenture Trustee in a Trust Account that is within the sole control
of the Indenture Trustee no later than 10:00 a.m. New York time on the Redemption Date the Redemption Price of the Notes to be redeemed
(or portion thereof) whereupon all such redeemed Notes shall be due and payable on the Redemption Date upon the furnishing of a notice
complying with Section 14.2 to each Holder of such Notes.
(ii)The redemption price for the Notes will be equal to the sum of (i) the Note Principal amount being redeemed (determined
without giving effect to any Notes owned by the Issuer), plus (ii) accrued and unpaid interest on such Notes through the day preceding the
Payment Date on which the redemption occurs, plus (iii) any other amounts payable to such Noteholders pursuant to the Transaction
Documents, plus (iv) any other amounts due and owing by the Issuer to the other Secured Parties pursuant to the Transaction Documents,
minus (v) the amounts, if any, on deposit on such Payment Date in the Payment Account for the payment of the foregoing amounts.
(iii)Unless otherwise consented to by the Holders of 100% of the Certificates outstanding, concurrent with any redemption of any
Notes by the Issuer, the Issuer shall make a distribution on the Certificates in accordance with this Article 14 in an amount equal to the sum of
(i) the amount distributable on the Certificates on the Payment Date on which the redemption occurs (calculated as though the Notes were not
redeemed on such Payment Date), plus (ii) any other amounts due and owing to the Holders of the outstanding Certificates pursuant to the
Transaction Documents, in each case, without duplication and net of any amounts payable in connection with the redemption of the Notes.
b. Form of Redemption Notice. Subject to Section 2.17, notice of redemption under Section 14.1 shall be given by the Indenture
Trustee by facsimile or by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to each Holder of
Notes to be redeemed, as of the close of business on the Record Date preceding the applicable Redemption Date, at such Holder’s address
appearing in the Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Issuer’s good faith estimate of the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as provided in Section 8.2); and
(iv) that interest on the Notes shall cease to accrue on the Redemption Date.
91
4147-9029-0755.4
Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. For the
avoidance of doubt, the Issuer shall provide the Indenture Trustee with the actual Redemption Price prior to the applicable Redemption Date.
Failure to give notice of redemption, or any defect therein, to any Holder of any Note to be redeemed shall not impair or affect the validity of
the redemption of any other Note.
c. Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by Section
14.2, on the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
ARTICLE 15.
MISCELLANEOUS
a. Compliance Certificates and Opinions, etc.
(i)Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture,
the Issuer shall furnish to the Indenture Trustee if requested thereby (i) an Officer’s Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been complied with, and (ii) an Opinion of Counsel (subject to reasonable
assumptions and qualifications) stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
1.
a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
2.
a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
3.
a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied
with; and
4.
a statement as to whether, in the opinion of each such signatory such condition or covenant has been complied with.
(ii)(i) Prior to the deposit of the Underlying Securities or other property or securities (other than cash) with the Indenture Trustee
that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 15.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee upon the Indenture Trustee’s request an
Officer’s Certificate certifying or stating the opinion of each individual signing such certificate as to the fair value (within ninety (90) days of
92
4147-9029-0755.4
such deposit) to the Issuer of the Underlying Securities or other property or securities to be so deposited.
1.
Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made
the basis of any such withdrawal or release since the commencement of the then-current Fiscal Year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause (ii), is 10% or more of the aggregate outstanding principal amount or
par value of all the Securities issued by the Issuer, but such a certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than $25,000 or less than 1% percent of the
aggregate outstanding principal amount or par value of all the Securities issued by the Issuer of the Securities.
2.
Other than with respect to the release of any cash (including Underlying Payments), and except for discharges of this
Indenture as described in Section 12.1, whenever any property or securities are to be released from the Lien of this Indenture, the Issuer
shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each individual signing such
certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating
that in the opinion of such individual the proposed release will not impair the security under this Indenture in contravention of the
provisions hereof.
3.
Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the property or securities and of all other property other than cash
(including Underlying Payments) or securities released from the Lien of this Indenture since the commencement of the then current
calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10% or more of the aggregate
outstanding principal amount or par value of all Securities issued by the Issuer, but such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than $25,000 or less
than 1% percent of the then aggregate outstanding principal amount or par value of all Securities issued by the Issuer of the Securities.
b. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in
one or several documents.
Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any
such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or
93
4147-9029-0755.4
opinion of, or representations by, an officer or officers of the Seller, the Administrator or the Issuer, stating that the information with respect to
such factual matters is in the possession of or known to the Seller, the Administrator or the Issuer, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements,
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any
term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate
or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to
affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided
in Article 10.
c. Acts of Noteholders and Certificateholders.
(i)Wherever in this Indenture a provision is made that an action may be taken or a notice, demand or instruction given by
Noteholders or Certificateholders, such action, notice or instruction may be taken or given by any Noteholder or Certificateholder, unless such
provision requires a specific percentage of Noteholders or Certificateholders. Notwithstanding anything in this Indenture to the contrary, so
long as any other Person is a Noteholder or Certificateholder, none of the Seller, the Issuer or any Affiliate controlled by Oportun or controlling
Oportun shall have any right to vote with respect to any Security.
(ii)Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or
taken by Noteholders or Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed
by such Noteholders or Certificateholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the Noteholders or Certificateholders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 11.1)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section.
(iii)The fact and date of the execution by any Person of any such instrument or writing may be proved in any customary manner of
the Indenture Trustee.
(iv)The ownership of Securities shall be proved by the Register.
(v)Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any such Securities shall
bind such Noteholder or Certificateholder and the Holder of every Security and every subsequent Holder of such Securities issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of anything done,
94
4147-9029-0755.4
omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon
such Security.
d. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, sent by facsimile to, sent by courier (overnight or hand-delivered) at or mailed by certified mail, return receipt
requested, to (a) in the case of the Issuer, to 2 Circle Star Way, Room 322, San Carlos, California 94070, Attention: Secretary, and (b) in the
case of the Indenture Trustee, to the Corporate Trust Office. Unless expressly provided herein, any notice required or permitted to be mailed to
a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at the address of such Noteholder or Certificateholder as
shown in the Register. Any notice so mailed within the time prescribed in this Indenture shall be conclusively presumed to have been duly
given, whether or not the Noteholder or Certificateholder receives such notice.
The Issuer or the Indenture Trustee by notice to the other may designate additional or different addresses for subsequent notices
or communications; provided, however, the Issuer may not at any time designate more than a total of three (3) addresses to which notices must
be sent in order to be effective.
Any notice (i) given in person shall be deemed delivered on the date of delivery of such notice, (ii) given by first class mail shall
be deemed given five (5) days after the date that such notice is mailed, (iii) delivered by telex or telecopier shall be deemed given on the date
of confirmation of the delivery of such notice by e-mail or telephone, and (iv) delivered by overnight air courier shall be deemed delivered one
(1) Business Day after the date that such notice is delivered to such overnight courier.
Notwithstanding any provisions of this Indenture to the contrary, the Indenture Trustee shall have no liability based upon or
arising from the failure to receive any notice required by or relating to this Indenture or the Securities.
the same time.
If the Issuer mails a notice or communication to Noteholders or Certificateholder, it shall mail a copy to the Indenture Trustee at
e. Notices to Noteholders and Certificateholders; Waiver. Where this Indenture provides for notice to Noteholders or
Certificateholders of any event, such notice shall be sufficiently given if sent in accordance with Section 15.4 hereof. In any case where notice
to Noteholders or Certificateholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder or Certificateholder shall affect the sufficiency of such notice with respect to other Noteholders or Certificateholders, and
any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders or
Certificateholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken
in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders or Certificateholders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
95
4147-9029-0755.4
f. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Securities to the
contrary, the Indenture Trustee on behalf of the Issuer may enter into any agreement with any Holder of a Security providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are consented to by the Issuer (which consent shall not be unreasonably
withheld). The Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements.
g. [Reserved].
h. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents and Cross-
Reference Table are for convenience of reference only, are not to be considered a part hereof, and shall not affect the meaning or construction
hereof.
i.
Successors and Assigns. All covenants and agreements in this Indenture and the Securities by the Issuer shall bind its successors
and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.
j.
Separability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Indenture or Securities
shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Indenture and shall in no way affect the validity or enforceability of the other
provisions of this Indenture or of the Securities or rights of the Holders thereof.
k. Benefits of Indenture. Except as set forth in this Indenture, nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than the parties hereto and their successors hereunder and the Secured Parties, any benefit or any legal or
equitable right, remedy or claim under the Indenture.
l.
Legal Holidays. In any case where the date on which any payment is due to any Secured Party shall not be a Business Day, then
(notwithstanding any other provision of the Securities or this Indenture) any such payment need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue
for the period from and after any such nominal date.
m. GOVERNING LAW; JURISDICTION . THIS INDENTURE AND THE SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS. EACH OF THE PARTIES TO THIS INDENTURE AND EACH SECURED PARTY HEREBY
AGREES TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENT THEREOF.
EACH OF THE PARTIES AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.
96
4147-9029-0755.4
n. Counterparts; Electronic Execution. This Indenture may be executed in any number of counterparts, and by different parties on
separate counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one
and the same instrument. Each of the parties hereto agrees that this transaction may be conducted by electronic means. Each party agrees, and
acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting, and
accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its handwritten
signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a
usable format.
o. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any
other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the
Noteholders, the Certificateholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
p. Issuer Obligation. Neither any trustee nor any member of the Issuer nor any of their respective officers, directors, employers or
agents will have any liability with respect to this Indenture, and no recourse may be had solely to the assets of the Issuer respect thereto. In
addition, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Securities
or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) any assets of the Issuer other
than the Trust Estate, (ii) the Seller, or the Indenture Trustee in their respective individual capacities, or (iii) any partner, owner, incorporator,
member, manager, beneficiary, beneficial owner, agent, officer, director, employee, shareholder or agent of the Issuer, the Seller, or the
Indenture Trustee, except as any such Person may have expressly agreed. Nothing in this Section 15.16 shall be construed to limit the Indenture
Trustee from exercising its rights hereunder with respect to the Trust Estate.
q. No Bankruptcy Petition Against the Issuer . Each of the Secured Parties and the Indenture Trustee by entering into the
Indenture or any Note Purchase Agreement, and in the case of a Noteholder, Certificateholder and Note Owner, by accepting a Security, hereby
covenants and agrees that, prior to the date which is one year and one day after the payment in full of the latest maturing Security and the
termination of the Indenture, it will not institute against, or join with any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation Proceedings, or other Proceedings, under any United States federal or state bankruptcy
or similar Law in connection with any obligations relating to the Securities, the Indenture or any of the Transaction Documents. In the event
that any such Secured Party or the Indenture Trustee takes action in violation of this Section 15.17, the Issuer shall file an answer with the
bankruptcy court or otherwise properly contesting the filing of such a petition by any such Secured Party or the Indenture Trustee against the
Issuer or the commencement of such action and raising the defense that such Secured Party or the Indenture Trustee has agreed in writing not
to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.
The provisions of this Section 15.17 shall survive the termination of this Indenture, and the resignation or removal of the Indenture Trustee.
Nothing contained herein shall preclude participation by any Secured Party or the Indenture Trustee in the assertion or defense of its claims in
any such Proceeding involving the Issuer.
r. No Joint Venture. Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of Oportun
97
4147-9029-0755.4
shall be rendered as an independent contractor and not as agent for the Indenture Trustee or the Issuer.
s. Rule 144A Information. For so long as any of the Securities are “restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act, the Issuer agrees to reasonably cooperate to provide to any Noteholders or Certificateholders and to any prospective
purchaser of Securities designated by such Noteholder or Certificateholder upon the request of such Noteholder or Certificateholder or
prospective purchaser, any information required to be provided to such holder or prospective purchaser to satisfy the condition set forth in Rule
144A(d)(4) under the Securities Act if at the time of the request the Issuer is not a reporting company under Section 13 or Section 15(d) of the
Exchange Act and the Administrator agrees to reasonably cooperate with the Issuer and the Indenture Trustee in connection with the foregoing.
t.
No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Indenture Trustee or any
Secured Party, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by Law.
u. Third-Party Beneficiaries. This Indenture will inure to the benefit of and be binding upon the parties hereto, the Secured
Parties, and their respective successors and permitted assigns. Except as otherwise provided in this Article 15, no other Person will have any
right or obligation hereunder.
v. Merger and Integration. Except as specifically stated otherwise herein, this Indenture sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Indenture.
w. Rules by the Indenture Trustee. The Indenture Trustee may make reasonable rules for action by or at a meeting of any Secured
Parties.
Indenture.
x. Duplicate Originals. The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this
y. Waiver of Trial by Jury . To the extent permitted by applicable Law, each of the Secured Parties irrevocably waives all right of
trial by jury in any action or Proceeding arising out of or in connection with this Indenture or the Transaction Documents or any matter arising
hereunder or thereunder.
z. No Impairment. Except for actions expressly authorized by this Indenture, the Indenture Trustee shall take no action reasonably
likely to impair the interests of the Issuer in any asset of the Trust Estate now existing or hereafter created or to impair the value of any asset of
the Trust Estate now existing or hereafter created.
[THIS SPACE LEFT INTENTIONALLY BLANK]
98
4147-9029-0755.4
IN WITNESS WHEREOF, the Indenture Trustee, the Issuer, the Securities Intermediary and the Depositary Bank have caused
this Indenture to be duly executed by their respective duly authorized officers as of the day and year first written above.
OPORTUN RF, LLC,
as Issuer
By:
Name: Jonathan Coblentz
Title: Treasurer
4147-9029-0755.4
[Indenture (Oportun RF, LLC)]
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Indenture Trustee
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Securities Intermediary
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Depositary Bank
By:
Name:
Title:
4147-9029-0755.4
[Indenture (Oportun RF, LLC)]
EXHIBIT A
TO INDENTURE
Form of Release and Reconveyance of Trust Estate
RELEASE AND RECONVEYANCE OF TRUST ESTATE
RELEASE AND RECONVEYANCE OF TRUST ESTATE, dated as of __________, _____, between Oportun RF, LLC (the
“Issuer”) and Wilmington Trust, National Association, a national banking association with trust powers (the “ Indenture Trustee”) pursuant to
the Indenture referred to below.
W I T N E S S E T H :
WHEREAS, the Issuer and the Indenture Trustee are parties to the Indenture dated as of December 20, 2021 (hereinafter as such
agreement may have been, or may from time to time be, amended, supplemented or otherwise modified, the “Indenture”);
WHEREAS, pursuant to the Indenture, upon the termination of the Lien of the Indenture pursuant to Section 12.1 of the
Indenture and after payment of all amounts due under the terms of the Indenture on or prior to such termination, the Indenture Trustee shall at
the request of the Issuer reconvey and release the Lien on the Trust Estate;
WHEREAS, the conditions to termination of the Indenture pursuant to Sections 12.1 and 12.6 have been satisfied;
WHEREAS, the Issuer has requested that the Indenture Trustee terminate the Lien of the Indenture on the Trust Estate pursuant
to Section 12.6; and
hereof;
WHEREAS, the Indenture Trustee is willing to execute such release and reconveyance subject to the terms and conditions
NOW, THEREFORE, the Issuer and the Indenture Trustee hereby agree as follows:
unless otherwise defined herein.
1 . Defined Terms . All terms defined in the Indenture and used herein shall have such defined meanings when used herein,
2 . Release and Reconveyance. (a) The Indenture Trustee does hereby release and reconvey to the Issuer, without recourse,
representation or warranty, on and after ____, ____ (the “Reconveyance Date”) all right, title and interest in the Trust Estate whether then
existing or thereafter created, all monies due or to become due with respect thereto and all proceeds of such Trust Estate, except for amounts, if
any, held by the Indenture Trustee or any Paying Agent pursuant to Section 12.5 of the Indenture.
(b) In connection with such transfer, the Indenture Trustee does hereby release the Lien of the Indenture on the Trust Estate
and agrees, upon the reasonable request and at the expense of the Issuer, to authorize the filing of any necessary or reasonably desirable UCC
termination statements in connection therewith.
3. [Reserved]
different parties on separate counterparts), each
4. Counterparts; Electronic Execution. This Release and Reconveyance may be executed in two or more counterparts (and by
A-1
4147-9029-0755.4
of which shall be an original, but all of which together shall constitute one and the same instrument. Each of the parties hereto agrees that this
transaction may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs
this Release and Reconveyance using an electronic signature, it is signing, adopting, and accepting this Release and Reconveyance and that
signing this Release and Reconveyance using an electronic signature is the legal equivalent of having placed its handwritten signature on this
Release and Reconveyance on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Release and
Reconveyance in a usable format.
5. Governing Law. THIS RELEASE AND RECONVEYANCE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
A-2
4147-9029-0755.4
IN WITNESS WHEREOF, the undersigned have caused this Release and Reconveyance of Trust Estate to be duly executed and delivered by
their respective duly authorized officers on the day and year first above written.
OPORTUN RF, LLC, as Issuer
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Indenture Trustee
By:
Name:
Title:
A-3
4147-9029-0755.4
B-1
4147-9029-0755.4
EXHIBIT B
TO INDENTURE
[Reserved]
EXHIBIT C
TO INDENTURE
FORM OF CLASS A RESTRICTED GLOBAL NOTE
RESTRICTED GLOBAL NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE OFFERED, SOLD,
PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN
COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE
SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT
TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW
THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (II) (A)
ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR
LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN
INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN
CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW
INVESTMENT GRADE.
C-1
4147-9029-0755.4
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE,
SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH TRANSFEREE OF THIS NOTE,
BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE
INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND CONDITIONS SET FORTH IN
THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
C-2
4147-9029-0755.4
No. R-[_] $[_]
CUSIP No. 68378L AA2
THE PRINCIPAL OF THIS CLASS A NOTE MAY BE PAYABLE IN INSTALLMENTS AS SET FORTH IN THE INDENTURE
DEFINED HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED NOTES, CLASS A
Oportun RF, LLC, a Delaware limited liability company (herein referred to as the “Issuer”), for value received, hereby promises to
pay Cede & Co., or registered assigns, the principal sum set forth above or such other principal sum set forth on Schedule A attached hereto
(which sum shall not exceed $[_]), payable on each Payment Date as set forth in the Indenture, in an amount equal to the amount available for
distribution under Section 5.15(b)(iv) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or otherwise modified from
time to time, the “Indenture”), between the Issuer and the Indenture Trustee; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the Legal Final Payment Date (as defined in the Indenture). The Issuer will pay interest on this Class A Note
at the Class A Note Rate (as defined in the Indenture) on each Payment Date until the principal of this Class A Note is paid or made available
for payment, which interest will be computed on the basis set forth in the Indenture. Such principal of and interest on this Class A Note shall be
paid in the manner specified on the reverse hereof.
The Class A Notes are subject to optional redemption in accordance with the Indenture by the Issuer on any Payment Date.
The principal of and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Class A Note set forth on the reverse hereof and to the Indenture, which shall have
the same effect as though fully set forth on the face of this Class A Note.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual
signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory
for any purpose.
C-3
4147-9029-0755.4
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
C-4
4147-9029-0755.4
This is one of the Class A Notes referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Indenture Trustee
By:_____________________________________
Authorized Signatory
C-5
4147-9029-0755.4
[REVERSE OF NOTE]
This Class A Note is one of a duly authorized issue of Class A Notes of the Issuer, designated as its Asset Backed Notes, Class A,
(herein called the “Class A Notes ”), all issued under the Indenture dated as of December 20, 2021 (such Indenture, as supplemented or
amended, is herein called the “Indenture”), between the Issuer and Wilmington Trust, National Association, as trustee (the “ Indenture Trustee,”
which term includes any successor Indenture Trustee under the Indenture), as securities intermediary and as depositary bank, to which
Indenture reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and
the Class A Noteholders. The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the
Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
Principal of the Class A Notes will be payable on each Payment Date, and may be prepaid, in each case, as set forth in the Indenture.
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on [__], 202[_].
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the next
succeeding Business Day.
nd
All principal payments on the Class A Notes shall be made pro rata to the Class A Noteholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of interest on this Class A Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in full payment of this Class A Note, shall be made by wire transfer in
immediately available funds to the Person whose name appears as the Class A Noteholder on the Register as of the close of business on the
immediately preceding Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the
principal amount of this Class A Note effected by any payments made on any Payment Date or date of prepayment shall be binding upon all
future Class A Noteholders and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted on Schedule A attached hereto. If funds are expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Class A Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record Date immediately preceding such Payment Date prior to such
Payment Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the
Indenture Trustee’s principal Corporate Trust Office.
On any redemption, purchase, exchange or cancellation of any of the beneficial interests represented by this Restricted Global Note,
details of such redemption, purchase, exchange or cancellation shall be entered by the Paying Agent in Schedule A hereto recording any such
redemption, purchase, exchange or cancellation and shall be signed by or on behalf of the Issuer. Upon any such redemption, purchase,
exchange or cancellation, the principal amount of this Restricted Global Note and the beneficial interests represented by the Restricted Global
Note shall be reduced or increased, as appropriate, by the principal amount so redeemed, purchased, exchanged or cancelled.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Class A Noteholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security of the
Issuer and the termination of the Indenture institute against the Issuer or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any United States federal or state bankruptcy or
similar
C-6
4147-9029-0755.4
Law in connection with any obligations relating to the Securities, the Indenture or the Transaction Documents.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Noteholder will treat such Note as debt for all federal, state and local income and franchise tax purposes.
Prior to the due presentment for registration of transfer of this Class A Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Class A Note (as of the date of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and
neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the
Indenture Trustee on the Securities or under the Indenture, including this Class A Note, against (i) any assets of the Issuer other than the Trust
Estate, (ii) the Seller or the Indenture Trustee in their respective individual capacities, or (iii) any partner, owner, incorporator, beneficiary,
beneficial owner, agent, officer, director, employee, shareholder or agent of the Issuer the Seller or the Indenture Trustee except as any such
Person may have expressly agreed.
The term “Issuer” as used in this Class A Note includes any successor to the Issuer under the Indenture.
The Class A Notes are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture,
subject to certain limitations therein set forth.
This Class A Note and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and interest on this Class A Note.
C-7
4147-9029-0755.4
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
_____________________________________
the within Class A Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Class A Note on the books kept for registration thereof, with full power of substitution in the premises.
(name and address of assignee)
Dated: _______________
Signature Guaranteed:
1
1
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without
alteration, enlargement or any change whatsoever.
——————————
C-8
4147-9029-0755.4
SCHEDULE A
SCHEDULE OF REDEMPTIONS
OR PURCHASES AND CANCELLATIONS
The following increases or decreases in principal amount of this Restricted Global Note or redemptions, purchases or cancellation of this
Restricted Global Note have been made:
Date of redemption or purchase
or cancellation
Increase or decrease in principal amount of this
Restricted Global Note due to redemption or
purchase or cancellation of this Restricted Global
Note
Remaining principal amount of this
Restricted Global Note following such
redemption or purchase or cancellation
Notation made by or on behalf of
the Issuer
__________
__________
__________
________________
________________
________________
_____________
_____________
_____________
_____________
_____________
_____________
C-9
4147-9029-0755.4
EXHIBIT D
FORM OF MONTHLY REPORT
(attached)
D-1
4147-9029-0755.4
EXHIBIT E
TO INDENTURE
FORM OF CERTIFICATE
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY
DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE MAY
BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS
OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION
4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE FOREGOING,
A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS
SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS CERTIFICATE. EACH TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE
ACCEPTED THIS CERTIFICATE, SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH
TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND
AGREEMENTS SET FORTH IN THE INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO THE TERMS AND CONDITIONS SET
FORTH IN THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS CERTIFICATE IS HEREBY NOTIFIED THAT THE SELLER OF THIS CERTIFICATE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
E-1
4147-9029-0755.4
No. R144A-[_] Percentage of this Certificate: [_]%
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED CERTIFICATE
Oportun RF, LLC, a limited liability company organized and existing under the laws of the State of Delaware (herein referred to as
the “Issuer”), for value received, hereby promises to pay Cede & Co., or registered assigns, on each Payment Date, an amount equal to 100% of
the amount available for distribution under Section 5.15(b)(vii) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or
otherwise modified from time to time, the “Indenture”), between the Issuer and the Indenture Trustee. This Certificate will not accrue interest
and will represent 100% of the aggregate amount of Certificates issued under the Indenture. Payments with respect to this Certificate will be
made in the manner specified on the reverse hereof.
The Certificates may be subject to redemption in connection with the optional redemption of the Notes in accordance with the
Indenture.
The payments with respect to this Certificate are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Certificate set forth on the reverse hereof and to the Indenture, which shall have the
same effect as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.
E-2
4147-9029-0755.4
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
Attested to:
By:
Authorized Officer
E-3
4147-9029-0755.4
This is one of the Certificates referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Indenture Trustee
By:_____________________________________
Authorized Officer
E-4
4147-9029-0755.4
[REVERSE OF CERTIFICATE]
This Certificate is one of a duly authorized issue of Certificates of the Issuer, designated as its Asset Backed Certificates (herein called
the “Certificates”), all issued under the Indenture, dated as of December 20, 2021 (the “Indenture”), between the Issuer and Wilmington Trust,
National Association, as indenture trustee (the “Indenture Trustee,” which term includes any successor Trustee under the Indenture), as
securities intermediary and as depositary bank, to which Indenture reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Certificateholders. The Certificates are subject to all terms of the Indenture.
All terms used in this Certificate that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
“Payment Date” means the second (2nd) Business Day immediately following each Underlying Payment Date, commencing on January
12, 2022.
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the
next succeeding Business Day.
All payments with respect to the Certificates shall be made pro rata to the Certificateholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of amounts with respect to the Certificates shall be made by wire
transfer in immediately available funds to the Person whose name appears as the Certificateholder on the Register as of the close of business
on the immediately preceding Record Date without requiring that this Certificate to be submitted for notation of payment.
Each Certificateholder, by acceptance of a Certificate, covenants and agrees that by accepting the benefits of the Indenture that such
Certificateholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security institute against
the Issuer or join in any institution against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States federal or state bankruptcy or similar Law in connection with any obligations relating to the
Securities, the Indenture or the Transaction Documents.
Prior to the due presentment for registration of transfer of this Certificate, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Certificate (as of the date of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not this Certificate be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the
Indenture, including this Certificate, against any Seller, the Servicer, the Trustee or any partner, owner, incorporator, beneficiary, beneficial
owner, agent, officer, director, employee, shareholder or agent of the Issuer, any Seller, the Servicer or the Trustee except as any such Person
may have expressly agreed.
The term “Issuer” as used in this Certificate includes any successor to the Issuer under the Indenture.
The Certificates are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture, subject
to certain limitations therein set forth.
E-5
4147-9029-0755.4
This Certificate and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Certificate or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay amounts payable under Section 5.15(b)(vii) of the Indenture.
E-6
4147-9029-0755.4
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
_____________________________________
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
(name and address of assignee)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated: _______________
Signature Guaranteed:
2
——————————
2
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever.
E-7
4147-9029-0755.4
Schedule 1
AMORTIZATION SCHEDULE
Scheduled Note
Principal Amount
$85,679,000
$75,484,000
$68,330,000
$56,642,000
$50,822,000
$45,002,000
$39,187,000
$33,454,000
$30,029,000
$26,626,000
$23,210,000
$19,815,000
$16,329,000
$12,892,000
$9,425,000
$5,891,000
$2,397,000
$0
Minimum Principal
Payment Amount
$0
$10,195,000
$7,154,000
$11,688,000
$5,820,000
$5,820,000
$5,815,000
$5,733,000
$3,425,000
$3,403,000
$3,416,000
$3,395,000
$3,486,000
$3,437,000
$3,467,000
$3,534,000
$3,494,000
$2,397,000
Date / Payment Date
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Schedule 1-1
4147-9029-0755.4
Schedule 2
CUSTODY ACCOUNT ALLOCATIONS
Underlying Securities
2019-A Certificates
2021-A Certificates
2021-B Certificates
2021-C Certificates
2022-A Certificates
2022-2 Certificates
Percentage Interest Maintained in
First Priority Custody Account
84.00%
82.00%
83.50%
83.00%
77.00%
46.50%
Percentage Interest Maintained in
Second Priority Custody Account
16.00%
18.00%
16.50%
17.00%
23.00%
53.50%
Schedule 2-1
4147-9029-0755.4
Schedule 3
PERFECTION REPRESENTATIONS, WARRANTIES
AND COVENANTS
With respect to such of the Trust Estate as constitutes securities entitlements:
(1) This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Trust Estate in favor of the
Indenture Trustee, which security interest is prior to all other security interests, and is enforceable as such against creditors of and purchasers
from the Issuer.
(2) All of the Trust Estate has been and will have been credited to a securities account. The securities intermediary for each securities
account has agreed to treat all assets credited to such securities account as “financial assets” within the meaning of the UCC.
(3) The Issuer owns and has good and marketable title to the Trust Estate free and clear of any security interest, claim, or encumbrance
of any Person.
(4) The Issuer has received all consents and approvals required by the terms of the Trust Estate to the transfer to the Indenture Trustee
of its interest and rights in the Trust Estate hereunder.
(5) The Issuer has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted in the Trust Estate to the Indenture
Trustee hereunder.
(6) Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the Trust Estate. The Issuer has not authorized the filing of and is not aware of
any financing statements against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement
relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment
or tax lien filings against the Issuer.
Schedule 3-1
4147-9029-0755.4
Schedule 4
LIST OF PROCEEDINGS
[None]
4145-2172-4227.4
Execution Copy
OPORTUN RF, LLC
FIFTH AMENDMENT TO INDENTURE
This FIFTH AMENDMENT TO INDENTURE, dated as of February 10, 2023 (this “Amendment”), is entered into among
OPORTUN RF, LLC, a special purpose Delaware limited liability company, as issuer (the “ Issuer”), and WILMINGTON TRUST,
NATIONAL ASSOCIATION, a national banking association with trust powers, as indenture trustee (in such capacity, the “ Indenture
Trustee”), as securities intermediary (in such capacity, the “Securities Intermediary”) and as depositary bank (in such capacity, the “Depositary
Bank”).
RECITALS
that certain Indenture, dated as of December 20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Indenture”);
WHEREAS, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have previously entered into
WHEREAS, in accordance with Section 13.2 of the Base Indenture, the Issuer desires to amend the Indenture as provided
herein; and
herein;
WHEREAS, as evidenced by their signature hereto, the Required Noteholders have consented to the amendments provided for
the receipt and adequacy of which are hereby acknowledged, each party hereto agrees as follows:
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration,
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms Not Defined Herein . All capitalized terms used herein that are not defined herein shall have the
meanings assigned to them in, or by reference in, the Indenture.
ARTICLE II
AMENDMENTS TO THE INDENTURE
SECTION 2.01. Amendments. The Indenture is hereby amended to incorporate the changes reflected on the marked pages of the
Indenture attached hereto as Schedule I, with a conformed copy of the amended Indenture attached hereto as Schedule II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION
3.01. Representations and Warranties. The Issuer hereby represents and warrants to the Indenture Trustee, the
Securities Intermediary, the Depositary Bank and each of the other Secured Parties that:
(a) Representations and Warranties. Both before and immediately after giving effect to this Amendment, the representations and
warranties made by the Issuer in the Indenture and each of the
4162-8896-5957.3
other Transaction Documents to which it is a party are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in
which case such representations or warranties were true and correct as of such earlier date).
(b) Enforceability. This Amendment and the Indenture, as amended hereby, constitute the legal, valid and binding obligation of
the Issuer enforceable against the Issuer in accordance with its respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and by general principles of equity.
(c) No Defaults. No Rapid Amortization Event, Event of Default, Servicer Default or Default has occurred and is continuing.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Ratification of Indenture. As amended by this Amendment, the Indenture is in all respects ratified and confirmed
and the Indenture, as amended by this Amendment, shall be read, taken and construed as one and the same instrument.
SECTION 4.02. Reissuance of Monthly Report. The parties hereto and the Required Noteholders acknowledge that the Monthly
Report relating to the February 2023 Payment Date has been reissued in the form attached hereto as Schedule III to give effect to certain of the
amendments effected hereby.
SECTION 4.03 Counterparts. This Amendment may be executed in any number of counterparts, and by different parties in
separate counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one
and the same instrument. Each of the parties hereto agrees that the transaction consisting of this Amendment may be conducted by electronic
means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Amendment using an electronic
signature, it is signing, adopting, and accepting this Amendment and that signing this Amendment using an electronic signature is the legal
equivalent of having placed its handwritten signature on this Amendment on paper. Each party acknowledges that it is being provided with an
electronic or paper copy of this Amendment in a usable format.
SECTION 4.04 Recitals. The recitals contained in this Amendment shall be taken as the statements of the Issuer, and none of the
Indenture Trustee, the Securities Intermediary or the Depositary Bank assumes any responsibility for their correctness. None of the Indenture
Trustee, the Securities Intermediary or the Depositary Bank makes any representations as to the validity or sufficiency of this Amendment.
SECTION 4.05 Rights of the Indenture Trustee, the Securities Intermediary and the Depositary Bank . The rights, privileges and
immunities afforded to the Indenture Trustee, the Securities Intermediary and the Depositary Bank under the Indenture shall apply hereunder
as if fully set forth herein.
SECTION 4.06 GOVERNING LAW; JURISDICTION . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
4162-8896-5957.3
2
AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES
HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 4.07 Effectiveness. This Amendment shall become effective as of the date hereof upon:
(a) receipt by the Indenture Trustee of an Issuer Order directing it to execute and deliver this Amendment;
(b) receipt by the Indenture Trustee of an Officer’s Certificate of the Issuer stating that the execution of this Amendment is
authorized and permitted by the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(c) receipt by the Indenture Trustee of an Opinion of Counsel stating that the execution of this Amendment is authorized and
permitted under the Indenture and all conditions precedent to the execution of this Amendment have been satisfied;
(d) receipt by the Indenture Trustee of evidence of the consent of the Required Noteholders to this Amendment;
(e) receipt by the Indenture Trustee of counterparts of this Amendment, duly executed by each of the parties hereto; and
(f) receipt by the Indenture Trustee of such other instruments, documents, agreements and opinions reasonably requested by the
Indenture Trustee prior to the date hereof.
4162-8896-5957.3
(Signature page follows)
3
IN WITNESS WHEREOF, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have caused
this Amendment to be duly executed by their respective officers as of the day and year first above written.
OPORTUN RF, LLC,
as Issuer
By: /s/ Jonathan Coblentz
Name: Jonathan Coblentz
Fifth Amendment to Indenture
Title: Treasurer
4162-8896-5957.3
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities Intermediary
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Depositary Bank
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
4162-8896-5957.3
Fifth Amendment to Indenture
Consented to and acknowledged by the Required Noteholders:
JEFFERIES FUNDING LLC,
as Holder of 100% of the outstanding Notes
By: /s/ Michael Wade
Name: Michael Wade
Title: Managing Director
4162-8896-5957.3
Fifth Amendment to Indenture
SCHEDULE I
Amendments to Indenture
4162-8896-5957.3
Fifth Amendment to Indenture
CONFORMED COPY As amended by the Fifth Amendment to Indenture, dated as of February 10, 2023
4162-8896-5957.3
Fifth Amendment to Indenture
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4162-8896-5957.3
Fifth Amendment to Indenture
TABLE OF CONTENTS Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE 2
Section 1.1. Definitions 2
Section 1.2. [Reserved] 26
Section 1.3. Cross-References 26
Section 1.4. Accounting and Financial Determinations; No Duplication 2726
Section 1.5. Rules of Construction 27
Section 1.6. Other Definitional Provisions. 27
ARTICLE 2. THE SECURITIES 28
Section 2.1. Designation and Terms of Securities 28
Section 2.2. [Reserved] 28
Section 2.3. [Reserved]. 28
Section 2.4. Execution and Authentication. 28
Section 2.5. Authenticating Agent. 2928
Section 2.6. Registration of Transfer and Exchange of Securities. 3029
Section 2.7. Appointment of Paying Agent 33
Section 2.8. Paying Agent to Hold Money in Trust. 33
Section 2.9. Private Placement Legend 34
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities. 36
Section 2.11. Temporary Notes. 37
Section 2.12. Persons Deemed Owners 3837
Section 2.13. Cancellation 38
Section 2.14. Release of Trust Estate 38
Section 2.15. Payment of Principal, Interest and Other Amounts. 39
Section 2.16. Book-Entry Notes. 39
Section 2.17. Notices to Clearing Agency 44
Section 2.18. Definitive Notes. 44
Section 2.19. Global Note 45
Section 2.20. Tax Treatment 4645
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and
Registrar 46
ARTICLE 3. ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES 46
Section 3.1. Issuance. 46
Section 3.2. Certain Fees and Expenses. 47
ARTICLE 4. NOTEHOLDER LISTS AND REPORTS 4847
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of
Noteholders and Certificateholders 4847
Section 4.2. Preservation of Information; Communications to Noteholders and
Certificateholders. 48
Section 4.3. Reports by Issuer 4948
Section 4.4. [Reserved] 49
Section 4.5. Reports and Records for the Indenture Trustee and Instructions. 49
4162-8896-5957.3
Fifth Amendment to Indenture
TABLE OF CONTENTS
(continued)
Page
ARTICLE 5. ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS 5049
Section 5.1. Rights of Noteholders and Certificateholders 5049
Section 5.2. Collection of Money 50
Section 5.3. Establishment of Accounts. 50
Section 5.4. Payments and Allocations. 52
Section 5.5. [Reserved] 53
Section 5.6. [Reserved] 53
Section 5.7. General Provisions Regarding Accounts 53
Section 5.8. [Reserved]. 53
Section 5.9. [Reserved]. 53
Section 5.10. [Reserved]. 53
Section 5.11. [Reserved]. 53
Section 5.12. Determination of Monthly Interest. 53
Section 5.13. Benchmark Replacement. 54
Section 5.14. [Reserved]. 55
Section 5.15. Monthly Payments. 55
Section 5.16. Failure to Make a Deposit or Payment. 56
ARTICLE 6. DISTRIBUTIONS AND REPORTS 5756
Section 6.1. Distributions. 57
Section 6.2. Monthly Report. 57
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE ISSUER 58
Section 7.1. Representations and Warranties of the Issuer. 58
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer. 62
ARTICLE 8. COVENANTS 62
Section 8.1. Money for Payments To Be Held in Trust 62
Section 8.2. Affirmative Covenants of Issuer 62
Section 8.3. Negative Covenants 66
Section 8.4. Further Instruments and Acts 69
Section 8.6. Perfection Representations 69
ARTICLE 9. RAPID AMORTIZATION EVENTS AND REMEDIES 69
Section 9.1. Rapid Amortization Events. 69
ARTICLE 10. REMEDIES 70
Section 10.1. Events of Default 70
Section 10.2. Rights of the Indenture Trustee Upon Events of Default. 71
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee. 72
Section 10.4. Remedies 74
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities 75
Section 10.6. Waiver of Past Events 75
Section 10.7. Limitation on Suits 7675
4149-1382-4069
4162-8896-5957.3
Fifth Amendment to Indenture
TABLE OF CONTENTS
(continued)
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding
Page
Taxes. 76
Section 10.9. Restoration of Rights and Remedies 77
Section 10.10. The Indenture Trustee May File Proofs of Claim 77
Section 10.11. Priorities 7877
Section 10.12. Undertaking for Costs 78
Section 10.13. Rights and Remedies Cumulative 78
Section 10.14. Delay or Omission Not Waiver 78
Section 10.15. Control by Noteholders 7978
Section 10.16. Waiver of Stay or Extension Laws 79
Section 10.17. Action on Securities 79
Section 10.18. Performance and Enforcement of Certain Obligations. 80
Section 10.19. Reassignment of Surplus 80
ARTICLE 11. THE INDENTURE TRUSTEE 80
Section 11.1. Duties of the Indenture Trustee. 80
Section 11.2. Rights of the Indenture Trustee 83
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities 87
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities 87
Section 11.5. Notice of Defaults 88
Section 11.6. Compensation. 88
Section 11.7. Replacement of the Indenture Trustee. 88
Section 11.8. Successor Indenture Trustee by Merger, etc. 90
Section 11.9. Eligibility: Disqualification 90
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. 91
Section 11.11. [Reserved] 92
Section 11.12. Taxes 92
Section 11.13. [Reserved] 92
Section 11.14. Suits for Enforcement 92
Section 11.15. Reports by Indenture Trustee to Holders 92
Section 11.16. Representations and Warranties of Indenture Trustee 92
Section 11.17. The Issuer Indemnification of the Indenture Trustee 93
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer 93
Section 11.19. [Reserved]. 93
Section 11.20. Maintenance of Office or Agency 93
Section 11.21. Concerning the Rights of the Indenture Trustee 94
Section 11.22. Direction to the Indenture Trustee 94
ARTICLE 12. DISCHARGE OF INDENTURE 94
Section 12.1. Satisfaction and Discharge of Indenture 94
Section 12.2. Application of Issuer Money 94
Section 12.3. Repayment of Moneys Held by Paying Agent 95
Section 12.4. [Reserved]. 95
Section 12.5. Final Payment. 95
4162-8896-5957.3
Fifth Amendment to Indenture
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust.
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among the
Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the
2022-2 Indenture.
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22, 2022,
among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the FebruaryJuly 2023 Payment Date,
0%, and (II) for any Payment Date on or after the MarchAugust 2023 Payment Date, (a) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for
such Payment Date is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss
Percentage for such Payment Date is greater than 15.0%, 100.0%.
“Adjusted Leverage Ratio” means, on any date of determination, the ratio of (i) Adjusted Liabilities to (ii) Tangible Net Worth.
“Adjusted Leverage Ratio Covenant” means that the Parent will have a maximum Adjusted Leverage Ratio of 3.5:1.
“Adjusted Liabilities” means, on any date of determination, the excess of total Liabilities over the amount of any asset-backed securities
that would appear as liabilities on the balance sheet of the Parent and its Subsidiaries determined on a consolidated basis in accordance with
GAAP.
“Administration Fee” means the fee payable to the Administrator pursuant to the Administrative Services Agreement.
4162-8896-5957.3
Fifth Amendment to Indenture
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal
functions.
“Fee Letter” shall mean that fee letter by and between Jefferies Funding LLC and the Issuer, dated December 20, 2021 , as amended,
restated, modified or supplemented from time to time.
“Financial Covenants” means each of the Leverage Ratio Covenant, the Adjusted Leverage Ratio Covenant, the Tangible Net Worth
Covenant and the Liquidity Covenant.
“First Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington Trust,
National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying Security
specified on Schedule 2 hereto.
“Fiscal Year” means any period of twelve consecutive calendar months ending on December 31.
“Fitch” means Fitch, Inc.
“Floor” means a rate of interest equal to 0.00%.
“Flow-through Entity” has the meaning specified in Section 2.6(e)(iii).
“GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the American
Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the
date of a report, as such principles are from time to time supplemented and amended, and with respect to determinations or calculations to be
made by a Person, applied on a basis consistent with the most recent audited financial statements of Consolidated Parent before the Closing
Date.
“Global Note” has the meaning specified in Section 2.19.
“Governmental Authority” means any government or political subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case
whether foreign or domestic.
“Grant” means the Issuer’s grant of a Lien on the Trust Estate as set forth in the Granting Clause of this Indenture.
“Holder” means the Person in whose name a Note or Certificate is registered in the Register.
“Indebtedness” means, with respect to any Person, such Person’s (i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on terms customary in
4162-8896-5957.3
Fifth Amendment to Indenture
4149-1382-4069
SCHEDULE II
Conformed Copy of Amended Indenture
4149-1382-4069
CONFORMED COPY
As amended by the
Fifth Amendment to Indenture,
dated as of February 10, 2023
OPORTUN RF, LLC,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Asset Backed Notes, Class A
Asset Backed Certificates
4149-1382-4069
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions
Section 1.2. [Reserved]
Section 1.3. Cross-References
Section 1.4. Accounting and Financial Determinations; No Duplication
Section 1.5. Rules of Construction
Section 1.6. Other Definitional Provisions.
ARTICLE 2. THE SECURITIES
Section 2.1. Designation and Terms of Securities
Section 2.2. [Reserved]
Section 2.3. [Reserved].
Section 2.4. Execution and Authentication.
Section 2.5. Authenticating Agent.
Section 2.6. Registration of Transfer and Exchange of Securities.
Section 2.7. Appointment of Paying Agent
Section 2.8. Paying Agent to Hold Money in Trust.
Section 2.9. Private Placement Legend
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities.
Section 2.11. Temporary Notes.
Section 2.12. Persons Deemed Owners
Section 2.13. Cancellation
Section 2.14. Release of Trust Estate
Section 2.15. Payment of Principal, Interest and Other Amounts.
Section 2.16. Book-Entry Notes.
Section 2.17. Notices to Clearing Agency
Section 2.18. Definitive Notes.
Section 2.19. Global Note
Section 2.20. Tax Treatment
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and Registrar
ARTICLE 3. ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
Section 3.1. Issuance.
Section 3.2. Certain Fees and Expenses.
ARTICLE 4. NOTEHOLDER LISTS AND REPORTS
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders
Section 4.2. Preservation of Information; Communications to Noteholders and Certificateholders.
Section 4.3. Reports by Issuer
Section 4.4. [Reserved]
Section 4.5. Reports and Records for the Indenture Trustee and Instructions.
-i-
4149-1382-4069
2
2
26
26
26
27
27
28
28
28
28
28
28
29
33
33
34
36
37
37
38
38
39
39
44
44
45
45
46
46
46
47
47
47
48
48
49
49
TABLE OF CONTENTS
(continued)
Page
ARTICLE 5. ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
Section 5.1. Rights of Noteholders and Certificateholders
Section 5.2. Collection of Money
Section 5.3. Establishment of Accounts.
Section 5.4. Payments and Allocations.
Section 5.5. [Reserved]
Section 5.6. [Reserved]
Section 5.7. General Provisions Regarding Accounts
Section 5.8. [Reserved].
Section 5.9. [Reserved].
Section 5.10. [Reserved].
Section 5.11. [Reserved].
Section 5.12. Determination of Monthly Interest.
Section 5.13. Benchmark Replacement.
Section 5.14. [Reserved].
Section 5.15. Monthly Payments.
Section 5.16. Failure to Make a Deposit or Payment.
ARTICLE 6. DISTRIBUTIONS AND REPORTS
Section 6.1. Distributions.
Section 6.2. Monthly Report.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Section 7.1. Representations and Warranties of the Issuer.
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer.
ARTICLE 8. COVENANTS
Section 8.1. Money for Payments To Be Held in Trust
Section 8.2. Affirmative Covenants of Issuer
Section 8.3. Negative Covenants
Section 8.4. Further Instruments and Acts
Section 8.6. Perfection Representations
ARTICLE 9. RAPID AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Rapid Amortization Events.
ARTICLE 10. REMEDIES
Section 10.1. Events of Default
Section 10.2. Rights of the Indenture Trustee Upon Events of Default.
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
Section 10.4. Remedies
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities
Section 10.6. Waiver of Past Events
Section 10.7. Limitation on Suits
-ii-
4149-1382-4069
49
49
50
50
52
53
53
53
53
53
53
53
53
54
55
55
56
56
57
57
58
58
62
62
62
62
66
69
69
69
69
70
70
71
72
74
75
75
75
TABLE OF CONTENTS
(continued)
Page
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
Section 10.9. Restoration of Rights and Remedies
Section 10.10. The Indenture Trustee May File Proofs of Claim
Section 10.11. Priorities
Section 10.12. Undertaking for Costs
Section 10.13. Rights and Remedies Cumulative
Section 10.14. Delay or Omission Not Waiver
Section 10.15. Control by Noteholders
Section 10.16. Waiver of Stay or Extension Laws
Section 10.17. Action on Securities
Section 10.18. Performance and Enforcement of Certain Obligations.
Section 10.19. Reassignment of Surplus
ARTICLE 11. THE INDENTURE TRUSTEE
Section 11.1. Duties of the Indenture Trustee.
Section 11.2. Rights of the Indenture Trustee
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities
Section 11.5. Notice of Defaults
Section 11.6. Compensation.
Section 11.7. Replacement of the Indenture Trustee.
Section 11.8. Successor Indenture Trustee by Merger, etc.
Section 11.9. Eligibility: Disqualification
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
Section 11.11. [Reserved]
Section 11.12. Taxes
Section 11.13. [Reserved]
Section 11.14. Suits for Enforcement
Section 11.15. Reports by Indenture Trustee to Holders
Section 11.16. Representations and Warranties of Indenture Trustee
Section 11.17. The Issuer Indemnification of the Indenture Trustee
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer
Section 11.19. [Reserved].
Section 11.20. Maintenance of Office or Agency
Section 11.21. Concerning the Rights of the Indenture Trustee
Section 11.22. Direction to the Indenture Trustee
ARTICLE 12. DISCHARGE OF INDENTURE
Section 12.1. Satisfaction and Discharge of Indenture
Section 12.2. Application of Issuer Money
Section 12.3. Repayment of Moneys Held by Paying Agent
Section 12.4. [Reserved].
-iii-
4149-1382-4069
76
77
77
77
78
78
78
78
79
79
80
80
80
80
83
87
87
88
88
88
90
90
91
92
92
92
92
92
92
93
93
93
93
94
94
94
94
94
95
95
TABLE OF CONTENTS
(continued)
Page
Section 12.5. Final Payment.
Section 12.6. Termination Rights of Issuer
Section 12.7. Repayment to the Issuer
ARTICLE 13. AMENDMENTS
Section 13.1. Supplemental Indentures without Consent of the Noteholders
Section 13.2. Supplemental Indentures with Consent of Noteholders
Section 13.3. Execution of Supplemental Indentures
Section 13.4. Effect of Supplemental Indenture
Section 13.5. [Reserved]
Section 13.6. [Reserved]
Section 13.7. [Reserved].
Section 13.8. Revocation and Effect of Consents.
Section 13.9. Notation on or Exchange of Securities Following Amendment.
Section 13.10. The Indenture Trustee to Sign Amendments, etc.
ARTICLE 14. REDEMPTION AND REFINANCING OF NOTES
Section 14.1. Redemption and Refinancing
Section 14.2. Form of Redemption Notice
Section 14.3. Notes Payable on Redemption Date
ARTICLE 15. MISCELLANEOUS
Section 15.1. Compliance Certificates and Opinions, etc
Section 15.2. Form of Documents Delivered to Indenture Trustee
Section 15.3. Acts of Noteholders and Certificateholders.
Section 15.4. Notices
Section 15.5. Notices to Noteholders and Certificateholders; Waiver
Section 15.6. Alternate Payment and Notice Provisions
Section 15.7. [Reserved]
Section 15.8. Effect of Headings and Table of Contents
Section 15.9. Successors and Assigns
Section 15.10. Separability of Provisions
Section 15.11. Benefits of Indenture
Section 15.12. Legal Holidays
Section 15.13. GOVERNING LAW; JURISDICTION
Section 15.14. Counterparts; Electronic Execution
Section 15.15. Recording of Indenture
Section 15.16. Issuer Obligation
Section 15.17. No Bankruptcy Petition Against the Issuer
Section 15.18. No Joint Venture
Section 15.19. Rule 144A Information
Section 15.20. No Waiver; Cumulative Remedies
Section 15.21. Third-Party Beneficiaries
Section 15.22. Merger and Integration
-iv-
4149-1382-4069
95
96
96
96
96
97
99
99
99
99
99
99
100
100
100
100
101
101
102
102
103
104
105
105
106
106
106
106
106
106
106
107
107
107
107
108
108
108
108
108
109
TABLE OF CONTENTS
(continued)
Page
109
109
109
109
Section 15.23. Rules by the Indenture Trustee
Section 15.24. Duplicate Originals
Section 15.25. Waiver of Trial by Jury
Section 15.26. No Impairment
-v-
4149-1382-4069
TABLE OF CONTENTS
(continued)
Page
Exhibits and Schedules:
Exhibit A: Form of Release and Reconveyance of Trust Estate
Exhibit B: [Reserved]
Exhibit C: Form of Class A Restricted Global Note
Exhibit D: Form of Monthly Report
Exhibit E: Form of Certificate
Schedule 1 Amortization Schedule
Schedule 2 Custody Account Allocations
Schedule 3 Perfection Representations, Warranties and Covenants
Schedule 4 List of Proceedings
-vi-
4149-1382-4069
INDENTURE, dated as of December 20, 2021, between OPORTUN RF, LLC, a Delaware limited liability company, as issuer
(the “Issuer”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association with trust powers, as Indenture
Trustee, as Securities Intermediary and as Depositary Bank.
W I T N E S S E T H :
WHEREAS, the Issuer has duly executed and delivered this Indenture to provide for the issuance of Securities, issuable as
provided in this Indenture; and
WHEREAS, all things necessary to make this Indenture a legal, valid and binding agreement of the Issuer, enforceable in
accordance with its terms, have been done, and the Issuer proposes to do all the things necessary to make the Securities, when executed by the
Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the legal, valid and binding
obligations of the Issuer as hereinafter provided.
covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
NOW, THEREFORE, for and in consideration of the premises and the receipt of the Securities by the Holders, it is mutually
GRANTING CLAUSE
The Issuer hereby grants to the Indenture Trustee at the Closing Date, for the benefit of the Indenture Trustee, the Noteholders,
the Certificateholders and any other Person to which any Secured Obligations are payable (the “Secured Parties”), to secure the Secured
Obligations, a continuing Lien on and security interest in all of the Issuer’s right, title and interest in, to and under the following property
whether now owned or hereafter acquired, now existing or hereafter created and wherever located: (a) all Underlying Securities, and any and
all monies due or to become due thereunder; (b) the Payment Account, each other Securities Account, and any other account maintained by the
Indenture Trustee pursuant hereto (each such account, a “Trust Account ”), all monies from time to time deposited therein and all money,
instruments, investment property and other property from time to time credited thereto or on deposit therein; (c) all certificates and instruments,
if any, representing or evidencing any or all of the Trust Accounts or the funds on deposit therein from time to time; (d) all investments made at
any time and from time to time with moneys in the Trust Accounts; (e) the Purchase Agreements; (f) all accounts, chattel paper, commercial
tort claims, deposit accounts, documents, general intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit,
money, and oil, gas and other minerals, (g) all additional property that may from time to time hereafter be subjected to the grant and pledge
made by the Issuer or by anyone on its behalf; (h) all present and future claims, demands, causes and choses in action and all payments on or
under the foregoing; and (i) all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of
all of the foregoing and the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property, rights to
payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing (collectively, the “Trust Estate”).
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in
respect of, the Secured Obligations, equally and ratably without prejudice, priority or distinction except as set forth herein, and to secure
compliance with the provisions of this Indenture, all as provided in this Indenture.
4149-1382-4069
The Issuer hereby assigns to the Indenture Trustee all of the Issuer’s power to authorize an amendment to the financing
statement filed with the Delaware Secretary of State relating to the security interest granted to the Issuer by the Seller pursuant to each
Purchase Agreement; provided, however, that the Indenture Trustee shall be entitled to all the protections of Article 11, including Sections
11.1(g) and 11.2(k), in connection therewith, and the obligations of the Issuer under Sections 8.2(i) and 8.3(j) shall remain unaffected.
The Indenture Trustee, for the benefit of the Secured Parties, hereby acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and the Lien on the Trust Estate conveyed by the Issuer pursuant to the Grant,
declares that it shall maintain such right, title and interest, upon the trust set forth, for the benefit of all Secured Parties, subject to Sections 11.1
and 11.2, and agrees to perform its duties required in this Indenture in accordance with the terms of this Indenture.
DESIGNATION
(a) There are hereby created notes and subordinate residual certificates to be issued pursuant to this Indenture and such notes
and subordinate residual certificates shall be substantially in the form of Exhibit C and E, respectively, hereto, executed by or on behalf of the
Issuer and authenticated by the Indenture Trustee and designated generally Asset Backed Notes, Class A, which notes shall include any
Additional Notes (the “Class A Notes ” or the “Notes”), and Asset Backed Certificates (the “Certificates” and, together with the Notes, the
“Securities”)). The Class A Notes shall be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof,
and the Certificates shall be issued in minimum percentage interests of 5% with no minimum incremental percentage interests in excess thereof.
(b) The Certificates shall be subordinate to the Class A Notes to the extent described herein.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 2.a.2
following meanings:
Definitions. Certain capitalized terms used herein (including the preamble and the recitals hereto) shall have the
CUSIP Number 68377F 108.
“2019-A Certificates” means the residual certificates issued by the 2019-A Issuer under the 2019-A Indenture and assigned
“2019-A Indenture” means the Base Indenture as supplemented by the Series 2019-A Supplement, each dated as of August 1,
2019, between the 2019-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2019-A Issuer” means Oportun Funding XIII, LLC, a Delaware special purpose limited liability company.
“2019-A Transaction Documents” means the “Transaction Documents” as defined in the 2019-A Indenture.
CUSIP Number 68377B 107.
“2021-A Certificates” means the residual certificates issued by the 2021-A Issuer under the 2021-A Indenture and assigned
2
4149-1382-4069
“2021-A Indenture” means the Base Indenture as supplemented by the Series 2021-A Supplement, each dated as of March 8,
2021, between the 2021-A Issuer, and Wilmington Trust, National Association, as trustee, securities intermediary and depositary bank, as
amended, restated, modified or supplemented from time to time.
“2021-A Issuer” means Oportun Funding XIV, LLC, a Delaware special purpose limited liability company.
“2021-A Transaction Documents” means the “Transaction Documents” as defined in the 2021-A Indenture.
representing the beneficial interest in the 2021-B Issuer and assigned CUSIP Number 68377G AE6.
“2021-B Certificates” means the trust certificates issued by the 2021-B Issuer pursuant to the 2021-B Trust Agreement,
“2021-B Indenture” means the Indenture, dated as of May 10, 2021, between the 2021-B Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2021-B Issuer” means Oportun Issuance Trust 2021-B, a Delaware statutory trust.
“2021-B Transaction Documents” means the “Transaction Documents” as defined in the 2021-B Indenture.
“2021-B Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-B Issuer, dated as of May
10, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2021-C Issuer and assigned CUSIP Number 68377W 101.
“2021-C Certificates” means the trust certificates issued by the 2021-C Issuer pursuant to the 2021-C Trust Agreement,
“2021-C Indenture” means the Indenture, dated as of October 28, 2021, between the 2021-C Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2021-C Issuer” means Oportun Issuance Trust 2021-C, a Delaware statutory trust.
“2021-C Transaction Documents” means the “Transaction Documents” as defined in the 2021-C Indenture.
“2021-C Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2021-C Issuer, dated as of
October 28, 2021, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing,
LLC, as administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2022-A Issuer and assigned CUSIP Number 68378N AE0.
“2022-A Certificates” means the trust certificates issued by the 2022-A Issuer pursuant to the 2022-A Trust Agreement,
3
4149-1382-4069
CUSIP Number 68378N AD2.
“2022-A Class D Notes ” means the Class D notes issued by the 2022-A Issuer pursuant to the 2022-A Indenture and assigned
“2022-A Indenture” means the Indenture, dated as of May 23, 2022, between the 2022-A Issuer, and Wilmington Trust,
National Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from
time to time.
“2022-A Issuer” means Oportun Issuance Trust 2022-A, a Delaware statutory trust.
“2022-A Purchase Agreement ” means the Security Purchase Agreement (2022-A), dated as of the 2022-A Purchase Date,
among the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-A Class D Notes and the 2022-A Certificates, as such
agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“2022-A Purchase Date” means May 24, 2022.
“2022-A Transaction Documents” means the “Transaction Documents” as defined in the 2022-A Indenture.
“2022-A Trust Agreement ” means the Amended and Restated Trust Agreement relating to the 2022-A Issuer, dated as of May
23, 2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
representing the beneficial interest in the 2022-2 Issuer and assigned CUSIP Number 68377H 104.
“2022-2 Certificates” means the trust certificates issued by the 2022-2 Issuer pursuant to the 2022-2 Trust Agreement,
“2022-2 Indenture” means the Indenture, dated as of July 22, 2022 between the 2022-2 Issuer, and Wilmington Trust, National
Association, as indenture trustee, securities intermediary and depositary bank, as amended, restated, modified or supplemented from time to
time.
“2022-2 Issuer” means Oportun Issuance Trust 2022-2, a Delaware Statutory Trust.
“2022-2 Purchase Agreement” means the Security Purchase Agreement (2022-2), dated as of the 2022-2 Purchase Date, among
the Seller and the Issuer, relating to the purchase by the Issuer of the 2022-2 Certificates, as such agreement may be amended, supplemented or
otherwise modified and in effect from time to time.
“2022-2 Purchase Date” means July 28, 2022.
“2022-2 Transaction Documents” means the “Transaction Documents” as defined in the 2022-2 Indenture.
“2022-2 Trust Agreement” means the Amended and Restated Trust Agreement relating to the 2022-2 Issuer, dated as of July 22,
2022, among Oportun Depositor, LLC, as depositor, Wilmington Savings Fund Society, FSB, as owner trustee, and PF Servicing, LLC, as
administrator, as amended, restated, modified or supplemented from time to time.
4
4149-1382-4069
“Additional Notes” means any Notes issued after the Closing Date in accordance with Section 3.1.
“Additional Principal Payment Percentage” means, (I) for any Payment Date up to and including the July 2023 Payment Date,
0%, and (II) for any Payment Date on or after the August 2023 Payment Date, (a) if the Three-Month Average Underlying Loss Percentage for
such Payment Date is less than or equal to 13.0%, 0.0%, (b) if the Three-Month Average Underlying Loss Percentage for such Payment Date is
greater than 13.0% but less than or equal to 14.0%, 50.0%, (c) if the Three-Month Average Underlying Loss Percentage for such Payment Date
is greater than 14.0% but less than or equal to 15.0%, 75.0%, and (d) if the Three-Month Average Underlying Loss Percentage for such
Payment Date is greater than 15.0%, 100.0%.
“Adjusted Leverage Ratio” means, on any date of determination, the ratio of (i) Adjusted Liabilities to (ii) Tangible Net Worth.
“Adjusted Leverage Ratio Covenant” means that the Parent will have a maximum Adjusted Leverage Ratio of 3.5:1.
“Adjusted Liabilities” means, on any date of determination, the excess of total Liabilities over the amount of any asset-backed
securities that would appear as liabilities on the balance sheet of the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
“Administration Fee” means the fee payable to the Administrator pursuant to the Administrative Services Agreement.
“Administrative Services Agreement” means the Administrative Services and Premises Agreement, dated as of the Closing
Date, between the Issuer and the Administrator, as amended, supplemented or otherwise modified from time to time.
“Administrator” means Oportun, as administrator of the Issuer pursuant to the Administrative Services Agreement.
“Administrator Default” has the meaning specified in the Administrative Services Agreement.
“Adverse Claim” means a Lien on any Person’s assets or properties in favor of any other Person (including any UCC financing
statement or any similar instrument filed against such Person’s assets or properties), other than a Permitted Encumbrance.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of
voting stock, by contract or otherwise.
“Agent” means any Transfer Agent and Registrar or Paying Agent.
“Alternative Rate” means, for any day, the sum of a per annum rate equal to the sum of (i) the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such
successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective)” and (ii) 0.50%. If on any relevant day such rate is not
yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for
5
4149-1382-4069
U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor,
the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate
rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as
determined by the Calculation Agent of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent.
“Amortization Schedule” means the schedule of Payment Dates and corresponding Scheduled Note Principal Amounts attached
hereto as Schedule 1, as amended as of the 2022-2 Purchase Date and as otherwise amended with the prior written consent of the Noteholders.
“Applicable Margin” shall have the meaning set forth in the Fee Letter.
“Applicants” has the meaning specified in Section 4.2(b).
“Available Funds” means, with respect to any Monthly Period and the Payment Date related thereto, the sum of the following,
without duplication: (a) any Underlying Payments received in respect of the Underlying Securities on the Underlying Payment Date
immediately following such Monthly Period and deposited into the Payment Account on such Underlying Payment Date; and (b) any
Investment Earnings received with respect to the Trust Estate.
“Available Tenor ” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any
tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component
thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining
any frequency of making payments of interest calculated pursuant to this Indenture as of such date.
“Bankruptcy Code” means the United States Bankruptcy Code, Title 11, United States, as amended.
“Benchmark” means, effective as of May 24, 2022, Term SOFR; provided that if a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred with respect to the then-current Benchmark, then “Benchmark” means the applicable Benchmark
Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of Section 5.13.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be
determined by the Required Noteholders, in consultation with the Issuer, for the applicable Benchmark Replacement Date:
(1) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; or
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Required Noteholders and the Issuer as the
replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or
(ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the
6
4149-1382-4069
then-current Benchmark for dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement
Adjustment.
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark
Replacement will be deemed to be the Floor for the purposes of this Indenture and the other Transaction Documents.
The Required Noteholders shall use commercially reasonable efforts to satisfy any applicable IRS guidance, including Proposed
Treasury Regulation 1.1001-6 and any future guidance, to the effect that a Benchmark Replacement will not result in a deemed exchange for
U.S. federal income Tax purposes of any Class A Note hereunder.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an
Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark
Replacement:
(1) for purposes of clause (1) of the definition of “Benchmark Replacement,” the first alternative set forth in the order
below that can be determined by the Required Noteholders:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a
positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that
has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the
applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; and
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such
Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction
referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable
Corresponding Tenor; and
(2) for purposes of clause (2) of the definition of “Benchmark Replacement,” the spread adjustment, or method for
calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the
Required Noteholders and the Issuer for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark
Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for
calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement for dollar-denominated syndicated credit facilities at such time;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such
Benchmark Replacement Adjustment from time to time as selected by the Required Noteholders in their reasonable discretion.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
7
4149-1382-4069
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the
public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the
published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such
Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark
(or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the
administrator of such Benchmark (or component thereof) to be no longer representative; provided that such non-representativeness will
be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of
such Benchmark (or component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but
earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to
the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause
(1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current
Available Tenors of such Benchmark (or the published component used in the calculation thereof).
Benchmark:
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the
published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component
thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official
with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the
administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the
administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has
ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely,
provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available
Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such
Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or
such component thereof) are no longer, or as of a specified future date will no longer be, representative.
8
4149-1382-4069
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if
a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such
Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date
pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 5.13 and (y) ending at the time that a
Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in
accordance with Section 5.13.
“Benefit Plan Investor” mean an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, a “plan” as described in Section 4975 of the Code, which is subject to Section 4975 of the Code, or an entity deemed to hold plan
assets of any of the foregoing.
“Book-Entry Notes” means Notes in which beneficial interests are owned and transferred through book entries by a Clearing
Agency as described in Section 2.16; provided that after the occurrence of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Notes are issued to the Note Owners, such Definitive Notes shall replace Book-Entry Notes.
“Business Day” means any day that DTC is open for business at its office in New York City and any day other than a Saturday,
Sunday or other day on which banking institutions or trust companies in the States of California, Florida, Illinois, Missouri, New York or Texas
are authorized or obligated by Law to be closed.
“Calculation Agent” means the party designated as such by the Issuer from time to time, with the written consent of the
Required Noteholders; initially, the Administrator. The compensation payable to the Administrator for the services performed by the
Calculation Agent hereunder shall be included in the Administration Fee.
“Capitalized Lease” of a Person means any lease of property by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
“Cash Equivalents” means (a) securities with maturities of one hundred twenty (120) days or less from the date of acquisition
issued or fully guaranteed or insured by the United States government or any agency thereof, (b) certificates of deposit and eurodollar time
deposits with maturities of one hundred twenty (120) days or less from the date of acquisition and overnight bank deposits of any commercial
bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the
United States government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by Standard and Poor’s or P-1
or the equivalent thereof by Moody’s and in either case maturing within ninety (90) days after the day of acquisition, (e) securities with
maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated
at least A by Standard & Poor’s or A by Moody’s, (f) securities with maturities of ninety (90) days
9
4149-1382-4069
or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b)
of this definition or, (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.
“Certificateholder” means a Holder of a Certificate.
“Certificates” has the meaning specified in paragraph (a) of the Designation.
“Class A Additional Interest” has the meaning specified in Section 5.12(a).
“Class A Deficiency Amount” has the meaning specified in Section 5.12(a).
“Class A Monthly Interest” has the meaning specified in Section 5.12(a).
“Class A Note Rate” means, with respect to any Interest Period, a variable rate per annum equal to the sum of (i) the Benchmark
applicable to such Interest Period (or if the Alternative Rate applies pursuant to Section 5.13, the Alternative Rate) plus (ii) the Applicable
Margin.
“Class A Noteholder” means a Holder of a Class A Note.
“Class A Notes” has the meaning specified in paragraph (a) of the Designation.
“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act or any
successor provision thereto.
“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to
time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
“Closing Date” means December 20, 2021.
thereunder.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and Treasury Regulations promulgated
“Commission” means the U.S. Securities and Exchange Commission, and its successors.
“Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational
changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of
“Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or
operational matters) that the Required Noteholders, in consultation with the Issuer, decide may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration thereof in a manner substantially consistent with market
practice (or, if the Required Noteholders decide that adoption of any portion of such market practice is not administratively feasible or if the
Required Noteholders determine that no market practice for the administration of such Benchmark Replacement exists, in such other manner of
administration as the Required Noteholders, in consultation with the Issuer, decide is reasonably necessary in connection with the
administration of this Indenture and the other Transaction Documents).
10
4149-1382-4069
“Consolidated Parent” means initially, Oportun Financial Corporation, a Delaware corporation, and any successor to Oportun
Financial Corporation as the indirect or direct parent of Oportun, the financial statements of which are for financial reporting purposes
consolidated with Oportun in accordance with GAAP, or if there is none, then Oportun.
“Contingent Liability” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other
liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or
other distributions upon the shares of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to
any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
“Contractual Obligation” means, with respect to any Person, any provision of any security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject.
“Corporate Trust Office” means the principal office of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of this Indenture is located at 1100 N. Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration.
interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an
“Credit Risk Retention Rules” means Regulation RR (17 C.F.R. Part 246), as such rule may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the Department of Treasury, the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Federal Housing Finance Agency, the Securities and Exchange Commission and the Department of
Housing and Urban Development in the adopting release (79 F.R. 77601 et seq.) or by the staff of any such agency, or as may be provided by
any such agency or its staff from time to time, in each case, as effective from time to time.
“Custody Account” means each of the First Priority Custody Account and the Second Priority Custody Account.
“Custody Agreement” means the Custody Agreement, dated as of December 20, 2021, between the Issuer and Wilmington
Trust, National Association, as custodian, as amended, supplemented or otherwise modified from time to time.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being
established by the Required Noteholders in accordance with the conventions for this rate selected or recommended by the Relevant
Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Required Noteholders decide that any such
convention is not administratively feasible, then the Required Noteholders may establish another convention in their reasonable discretion.
Administrator Default or a Rapid Amortization Event.
“Default” means any occurrence that is, or with notice or lapse of time or both would become, an Event of Default, an
11
4149-1382-4069
“Definitive Notes” has the meaning specified in Section 2.16(i).
“Depository” means the Clearing Agency.
“Depository Agreement” means the agreement among the Issuer and the Clearing Agency.
“Determination Date” means the third Business Day prior to each Underlying Payment Date.
“Dollars” and the symbol “$” mean the lawful currency of the United States.
“DTC” means The Depository Trust Company.
thereunder.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated
“ERISA Affiliate ” means, with respect to any Person, (i) any corporation which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as such Person; (ii) any trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with such Person; or (iii) any member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as such Person.
“ERISA Event” means any of the following: (i) the failure to satisfy the minimum funding standard under Section 302 of
ERISA or Section 412 of the Code with respect to any Pension Plan; (ii) the filing by the Pension Benefit Guaranty Corporation or a plan
administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or an event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or grounds to appoint a trustee to administer any Pension Plan; (iii) the complete
withdrawal or partial withdrawal by any Person or any of its ERISA Affiliates from any Multiemployer Plan; (iv) any “reportable event” as
defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Pension Plan (other than an event for which the 30-day
notice period is waived), (v) the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the termination of any Pension Plan
(vi) the receipt by the Issuer, the Seller or any ERISA Affiliate of any notice concerning a determination that a Multiemployer Plan is, or is
expected to be insolvent within the meaning of Title IV of ERISA; or (vii) the imposition of any liability under Title IV of ERISA, other than
for Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Person or any of its
ERISA Affiliates with respect to a Pension Plan.
“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if:
(i)a Proceeding shall be commenced, without the application or consent of such Person, before any Governmental Authority,
seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or adjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any Law relating to bankruptcy, insolvency, reorganization, winding up or composition
or adjustment of debts, and in the case of any Person, such Proceeding shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) consecutive days; or an
12
4149-1382-4069
order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy Laws or other similar Laws now
or hereafter in effect; or
(ii)such Person shall (i) consent to the institution of (except as described in the proviso to clause (a) above) any Proceeding or
petition described in clause (a) of this definition, or (ii) commence a voluntary Proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar Law now or hereafter in effect, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial
part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its
debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Section 10.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
any regulations or official interpretations issued with respect thereof or agreements thereunder and any amended or successor provisions).
“FATCA” means the Foreign Account Tax Compliance Act provisions, sections 1471 through to 1474 of the Code (including
“FATCA Withholding Tax” means any withholding or deduction required pursuant to FATCA.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its
principal functions.
“Fee Letter” shall mean that fee letter by and between Jefferies Funding LLC and the Issuer, dated December 20, 2021, as
amended, restated, modified or supplemented from time to time.
Worth Covenant and the Liquidity Covenant.
“Financial Covenants” means each of the Leverage Ratio Covenant, the Adjusted Leverage Ratio Covenant, the Tangible Net
“First Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
“Fiscal Year” means any period of twelve consecutive calendar months ending on December 31.
“Fitch” means Fitch, Inc.
“Floor” means a rate of interest equal to 0.00%.
“Flow-through Entity” has the meaning specified in Section 2.6(e)(iii).
“GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to time supplemented and amended, and with respect to determinations
or calculations to be made by a Person, applied on a basis
13
4149-1382-4069
consistent with the most recent audited financial statements of Consolidated Parent before the Closing Date.
“Global Note” has the meaning specified in Section 2.19.
“Governmental Authority” means any government or political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
“Grant” means the Issuer’s grant of a Lien on the Trust Estate as set forth in the Granting Clause of this Indenture.
“Holder” means the Person in whose name a Note or Certificate is registered in the Register.
“Indebtedness” means, with respect to any Person, such Person’s (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on
terms customary in the trade, (iii) obligations, whether or not assumed, secured by Liens on or payable out of the proceeds or production from,
property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments,
(v) Capitalized Lease obligations and (vi) obligations of another Person of a type described in clauses (i) through (v) above, for which such
Person is obligated pursuant to a guaranty, put or similar arrangement.
Intermediary and Depositary Bank, as amended, restated, modified or supplemented from time to time.
“Indenture” means this Indenture dated as of the Closing Date, between the Issuer and the Indenture Trustee, Securities
“Indenture Termination Date” has the meaning specified in Section 12.1.
“Indenture Trustee” means initially Wilmington Trust, National Association, acting in such capacity under this Indenture, and its
successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any
successor trustee appointed in accordance with the provisions of this Indenture.
“Independent” means, when used with respect to any specified Person, that such Person (a) is in fact independent of the Issuer,
any other obligor upon the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or
any material indirect financial interest in the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar functions.
“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of Section 15.1, prepared by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall
state that the signer has read the definition of “Independent” in this Indenture and that the signer is Independent within the meaning thereof.
“Initial Purchase Agreement” means the Certificate Purchase Agreement, dated as of the Closing Date, among the Seller and the
Issuer, relating to the purchase by the Issuer of the
14
4149-1382-4069
2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates and the 2021-C Certificates, as such agreement may be amended,
supplemented or otherwise modified and in effect from time to time.
“Initial Purchaser” means Jefferies Funding LLC.
“Interest Period” means, with respect to any Payment Date, the period from and including the Payment Date immediately
preceding such Payment Date (or, in the case of the first Payment Date, from and including the Closing Date) to but excluding such Payment
Date.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
the Trust Accounts.
“Investment Earnings” means all interest and earnings (net of losses and investment expenses) accrued on funds on deposit in
“Issuer” has the meaning specified in the preamble of this Indenture.
December 20, 2021, as further amended, supplemented or otherwise modified from time to time.
“Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Issuer, dated as of
Responsible Officers and delivered to the Indenture Trustee.
“Issuer Order” and “Issuer Request” means a written order or request signed in the name of the Issuer by any one of its
decree or award of any Governmental Authority.
“Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ,
“Legal Final Payment Date” means the latest Payment Date listed on the Amortization Schedule.
“Leverage Ratio” means, on any date of determination, the ratio of (i) Liabilities to (ii) Tangible Net Worth.
“Leverage Ratio Covenant” means that the Parent will have a maximum Leverage Ratio of 11.5:1.
“Liabilities” means, on any date of determination, the total liabilities which would appear on the balance sheet of the Parent and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC or comparable Law of
any
as such agreement may be amended, supplemented or otherwise modified and in effect from time to time.
“Limited Guaranty” means the Limited Guaranty, dated as of December 20, 2021, between Oportun and the Indenture Trustee,
15
4149-1382-4069
Equivalents.
“Liquidity Covenant” means that the Seller will have a minimum liquidity of $10,000,000, equal to unrestricted cash or Cash
“Material Adverse Effect” means any event or condition which would have a material adverse effect on (i) the Underlying
Securities or Underlying Payments, (ii) the condition (financial or otherwise), businesses or properties of the Issuer or the Seller, (iii) the ability
of the Issuer or the Seller to perform its respective obligations under the Transaction Documents or the ability of the Administrator to perform
its obligations under the Administrative Services Agreement or (iv) the interests of the Indenture Trustee or any Secured Party in the Trust
Estate or under the Transaction Documents.
“Minimum Principal Payment Amount” means, for any Payment Date, the “Minimum Principal Payment Amount” specified
therefor on the Amortization Schedule.
“Monthly Period” means the period from and including the first day of a calendar month to and including the last day of such
calendar month; provided, however, that the first Monthly Period shall be the period from and including the Closing Date to and including
December 31, 2021.
“Monthly Report” means a report substantially in the form attached as Exhibit D or in such other form as the Administrator may
determine necessary or desirable (with prior consent of the Indenture Trustee); provided, however, that no such other agreed form shall serve to
exclude information expressly required by this Indenture.
“Moody’s” means Moody’s Investors Service, Inc.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA with respect to which the
Seller, the Issuer or any of their respective ERISA Affiliates is making, is obligated to make, or has made or been obligated to make,
contributions.
“Note Owner” means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as
an indirect participant, in accordance with the rules of such Clearing Agency).
“Note Principal Amount” means on any date of determination the then outstanding principal amount of the Notes.
“Note Purchase Agreement” means the agreement by and among the Initial Purchaser, Oportun and the Issuer, dated December
20, 2021, pursuant to which the Initial Purchaser agreed to purchase an interest in the Class A Notes from the Issuer, subject to the terms and
conditions set forth therein, as amended, supplemented or otherwise modified from time to time.
“Note Rate” means the Class A Note Rate.
“Noteholder” means with respect to any Note, the holder of record of such Note.
“Notes” has the meaning specified in paragraph (a) of the Designation.
“NYFRB” means the Federal Reserve Bank of New York.
16
4149-1382-4069
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Officer’s Certificate” means a certificate signed by any Responsible Officer of the Person providing the certificate.
“Opinion of Counsel” means one or more written opinions of counsel to the Issuer or the Seller who (except in the case of
opinions regarding matters of organizational standing, power and authority, conflict with organizational documents, conflict with agreements
other than Transaction Documents, qualification to do business, licensure and litigation or other Proceedings) shall be external counsel,
satisfactory to the Indenture Trustee, which opinions shall comply with any applicable requirements of Section 15.1, and shall be in form and
substance satisfactory to the Indenture Trustee, and shall be addressed to the Indenture Trustee. An Opinion of Counsel may, to the extent same
is based on any factual matter, rely on an Officer’s Certificate as to the truth of such factual matter.
“Oportun” means Oportun, Inc., a Delaware corporation.
“Parent” means Oportun Financial Corporation.
“Paying Agent” means any paying agent appointed pursuant to Section 2.7 and shall initially be the Indenture Trustee.
“Payment Account” means the account established as such for the benefit of the Secured Parties pursuant to Section 5.3(c).
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on
nd
January 12, 2022.
“Pension Plan” means an “employee pension benefit plan” as described in Section 3(2) of ERISA (excluding a Multiemployer
Plan) that is subject to Title IV of ERISA or Section 302 of ERISA or 412 of the Code, and in respect of which the Issuer, the Seller or any
ERISA Affiliate thereof is, or at any time during the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of
ERISA, or with respect to which the Issuer, the Seller or any of their respective ERISA Affiliates has any liability, contingent or otherwise.
“Perfection Representations” means the representations, warranties and covenants set forth in Schedule 3 attached hereto.
“Periodic Term SOFR Determination Day” has the meaning specified in in the definition of “Term SOFR.”
(b) with respect to the Seller, any item described in clauses (i) through (vi) of the following:
“Permitted Encumbrance” means (a) with respect to the Issuer, any item described in clause (i), (iv) or (vi) of the following, and
(1)
Liens for taxes and assessments that are not yet due and payable or that are being contested in good faith and for which
reserves have been established, if required in accordance with GAAP;
(2)
Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Seller shall at any time in good faith be prosecuting an appeal or proceeding for a review
17
4149-1382-4069
and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP;
(3)
Liens incidental to the conduct of business or the ownership of properties and assets (including mechanics’, carriers’,
repairers’, warehousemen’s and statutory landlords’ liens and liens to secure the performance of leases) and Liens to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in connection
with the borrowing of money, provided in each case, the obligation secured is not overdue, or, if overdue, is being contested in good
faith by appropriate actions or Proceedings and with respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(4)
Liens in favor of the Indenture Trustee, or otherwise created by the Issuer, the Seller or the Indenture Trustee pursuant to
the Transaction Documents;
(5)
Liens that, in the aggregate do not exceed $250,000 (such amount not to include Permitted Encumbrances under clauses (i)
through (iv) or (vi)) and which, individually or in the aggregate, do not materially interfere with the rights under the Transaction
Documents of the Indenture Trustee or any Noteholder or Certificateholder in any of the Trust Estate; and
(6)
any Lien created in favor of the Issuer or the Seller in connection with the purchase of the Underlying Securities by the
Issuer or the Seller and covering such Underlying Securities.
or registered form and that evidence:
“Permitted Investments” means book-entry securities, negotiable instruments or securities represented by instruments in bearer
(i)direct obligations of, and obligations fully guaranteed as to the full and timely payment by, the United States;
(ii)demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the
Laws of the United States or any state thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depository institution authorities (including depository receipts issued by any such institution or
trust company as custodian with respect to any obligation referred to in clause (a) above or a portion of such obligation for the benefit of the
holders of such depository receipts); provided that at the time of the investment or contractual commitment to invest therein (which shall be
deemed to be made again each time funds are reinvested following each Payment Date), the commercial paper or other short-term senior
unsecured debt obligations (other than such obligations the rating of which is based on the credit of a person other than such depository
institution or trust company) of such depository institution or trust company shall have a credit rating from a Rating Agency in the highest
investment category granted thereby;
(iii)commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Fitch of “F2”
or the equivalent thereof from Moody’s or Standard & Poor’s; or
(iv)only to the extent permitted by Rule 3a-7 under the Investment Company Act, investments in money market funds having a
rating from Fitch of “AA” or, to the extent not rated by Fitch, rated in the highest rating category by Moody’s, Standard & Poor’s or another
Rating Agency.
18
4149-1382-4069
Permitted Investments may be purchased by or through the Indenture Trustee or any of its Affiliates.
“Person” means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated
organization, enterprise, government or any department or agency of any government.
“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.
Purchase Agreement.
“Purchase Agreement” means each of the Initial Purchase Agreement, the 2022-A Purchase Agreement and the 2022-2
“QIB” has the meaning specified in Section 2.16(a)(i).
“Qualified Institution” means a depository institution or trust company:
(i)whose commercial paper, short-term unsecured debt obligations or other short-term deposits have a rating commonly regarded
as “investment grade” by at least one Rating Agency, if the deposits are to be held in the account for 30 days or less, or
(ii)whose long-term unsecured debt obligations have a rating commonly regarded as “investment grade” by at least one Rating
Agency, if the deposits are to be held in the account more than 30 days.
“Rapid Amortization Event” has the meaning specified in Section 9.1.
“Rating Agency” means any nationally recognized statistical rating organization.
“Record Date” means, with respect to any Payment Date, the last Business Day of the preceding Monthly Period.
“Records” means all documents, books, records and other information in physical or electronic format (including, without
limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) maintained with respect to
the Underlying Securities.
pursuant to Section 14.1.
“Redemption Date” means in the case of a redemption of the Notes, the Payment Date specified by Oportun or the Issuer
“Redemption Price” means an amount as set forth in Section 14.1(b) for the redemption of the Notes.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 5:00
p.m. (New York City time) on each Periodic Term SOFR Determination Day, and (2) if such Benchmark is not Term SOFR, the time
determined by the Required Noteholders in their reasonable discretion.
“Register” has the meaning specified in Section 2.6(a).
“Registered Certificates” has the meaning specified in Section 2.1.
“Registered Notes” has the meaning specified in Section 2.1.
19
4149-1382-4069
convened by the Federal Reserve Board or the NYFRB, or any successor thereto.
“Relevant Governmental Body” means the Federal Reserve Board or the NYFRB, or a committee officially endorsed or
Certificates outstanding.
“Required Certificateholders” means the holders of Certificates representing a percentage interest in excess of 50% of the
the aggregate principal balance of the Class A Notes outstanding (or, if the Notes have been paid in full, the Required Certificateholders).
“Required Noteholders” means the holders of the Class A Notes outstanding, voting together, representing in excess of 50% of
“Requirements of Law” means, as to any Person, the organizational documents of such Person and any Law applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” means (i) with respect to any Person, the member, the Chairman, the President, the Controller, any Vice
President, the Secretary, the Treasurer, or any other officer of such Person or of a direct or indirect managing member of such Person, who
customarily performs functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter
any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and
(ii) with respect to the Indenture Trustee, in any of its capacities hereunder, a Trust Officer.
“Restricted Global Notes” has the meaning specified in Section 2.16(a)(i).
“Retained Notes” means any Notes, or interests therein, beneficially owned by the Issuer or an entity which, for U.S. federal
income tax purposes, is considered the same Person as the Issuer, until such time as such Notes are the subject of an opinion pursuant to
Section 2.6(d) hereof.
“Rule 144A” has the meaning specified in Section 2.16(a)(i).
“Scheduled Note Principal Amount” means, for any Payment Date, the “Scheduled Note Principal Amount” specified therefor
on the Amortization Schedule.
Amount on such Payment Date over (b) the Scheduled Note Principal Amount for such Payment Date.
“Scheduled Principal Payment Amount” means, for any Payment Date, an amount equal to the excess of (a) the Note Principal
“Second Priority Custody Account” means the securities custody account separately established by the Issuer with Wilmington
Trust, National Association pursuant to the Custody Agreement in which the Issuer maintains the percentage interest of each Underlying
Security specified on Schedule 2 hereto.
“Secured Obligations” means (i) all principal and interest, at any time and from time to time, owing by the Issuer on the Notes
(including any Note held by the Seller, the Parent or any Affiliate of any of the foregoing), (ii) all amounts distributable to the
Certificateholders and (iii) all costs, fees, expenses, indemnity and other amounts owing or payable by, or obligations of, the Issuer to any
Person (other than any Affiliate of the Issuer) under the Indenture or the other Transaction Documents.
“Secured Parties” has the meaning specified in the Granting Clause of this Indenture.
20
4149-1382-4069
“Securities” has the meaning specified in paragraph (a) of the Designation.
Priority Custody Account.
“Securities Account” means each of (i) the Payment Account, (ii) the First Priority Custody Account, and (iii) the Second
“Securities Act” means the Securities Act of 1933, as amended.
Association, acting in such capacity under this Indenture.
“Securities Intermediary” has the meaning specified in Section 5.3(e) and shall initially be Wilmington Trust, National
“Seller” means Oportun.
“Similar Law” means applicable Law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.
Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor
“Solvent” means with respect to any Person that as of the date of determination both (A)(i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of liabilities (including Contingent Liabilities) of such Person and (z) not less than
the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not
unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person
is “solvent” within the meaning given that term and similar terms under applicable Laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any Contingent Liability at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Standard & Poor’s” means S&P Global Ratings.
“Subsidiary” of a Person means any other Person more than 50% of the outstanding voting interests of which shall at any time
be owned or controlled, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or any similar business
organization which is so owned or controlled.
“Supplement” means a supplement to this Indenture complying with the terms of Article 13 of this Indenture.
paid-in capital and retained earnings after deducting treasury stock) which would appear on the balance sheet of the Parent and its
“Tangible Net Worth ” means, on any date of determination, the total shareholders’ equity (including capital stock, additional
21
4149-1382-4069
Subsidiaries determined on a consolidated basis in accordance with GAAP, less the sum of (a) all notes receivable from officers and employees
of the Parent and its Subsidiaries and from affiliates of the Parent, and (b) the aggregate book value of all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, patents, trademarks, trade names, copyrights, and franchises.
“Tangible Net Worth Covenant” means that the Parent will have a minimum Tangible Net Worth of $100,000,000.
to eliminate the imposition of or to determine the amount of any withholding of tax, including FATCA Withholding Tax.
“Tax Information” means information and/or properly completed and signed tax certifications and/or documentation sufficient
“Tax Opinion” means with respect to any action or event, an Opinion of Counsel to the effect that, for United States federal
income tax purposes, (a) such action or event will not adversely affect the tax characterization of the Notes issued to investors as debt, and (b)
such action or event will not cause the Issuer to be classified as an association or publicly traded partnership, in each case, taxable as a
corporation.
“Term SOFR” means the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such
day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such
Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on
any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term
SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR
will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as
such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to
such Periodic Term SOFR Determination Day; provided that if Term SOFR as so determined would be less than 0%, such rate shall be deemed
to be 0% for the purposes of this Indenture.
the Term SOFR Reference Rate selected by the Required Noteholders and the Issuer).
“Term SOFR Administrator ” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
owing to the Noteholders, are paid in full, (b) the Legal Final Payment Date and (c) the Indenture Termination Date.
“Termination Date” means the earliest to occur of (a) the Payment Date on which the Notes, plus all other amounts due and
“Three-Month Average Underlying Loss Percentage ” means, for any Payment Date, the weighted average of the Underlying
Monthly Loss Percentages over the previous three (3) Monthly Periods for all Underlying Securities that were outstanding during such
Monthly Periods.
“Transaction Documents” means, collectively, this Indenture, the Notes, the Purchase Agreements, the Note Purchase
Agreement, the Limited Guaranty, the Administrative Services Agreement, the Custody Agreement and any agreements of the Issuer relating
to the issuance or the purchase of any of the Notes.
22
4149-1382-4069
“Transfer” has the meaning specified in Section 2.6(e).
National Association is acting as Indenture Trustee, be the Indenture Trustee.
“Transfer Agent and Registrar ” has the meaning specified in Section 2.6 and shall initially, and so long as Wilmington Trust,
and control of the Indenture Trustee.
“Trust Account” has the meaning specified in the Granting Clause to this Indenture, which accounts are under the sole dominion
“Trust Estate” has the meaning specified in the Granting Clause of this Indenture.
“Trust Officer” means any officer within the Corporate Trust Office (or any successor group of the Indenture Trustee),
including any Vice President, any Director, any Managing Director, any Assistant Vice President or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any individual who at the time shall be an above-designated officer and is
directly responsible for the day-to-day administration of the transactions contemplated herein.
“Trustee Fees and Expenses” means, for any Payment Date, the amount of accrued and unpaid fees, indemnity amounts and
reasonable out-of-pocket expenses, not in excess of $150,000 per calendar year for the Indenture Trustee (including in its capacity as Agent),
the Securities Intermediary and the Depositary Bank (or, if an Event of Default or other Rapid Amortization Event has occurred and is
continuing, without limit).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the
Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire
day for purposes of trading in United States government securities.
and in effect in such jurisdiction.
“UCC” means, with respect to any jurisdiction, the Uniform Commercial Code as the same may, from time to time, be enacted
Replacement Adjustment.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark
2022-A Indenture or the 2022-2 Indenture, as applicable.
“Underlying Indenture” means the 2019-A Indenture, the 2021-A Indenture, the 2021-B Indenture, the 2021-C Indenture, the
the 2022-2 Issuer, as applicable.
“Underlying Issuer” means the 2019-A Issuer, the 2021-A Issuer, the 2021-B Issuer, the 2021-C Issuer, the 2022-A Issuer or
applicable Underlying Indenture.
“Underlying Monthly Loss Percentage” means, for any Underlying Issuer, the “Monthly Loss Percentage” as defined in the
“Underlying Payment Date” means with respect to any Underlying Security, means the eighth (8th) day of each calendar month,
or if such eighth (8th) day is not a Business Day, the next succeeding Business Day.
Underlying Securities in accordance with the applicable Underlying Transaction Documents.
“Underlying Payments” means, with respect to any Underlying Securities, any payments or distributions made in respect of such
23
4149-1382-4069
2021-C Certificates, the 2022-A Certificates and the 2022-2 Certificates.
“Underlying Securities” means, collectively, the 2019-A Certificates, the 2021-A Certificates, the 2021-B Certificates, the
“Underlying Transaction Documents” means the 2019-A Transaction Documents, the 2021-A Transaction Documents, the
2021-B Transaction Documents, the 2021-C Transaction Documents, the 2022-A Transaction Documents and the 2022-2 Transaction
Documents as applicable.
“U.S.” or “United States” means the United States of America and its territories.
telecopier device.
“written” or “in writing” means any form of written communication, including, without limitation, by means of e-mail, telex or
Section 2.b.2 [Reserved].
Section 2.c.2
Cross-References. Unless otherwise specified, references in this Indenture and in each other Transaction
Document to any Article or Section are references to such Article or Section of this Indenture or such other Transaction Document, as the case
may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such
Article, Section or definition.
Section 2.d.2
Accounting and Financial Determinations; No Duplication. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of
this Indenture, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in this Indenture, in
accordance with GAAP. When used herein, the term “financial statement” shall include the notes and schedules thereto. All accounting
determinations and computations hereunder or under any other Transaction Documents shall be made without duplication.
Section 2.e.2
Rules of Construction. In this Indenture, unless the context otherwise requires:
(1)
(2)
(3)
“or” is not exclusive;
the singular includes the plural and vice versa;
reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Indenture, and reference to any Person in a particular capacity only refers to such Person in such capacity;
(4)
reference to any gender includes the other gender;
(5)
reference to any Requirement of Law means such Requirement of Law as amended, modified, codified or reenacted, in
whole or in part, and in effect from time to time;
(6)
“including” (and with correlative meaning “include”) means including without limiting the generality of any description
preceding such term; and
with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but
(7)
excluding.”
24
4149-1382-4069
Section 2.f.2 Other Definitional Provisions.
(i)All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. Capitalized terms used but not defined herein shall have the respective meaning
given to such term in the Servicing Agreement.
(ii)The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this Indenture; and Section, subsection, Schedule and Exhibit references contained
in this Indenture are references to Sections, subsections, Schedules and Exhibits in or to this Indenture unless otherwise specified.
(iii)Terms used herein that are defined in the New York Uniform Commercial Code and not otherwise defined herein shall have the
meanings set forth in the New York Uniform Commercial Code, unless the context requires otherwise. Any reference herein to a “beneficial
interest” in a security also shall mean, unless the context requires otherwise, a security entitlement with respect to such security, and any
reference herein to a “beneficial owner” or “beneficial holder” of a security also shall mean, unless the context requires otherwise, the holder of
a security entitlement with respect to such security. Any reference herein to money or other property that is to be deposited in or is on deposit in
a securities account shall also mean that such money or other property is to be credited to, or is credited to, such securities account.
ARTICLE 2.
THE SECURITIES
Section 2.1. Designation and Terms of Securities. Subject to Sections 2.16 and 2.19, the Notes shall be issued in fully
registered form (the “Registered Notes”), the Certificates shall be issued in definitive, fully registered form (the “Registered Certificates”), and
Registered Notes and Registered Certificates shall be substantially in the form of exhibits with respect thereto attached hereto, with such
appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such restrictions, legends or endorsements placed thereon and shall bear, upon their face, the
designation for such series to which they belong so selected by the Issuer, all as determined by the Responsible Officers executing such
Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Security
Section 2.2. [Reserved].
Section 2.3. [Reserved].
Section 2.4. Execution and Authentication.
(a) Each Security shall be executed by manual or facsimile signature by the Issuer. Securities bearing the manual or facsimile signature
of the individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Issuer shall not be rendered invalid,
notwithstanding that such individual has ceased to be so authorized prior to the authentication and delivery of such Securities or does not hold
such office at the date of such Securities. No Securities shall be entitled to any benefit under this Indenture, or be valid for any purpose, unless
there appears on such Security a certificate of authentication substantially in the form provided for herein, duly executed by or on behalf of the
25
4149-1382-4069
Indenture Trustee by the manual signature of a duly authorized signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and delivered hereunder.
(b) The Issuer shall execute and the Indenture Trustee shall authenticate and deliver the Securities having the terms specified herein,
upon the receipt of an Issuer Order, to the purchasers thereof, the underwriters for sale or to the Issuer for initial retention by it. The Issuer shall
execute and the Indenture Trustee shall authenticate and deliver each Global Note that is issued upon original issuance thereof, upon the receipt
of an Issuer Order against payment of the purchase price therefor. The Issuer shall execute and the Indenture Trustee shall authenticate Book-
Entry Notes that are issued upon original issuance thereof, upon the receipt of an Issuer Order, to a Clearing Agency or its nominee as provided
in Section 2.16 against payment of the purchase price thereof.
(c) All Securities shall be dated and issued as of the date of their authentication.
Section 2.5. Authenticating Agent.
(a) The Indenture Trustee may appoint one or more authenticating agents with respect to the Securities which shall be authorized to act
on behalf of the Indenture Trustee in authenticating the Securities in connection with the issuance, delivery, registration of transfer, exchange
or repayment of the Securities. Whenever reference is made in this Indenture to the authentication of Securities by the Indenture Trustee or the
Indenture Trustee’s certificate of authentication, such reference shall be deemed to include authentication on behalf of the Indenture Trustee by
an authenticating agent and a certificate of authentication executed on behalf of the Indenture Trustee by an authenticating agent. Each
authenticating agent must be acceptable to the Issuer.
(b) Any institution succeeding to the corporate agency business of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any paper or any further act on the part of the Indenture Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written notice of resignation to the Indenture Trustee and to the Issuer.
The Indenture Trustee may at any time terminate the agency of an authenticating agent by giving notice of termination to such authenticating
agent and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time an authenticating agent
shall cease to be acceptable to the Indenture Trustee or the Issuer, the Indenture Trustee promptly may appoint a successor authenticating
agent. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent.
(d) The Issuer agrees to pay each authenticating agent from time to time reasonable compensation for its services under this Section 2.5.
(e) Pursuant to an appointment made under this Section 2.5, the Securities may have endorsed thereon, in lieu of the Indenture Trustee’s
certificate of authentication, an alternate certificate of authentication in substantially the following form:
This is one of the [notes/certificates] described in the Indenture.
[Name of Authenticating Agent],
as Authenticating Agent
for the Indenture Trustee,
26
4149-1382-4069
By:
Responsible Officer
Section 2.6. Registration of Transfer and Exchange of Securities.
(a) (i) The Indenture Trustee shall cause to be kept at the office or agency to be maintained by a transfer agent and registrar (the “Transfer
Agent and Registrar”), in accordance with the provisions of Section 2.6(c), a register (the “Register”) in which, subject to such reasonable
regulations as it may prescribe, the Transfer Agent and Registrar shall provide for the registration of the Securities and registrations of
transfers and exchanges of the Securities as herein provided. The Indenture Trustee is hereby initially appointed Transfer Agent and Registrar
for the purposes of registering the Securities and transfers and exchanges of the Securities as herein provided. If a Person other than the
Indenture Trustee is appointed by the Issuer as Transfer Agent and Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Transfer Agent and Registrar and of the location, and any change in the location, of the Register, and the Indenture
Trustee shall have the right to inspect the Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the
right to rely upon a certificate executed on behalf of the Transfer Agent and Registrar by a Responsible Officer thereof as to the names and
addresses of the Holders of the Securities and the principal amounts or par values and number of such Securities. If any form of Note is issued
as a Global Note, the Indenture Trustee may appoint a co-transfer agent and co-registrar in a European city. Any reference in this Indenture to
the Transfer Agent and Registrar shall include any co-transfer agent and co-registrar unless the context otherwise requires. The Indenture
Trustee shall be permitted to resign as Transfer Agent and Registrar upon thirty (30) days’ written notice to Administrator and the Issuer. In the
event that the Indenture Trustee shall no longer be the Transfer Agent and Registrar, the Issuer shall appoint a successor Transfer Agent and
Registrar.
(ii) Upon surrender for registration of transfer of any Security at any office or agency of the Transfer Agent and Registrar, if the
requirements of Section 8-401(a) of the UCC are met, the Issuer shall execute, subject to the provisions of Section 2.6(b), and the Indenture
Trustee shall authenticate and (unless the Transfer Agent and Registrar is different than the Indenture Trustee, in which case the Transfer
Agent and Registrar shall) deliver and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Securities in authorized denominations of like aggregate principal amount or aggregate par value, as applicable.
(iii) All Securities issued upon any registration of transfer or exchange of Securities shall be valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
(iv) At the option of any Holder of Registered Notes, Registered Notes may be exchanged for other Registered Notes in authorized
denominations of like aggregate principal amounts or aggregate par values in the manner specified herein, upon surrender of the Registered
Notes to be exchanged at any office or agency of the Transfer Agent and Registrar maintained for such purpose. At the option of any Holder of
Registered Certificates, Registered Certificates may be exchanged for other Registered Certificates of like percentage interests in the manner
specified herein, upon surrender of the Registered Certificates to be exchanged at any office or agency of the Transfer Agent and Registrar
maintained for such purpose.
(v) Whenever any Securities are so surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are met, the
Issuer shall execute and the Indenture Trustee shall authenticate and (unless the Transfer Agent and Registrar is different than the Indenture
Trustee, in which case the Transfer Agent and Registrar shall) deliver and the Noteholders shall obtain
27
4149-1382-4069
from the Indenture Trustee, the Securities that the Noteholder making the exchange is entitled to receive. Every Security presented or
surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in a form satisfactory to the Issuer
duly executed by the Noteholder thereof or its attorney-in-fact duly authorized in writing.
(vi) The preceding provisions of this Section 2.6 notwithstanding, the Indenture Trustee or the Transfer Agent and Registrar, as
the case may be, shall not be required to register the exchange of any Global Note for a Definitive Note or the transfer of or exchange any
Security for a period of five (5) Business Days preceding the due date for any payment with respect to the Securities or during the period
beginning on any Record Date and ending on the next following Payment Date.
(vii) No service charge shall be made for any registration of transfer or exchange of Securities, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
(viii) All Securities surrendered for registration of transfer and exchange shall be cancelled by the Transfer Agent and Registrar
and disposed of. The Indenture Trustee shall cancel and destroy any Global Note upon its exchange in full for Definitive Notes and shall
deliver a certificate of destruction to the Issuer. Such certificate shall also state that a certificate or certificates of each Clearing Agency to the
effect referred to in Section 2.19 was received with respect to each portion of the Global Note exchanged for Definitive Notes.
(ix) Upon written request, the Issuer shall deliver to the Indenture Trustee or the Transfer Agent and Registrar, as applicable,
Registered Notes and Registered Certificates in such amounts and at such times as are necessary to enable the Indenture Trustee to fulfill its
responsibilities under this Indenture and the Securities.
(x) [Reserved].
(xi) Notwithstanding any other provision of this Section 2.6, the typewritten Note or Notes representing Book-Entry Notes may be
transferred, in whole but not in part, only to another nominee of the Clearing Agency for such Notes, or to a successor Clearing Agency for
such Notes selected or approved by the Issuer or to a nominee of such successor Clearing Agency, only if in accordance with this Section 2.6.
(xii) By its acceptance of a Class A Note, each Noteholder and Note Owner shall be deemed to have represented and warranted
that, with respect to the Class A Notes, either (i) it is not a Benefit Plan Investor or a governmental or other plan subject to Similar Law, or (ii)
(a) the purchase and holding of the Class A Note (or any interest therein) will not give rise to a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (b) it acknowledges and agrees that the Class A Notes,
are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law at any time that the Class A
Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated below investment grade.
(b) Registration of transfer of Registered Notes containing a legend relating to the restrictions on transfer of such Registered Notes (which
legend is set forth in Section 2.16(d) of this Indenture relating to such Notes) shall be effected only if the conditions set forth in Section 2.6
have been satisfied.
Whenever a Registered Note containing the legend set forth in Section 2.16(d) is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and
28
4149-1382-4069
Registrar shall promptly seek instructions from the Issuer regarding such transfer. The Transfer Agent and Registrar and the Indenture Trustee
shall be entitled to receive written instructions signed by a Responsible Officer of the Issuer prior to registering any such transfer or
authenticating new Registered Notes, as the case may be. The Issuer hereby agrees to indemnify the Transfer Agent and Registrar and the
Indenture Trustee and to hold each of them harmless against any loss, liability or expense incurred without negligence or willful misconduct on
their part arising out of or in connection with actions taken or omitted by them in reliance on any such written instructions furnished pursuant to
this Section 2.6(b).
(c) The Transfer Agent and Registrar will maintain an office or offices or an agency or agencies where Securities may be surrendered for
registration of transfer or exchange.
(d) Any Retained Notes may not be transferred to another Person for United States federal income tax purposes unless the transferor shall
cause an Opinion of Counsel to be delivered to the Seller and the Trustee at such time stating that, although not free from doubt, such Notes
will be characterized as debt for United States federal income tax purposes. In addition, if for tax or other reasons it may be necessary to track
such Notes (e.g., if the Notes have original issue discount), tracking conditions such as requiring that such Notes be in definitive registered
form may be required by the Issuer as a condition to such transfer.
(e) Notwithstanding anything to the contrary in this Indenture, no interest in the Certificates may be directly or indirectly sold, transferred,
assigned, exchanged, participated or otherwise conveyed, pledged, hypothecated or rehypothecated or made the subject of a security interest
(each such transaction for purposes of this Section 2.6(e), a “Transfer”) except to a Person who is a “United States person” for United Stated
federal income tax purposes and only upon the prior delivery of a Tax Opinion to the Indenture Trustee with respect to such Transfer, and any
Transfer in violation of these requirements shall be null and void ab initio.
Section 2.7. Appointment of Paying Agent.
(a) The Paying Agent shall make payments to the Secured Parties from the appropriate account or accounts maintained for the benefit of the
Secured Parties as specified in this Indenture pursuant to Articles 5 and 6. Any Paying Agent shall have the revocable power to withdraw funds
from such appropriate account or accounts for the purpose of making distributions referred to above. The Indenture Trustee (or the Issuer or
Oportun if the Indenture Trustee is the Paying Agent) may revoke such power and remove the Paying Agent, if the Paying Agent fails to
perform its obligations under this Indenture in any material respect or for other good cause. The Paying Agent shall initially be the Indenture
Trustee. The Indenture Trustee shall be permitted to resign as Paying Agent upon thirty (30) days’ written notice to the Issuer with a copy to
Oportun. In the event that the Indenture Trustee shall no longer be the Paying Agent, the Issuer or Oportun shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company).
(b) The Issuer shall cause each Paying Agent (other than the Indenture Trustee) to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee that such Paying Agent will hold all sums, if any, held by it for payment to the
Secured Parties in trust for the benefit of the Secured Parties entitled thereto until such sums shall be paid to such Secured Parties and shall
agree, and if the Indenture Trustee is the Paying
29
4149-1382-4069
Agent it hereby agrees, that it shall comply with all requirements of the Code regarding the withholding of payments in respect of federal
income taxes due from Note Owners or other Secured Parties (including in respect of FATCA and any applicable tax reporting requirements).
Section 2.8 Paying Agent to Hold Money in Trust.
(a) The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject
to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with respect to the Secured Obligations in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided herein and pay such sums to such
Persons as provided herein;
(ii) give the Indenture Trustee written notice of any default by the Issuer (or any other obligor under the Secured Obligations) of
which it (or, in the case of the Indenture Trustee, a Trust Officer) has actual knowledge in the making of any payment required to be made with
respect to the Securities;
(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of
the Secured Obligations if at any time it ceases to meet the standards required to be met by an Indenture Trustee hereunder; and
(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Secured
Obligations of any applicable withholding taxes imposed thereon, including FATCA Withholding Tax (including obtaining and retaining from
Persons entitled to payments with respect to the Securities any Tax Information and making any withholdings with respect to the Securities as
required by the Code (including FATCA) and paying over such withheld amounts to the appropriate Governmental Authority), comply with
respect to any applicable reporting requirements in connection with any payments made by it on any Secured Obligations and any withholding
of taxes therefrom, and, upon request, provide any Tax Information to the Issuer.
(b) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, cause to
be delivered an Issuer Order directing any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums
to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such
money.
(c) Subject to applicable Laws with respect to escheat of funds, any money held by the Indenture Trustee, any Paying Agent or any Clearing
Agency in trust for the payment of any amount due with respect to any Secured Obligation and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Order; and the holder of such
Secured Obligation shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the
amounts so
30
4149-1382-4069
paid to the Issuer), and all liability of the Indenture Trustee, such Paying Agent or such Clearing Agency with respect to such trust money shall
thereupon cease; provided, however, that the Indenture Trustee, such Paying Agent or such Clearing Agency, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in New York City and, if the related Notes have been listed on the
Luxembourg Stock Exchange, and if the Luxembourg Stock Exchange so requires, in a newspaper customarily published on each Luxembourg
business day and of general circulation in Luxembourg City, Luxembourg, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment.
Section 2.9 Private Placement Legend.
(a) In addition to any legend required by Section 2.16, each Class A Note shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE OFFERED,
SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS OF
RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT
THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE
AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
31
4149-1382-4069
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY FIDUCIARY
ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT THAT
EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS
SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING
(EACH OF THE FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO
APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
(“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT
ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO
SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR
APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW INVESTMENT GRADE.
(b) Each Certificate shall bear a legend in substantially the following form:
32
4149-1382-4069
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE
MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN
INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE
RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND
WARRANT THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A
“PLAN” AS DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
WHICH IS
33
4149-1382-4069
SUBJECT TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING,
OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
Section 2.10. Mutilated, Destroyed, Lost or Stolen Securities.
(a) If (i) any mutilated Security is surrendered to the Transfer Agent and Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Security, and (ii) there is delivered to the Transfer Agent and Registrar, the Indenture
Trustee, and the Issuer such security or indemnity as may, in their sole discretion, be required by them to hold the Transfer Agent and
Registrar, the Indenture Trustee, and the Issuer harmless then, in the absence of written notice to the Indenture Trustee that such Security has
been acquired by a protected purchaser, and provided that the requirements of Section 8-405 of the UCC (which generally permit the Issuer to
impose reasonable requirements) are met, then the Issuer shall execute and the Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and (unless the Transfer Agent and Registrar is different from the Indenture Trustee, in which case the Transfer Agent and
Registrar shall) deliver (in compliance with applicable Law), in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security,
a replacement Security of like tenor and aggregate principal balance or aggregate par value; provided, however, that if any such destroyed, lost
or stolen Security, but not a mutilated Security, shall have become or within seven (7) days shall be due and payable or shall have been called
for redemption, instead of issuing a replacement Security, the Issuer may pay such destroyed, lost or stolen Security when so due or payable
without surrender thereof.
If, after the delivery of such replacement Security or payment of a destroyed, lost or stolen Security pursuant to the proviso to
the preceding sentence, a protected purchaser of the original Security in lieu of which such replacement Security was issued presents for
payment such original Security, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Security (or such payment)
from the Person to whom it was delivered or any Person taking such replacement Security from such Person to whom such replacement
Security was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(b) Upon the issuance of any replacement Security under this Section 2.10, the Transfer Agent and Registrar or the Indenture Trustee may
require the payment by the Holder of such Security of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Transfer Agent and
Registrar) connected therewith.
(c) Every replacement Security issued pursuant to this Section 2.10 in replacement of any mutilated, destroyed, lost or stolen Security shall
constitute an original additional Contractual Obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any
time enforceable by anyone and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Security
of like kind duly issued hereunder.
34
4149-1382-4069
(d) The provisions of this Section 2.10 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.11. Temporary Notes.
(a) Pending the preparation of Definitive Notes, the Issuer may request and the Indenture Trustee, upon receipt of an Issuer Order, shall
authenticate and deliver temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that
are not inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of
such Notes.
(b) If temporary Notes are issued pursuant to Section 2.11(a) above, the Issuer will cause Definitive Notes to be prepared without unreasonable
delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 8.2(b), without charge to the Noteholder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall execute and at the request of the Issuer the Indenture Trustee
shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.12. Persons Deemed Owners. Prior to due presentation of a Security for registration of transfer, the Issuer, the Indenture
Trustee, the Paying Agent, the Transfer Agent and Registrar and any agent of any of them may treat a Person in whose name any Security is
registered (as of any date of determination) as the owner of the related Security for the purpose of receiving payments of principal and interest,
if any, on such Security and for all other purposes whatsoever whether or not such Security be overdue, and neither the Issuer, the Indenture
Trustee, the Paying Agent, the Transfer Agent and Registrar nor any agent of any of them shall be affected by any notice to the contrary;
provided, however, that in determining whether the requisite number of Holders of Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by any of the Issuer, the Seller, the Parent or any Affiliate controlled by or
controlling Oportun shall be disregarded and deemed not to be outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Trust Officer in
the Corporate Trust Office of the Indenture Trustee actually knows to be so owned shall be so disregarded. The foregoing proviso shall not
apply if there are no Holders other than the Issuer or its Affiliates.
Section
2.13. Cancellation. All Securities surrendered for payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled
by the Indenture Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture.
35
4149-1382-4069
All cancelled Securities may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided that such Issuer Order is
timely and the Securities have not been previously disposed of by the Indenture Trustee. The Registrar and Paying Agent shall forward to the
Indenture Trustee any Securities surrendered to them for registration of transfer, exchange or payment.
Section 2.14. Release of Trust Estate.
(a) The Indenture Trustee shall (a) in connection any redemption of the Securities, release the Trust Estate from the Lien created by this
Indenture upon receipt of an Officer’s Certificate of the Issuer certifying that (i) the Redemption Price and all other amounts due and owing on
the Redemption Date have been deposited into a Trust Account that is within the sole control of the Indenture Trustee, (ii) the distribution on
the Certificates if and as required by Section 14.1(c) has been made in full, and (iii) such release is authorized and permitted under the
Transaction Documents and (b) on or after the Indenture Termination Date, release any remaining portion of the Trust Estate from the Lien
created by this Indenture, including any funds then on deposit in any Trust Account upon receipt of an Issuer Order accompanied by an
Officer’s Certificate of the Issuer meeting the applicable requirements of Section 15.1.
(b) On the 2022-2 Purchase Date, concurrently with the inclusion of the 2022-2 Certificates in the Trust Estate and the transfer by the Issuer of
the 2022-A Class D Notes, the Lien created by this Indenture in respect of the 2022-A Class D Notes, together with all monies due or to
become due thereunder and all proceeds of every kind and nature whatsoever in respect of the foregoing, shall be automatically released and
the Indenture Trustee shall be deemed to have released such Lien, without the execution or filing of any instrument or paper or the performance
of any further act, and the 2022-A Class D Notes shall no longer be included in the Trust Estate.
Section 2.15. Payment of Principal, Interest and Other Amounts.
(a) The principal of each of the Notes shall be payable at the times and in the amounts set forth in Section 5.15 and in accordance with
Section 8.1.
(b) Each of the Notes shall accrue interest as provided in Section 5.12 and such interest shall be payable at the times and in the amounts set
forth in Section 5.15 and in accordance with Section 8.1. The payments of amounts payable with respect to the Certificates shall be made at the
times and in the amounts set forth in Section 5.15 and in accordance with Section 8.1.
(c) Any installment of interest, principal or other amounts, if any, payable on any Security which is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose name such Security is registered at the close of business on any
Record Date with respect to a Payment Date for such Security and such Person shall be entitled to receive the principal, interest or other
amounts payable on such Payment Date notwithstanding the cancellation of such Security upon any registration of transfer, exchange or
substitution of such Security subsequent to such Record Date, by wire transfer in immediately available funds to the account designated by the
Holder of such Security, except that, unless Definitive Notes have been issued pursuant to Section 2.18, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable
with respect to such Note on a Payment Date or on the Legal Final Payment Date (and except for the Redemption Price for any Note called for
redemption pursuant to Section 14.1) which shall be payable as provided herein; except that, any interest payable at maturity shall be paid to
the Person to whom
36
4149-1382-4069
the principal of such Note is payable. The funds represented by any such checks returned undelivered shall be held in accordance with
Section 2.8.
Section 2.16. Book-Entry Notes.
(a) The Notes shall be delivered as Registered Notes representing Book-Entry Notes as provided in subsection (a)(i). For purposes of this
Indenture, the term “Global Notes” refers to the Restricted Global Notes, as defined below.
(i) Restricted Global Notes. The Notes to be sold will be issued in book-entry form and represented by one or more permanent
global Notes in fully registered form without interest coupons (the “Restricted Global Notes”), substantially in the form attached hereto as
Exhibit C, and will be either (x) retained by the Issuer or an Affiliate thereof or (y) offered and sold, only (1) by the Issuer to an institutional
“accredited investor” within the meaning of Regulation D under the Securities Act in reliance on an exemption from the registration
requirements of the Securities Act and (2) thereafter only to a Person that is a qualified institutional buyer (“QIB”) as defined in Rule 144A
under the Securities Act (“Rule 144A”) in accordance with subsection (c) hereof, and shall be deposited with a custodian for, and registered in
the name of a nominee of DTC, duly executed by the Issuer and authenticated by the Indenture Trustee as provided in this Indenture for credit
to the accounts of the subscribers at DTC. The initial principal amount of the Restricted Global Notes may from time to time be increased or
decreased by adjustments made on the records of the custodian for DTC, DTC or its nominee, as the case may be, as hereinafter provided.
(b) The Class A Notes will be issuable and transferable in minimum denominations of $100,000 and in integral multiples of $1,000 in excess
thereof.
(c) The Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee.
Beneficial interests in the Global Notes may not be exchanged for Definitive Notes except in the limited circumstances described in
Section 2.18 of this Indenture. Beneficial interests in the Global Notes may be transferred only (i) to a Person that is a QIB in a transaction
meeting the requirements of Rule 144A and whom the transferor has notified that it may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A, in compliance with the Indenture and all applicable securities Laws of any state of
the United States or any other applicable jurisdiction, subject to any Requirement of Law that the disposition of the seller’s property or the
property of an investment account or accounts be at all times within the seller’s or account’s control. Each transferee of a beneficial interest in a
Global Note shall be deemed to have made the acknowledgments, representations and agreements set forth in subsection (d) hereof. Any such
transfer shall also be made in accordance with the following provisions:
(i) Transfer of Interests Within a Global Note. Beneficial interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note in accordance with the transfer restrictions set forth in the foregoing
paragraph of this subsection 2.16(c) and the transferee shall be deemed to have made the representations contained in subsection 2.16(d).
(d) Each transferee of a beneficial interest in a Global Note or of any Definitive Notes shall be deemed to have represented and agreed that:
37
4149-1382-4069
(i) it (A) is a QIB, (B) is aware that the sale to it is being made in reliance on Rule 144A and (C) is acquiring the Notes for its
own account or for the account of a QIB;
(ii) the Notes have not been and will not be registered under the Securities Act, and that, if in the future it decides to offer, resell,
pledge or otherwise transfer such Notes, such Notes may be offered, sold, pledged or otherwise transferred only to a Person that is a QIB in a
transaction meeting the requirements of Rule 144A and whom the transferor has notified that it may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule 144A, in compliance with the Indenture and all applicable securities Laws of
any state of the United States or any other jurisdiction, subject to any Requirement of Law that the disposition of the seller’s property or the
property of an investment account or accounts be at all times within the seller’s or account’s control and it will notify any transferee of the
resale restrictions set forth above;
(iii) the following legend will be placed on the Class A Notes unless the Issuer determines otherwise in compliance with
applicable Law:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS
NOTE MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN
TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE
AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET
FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND
ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO
REPRESENT AND WARRANT THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION 4975
OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO
APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE (“SIMILAR LAW”) OR (II) (A) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST
HEREIN) WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION
38
4149-1382-4069
406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND (B) IT
ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT
PLAN INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO SIMILAR LAW AT ANY TIME
THAT THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE
LOCAL LAW PURPOSES OR IS RATED BELOW INVESTMENT GRADE.
(iv) [Reserved].
(v) (A) in the case of Global Notes, the foregoing restrictions apply to holders of beneficial interests in such Notes
(notwithstanding any limitations on such transfer restrictions in any agreement between the Issuer, the Indenture Trustee and the holder of a
Global Note) as well as to Holders of such Notes and the transfer of any beneficial interest in such a Global Note will be subject to the
restrictions and certification requirements set forth herein and (B) in the case of Definitive Notes, the transfer of any such Notes will be subject
to the restrictions and certification requirements set forth herein.
(vi) the Indenture Trustee, the Issuer, the Initial Purchasers or placement agents for the Notes and their Affiliates and others will
rely upon the truth and accuracy of the foregoing representations and agreements and agrees that if any of the representations or agreements
deemed to have been made by its purchase of such Notes cease to be accurate and complete, it will promptly notify the Issuer and the Initial
Purchasers or placement agents for the Notes in writing;
(vii) if it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it has sole investment discretion with
respect to each such account and it has full power to make the foregoing representations and agreements with respect to each such account; and
(viii) with respect to the Class A Notes, either (A) it is not a Benefit Plan Investor or a governmental or other plan subject to Similar
Law, or (B) (1) the purchase and holding of the Note (or any interest therein) will not give rise to a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law and (2) it acknowledges and agrees that the Class A Notes,
are not eligible for acquisition by Benefit Plan Investors or governmental or other plans subject to Similar Law at any time that the Class A
Notes, have been characterized as other than indebtedness for applicable local law purposes or are rated below investment grade.
In addition, such transferee shall be responsible for providing additional information or certification, as reasonably requested by
the Indenture Trustee or the Issuer, to support the truth and accuracy of the foregoing representations and agreements, it being understood that
such additional information is not intended to create additional restrictions on the transfer of the Notes.
(e) For each of the Notes to be issued in registered form, the Issuer shall duly execute, and the Indenture Trustee shall, in accordance with
Section 2.4 hereof, authenticate and deliver initially, one or more Global Notes that shall be registered on the Register in the name of a
Clearing Agency or such Clearing Agency’s nominee. Each Global Note registered in the name of DTC or its nominee shall bear a legend
substantially to the following effect:
39
4149-1382-4069
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”), A NEW YORK CORPORATION, TO OPORTUN RF, LLC OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. (“ CEDE”) OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE, HAS AN INTEREST HEREIN.
So long as the Clearing Agency or its nominee is the registered owner or holder of a Global Note, the Clearing Agency or its
nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for purposes of this
Indenture and such Notes. Members of, or participants in, the Clearing Agency shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Clearing Agency, and the Clearing Agency may be treated by the Issuer, the Administrator, the
Indenture Trustee, any Agent and any agent of such entities as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Administrator, the Indenture Trustee, any Agent and any agent of
such entities from giving effect to any written certification, proxy or other authorization furnished by the Clearing Agency or impair, as
between the Clearing Agency and its agent members, the operation of customary practices governing the exercise of the rights of a holder of
any Note.
(f) [Reserved].
(g) Title to the Notes shall pass only by registration in the Register maintained by the Transfer Agent and Registrar pursuant to Section 2.6.
(h) Any typewritten Note or Notes representing Book-Entry Notes shall provide that they represent the aggregate or a specified amount of
outstanding Notes from time to time endorsed thereon and may also provide that the aggregate amount of outstanding Notes represented
thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of a typewritten Note or Notes representing
Book-Entry Notes to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Note Owners represented
thereby, shall be made in such manner and by such Person or Persons as shall be specified therein or in the Issuer Order to be delivered to the
Indenture Trustee pursuant to Section 2.4(b). The Indenture Trustee shall deliver and redeliver any typewritten Note or Notes representing
Book-Entry Notes in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Issuer Order. Any
instructions by the Issuer with respect to endorsement or delivery or redelivery of a typewritten Note or Notes representing the Book-Entry
Notes shall be in writing but need not comply with Section 13.3 hereof and need not be accompanied by an Opinion of Counsel.
(i) Unless and until definitive, fully registered Notes (“Definitive Notes”) have been issued to Note Owners initially issued as Book-Entry
Notes pursuant to Section 2.18:
(i) the provisions of this Section 2.16 shall be in full force and effect with respect to each of the Notes;
(ii) the Issuer, the Seller the Paying Agent, the Transfer Agent and Registrar and the Indenture Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for
40
4149-1382-4069
all purposes of this Indenture (including the making of payments on the Notes and the giving of instructions or directions hereunder) as the
authorized representatives of such Note Owners;
(iii) to the extent that the provisions of this Section 2.16 conflict with any other provisions of this Indenture, the provisions of this
Section 2.16 shall control;
(iv) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of such Notes
evidencing a specified percentage of the outstanding principal amount of such Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect from Note Owners and/or their related Clearing Agency Participants
owning or representing, respectively, such required percentage of the beneficial interest in such Notes and has delivered such instructions to the
Indenture Trustee;
(v) the rights of Note Owners shall be exercised only through the Clearing Agency and their related Clearing Agency Participants
and shall be limited to those established by Law and agreements between such Note Owners and the related Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes are issued pursuant to Section 2.18, the
applicable Clearing Agencies or Foreign Clearing Agencies will make book-entry transfers among their related Clearing Agency Participants
and receive and transmit payments of principal and interest on such Notes to such Clearing Agency Participants; and
(vi) Note Owners may receive copies of any reports sent to Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payments of reproduction and postage expenses associated with the distribution of such
reports, from the Indenture Trustee at the Corporate Trust Office.
Section 2.17. Notices to Clearing Agency. Whenever notice or other communication to the Noteholders is required under this
Indenture, unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.18, the Indenture Trustee shall give
all such notices and communications specified herein to be given to Holders of the Notes to the applicable Clearing Agency for distribution to
the Holders of the Notes.
Section 2.18. Definitive Notes.
(a) Conditions for Exchange. If with respect to any of the Book-Entry Notes (i) (A) the Issuer advises the Indenture Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its responsibilities under the applicable Depository Agreement and (B) the
Issuer is not able to locate a qualified successor, (ii) to the extent permitted by Law, the Issuer, at its option, advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the Clearing Agency with respect to any of the Notes or (iii) after the
occurrence of an Event of Default, Note Owners representing beneficial interests aggregating not less than a majority of the portion of
outstanding principal amount of the Notes advise the Indenture Trustee and the applicable Clearing Agency through the applicable Clearing
Agency Participants in writing that the continuation of a book-entry system through the applicable Clearing Agency is no longer in the best
interests of the Note Owners, the Indenture Trustee shall notify all Note Owners, through the applicable Clearing Agency Participants, of the
occurrence of any such event and of the availability of Definitive Notes to Note Owners. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the applicable Clearing Agency, accompanied by registration instructions
from the applicable Clearing Agency for registration, the Indenture Trustee shall issue the Definitive Notes. Neither the Issuer nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the
41
4149-1382-4069
issuance of Definitive Notes and upon the issuance of any Notes in definitive form in accordance with this Indenture, all references herein to
obligations imposed upon or to be performed by the applicable Clearing Agency shall be deemed to be imposed upon and performed by the
Indenture Trustee, to the extent applicable with respect to such Definitive Notes, and the Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders hereunder.
(b) Transfer of Definitive Notes. Subject to the terms of this Indenture, the holder of any Definitive Note may transfer the same in whole or in
part, in an amount equivalent to an authorized denomination, by surrendering at the Corporate Trust Office, such Note with the form of transfer
endorsed on it duly completed and executed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the
Transfer Agent and Registrar by, the holder thereof and, if applicable, accompanied by a certificate substantially in the form of Exhibit B. In
exchange for any Definitive Note properly presented for transfer, the Issuer shall execute and the Indenture Trustee shall promptly authenticate
and deliver or cause to be executed, authenticated and delivered in compliance with applicable Law, to the transferee at such office, or send by
mail (at the risk of the transferee) to such address as the transferee may request, Definitive Notes for the same aggregate principal amount as
was transferred. In the case of the transfer of any Definitive Note in part, the Issuer shall execute and the Indenture Trustee shall promptly
authenticate and deliver or cause to be authenticated and delivered to the transferor at such office, or send by mail (at the risk of the transferor)
to such address as the transferor may request, Definitive Notes for the aggregate principal amount that was not transferred. No transfer of any
Definitive Note shall be made unless the request for such transfer is made by the Holder at such office. Neither the Issuer nor the Indenture
Trustee shall be liable for any delay in delivery of transfer instructions and each may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders.
Section 2.19. Global Note. As specified in Section 2.16, (i) the Notes may be initially issued in the form of a single temporary
global note (the “Global Note”) in registered form, without interest coupons, in the denomination of the initial aggregate principal amount of
the Notes, substantially in the form of Exhibit C. The provisions of this Section 2.19 shall apply to such Global Note. The Global Note will be
authenticated by the Indenture Trustee upon the same conditions, in substantially the same manner and with the same effect as the Definitive
Notes. The Global Note may be exchanged in the manner described herein.
Section
2.20. Tax Treatment . The Notes have been (or will be) issued with the intention that, the Notes will qualify under
applicable tax Law as debt for U.S. federal income tax purposes and any entity acquiring any direct or indirect interest in any Note by
acceptance of its Notes (or, in the case of a Note Owner, by virtue of such Note Owner’s acquisition of a beneficial interest therein) agrees to
treat the Notes (or beneficial interests therein) for purposes of federal, state and local income and franchise taxes and any other tax imposed on
or measured by income, as debt. Each Noteholder agrees that it will cause any Note Owner acquiring an interest in a Note through it to comply
with this Indenture as to treatment as debt for such tax purposes. Notwithstanding the foregoing, to the extent the Issuer is treated as a
partnership for federal, state or local income or franchise purposes and a Noteholder (or Note Owner, as applicable) is treated as a partner in
such partnership, the Noteholders (and Note Owners, as applicable) agree that any tax, penalty, interest or other obligation imposed under the
Code with respect to the income tax items arising from such partnership shall be the sole obligation of the Noteholder (or Note Owner, as
applicable) to whom such items are allocated and not of such partnership.
Section 2.21. Duties of the Indenture Trustee and the Transfer Agent and Registrar. Notwithstanding anything contained herein to
the contrary, neither the Indenture Trustee nor the Transfer Agent and Registrar shall be responsible for ascertaining whether any
42
4149-1382-4069
transfer of a Security complies with the terms of this Indenture, the registration provision of or exemptions from the Securities Act, applicable
state securities Laws, ERISA or the Investment Company Act; provided that if a transfer certificate or opinion is specifically required by the
express terms of this Indenture to be delivered to the Indenture Trustee or the Transfer Agent and Registrar in connection with a transfer, the
Indenture Trustee or the Transfer Agent and Registrar, as the case may be, shall be under a duty to receive the same.
ARTICLE 3.
ISSUANCE OF SECURITIES; CERTAIN FEES AND EXPENSES
Section 3.1. Issuance.
(a) Subject to satisfaction of the conditions precedent set forth in subsection (b) of this Section 3.1, on the Closing Date, the
Issuer will issue, (i) in accordance with Section 2.16 hereof, the initial Class A Notes in the aggregate initial principal amount equal to
$116,000,000 and (ii) the Certificates constituting a subordinate residual interest in the Issuer.
of the following conditions with respect to such initial issuance:
(b) The Securities issued on the Closing Date pursuant to subsection (a) above will be issued only upon satisfaction of each
(i) the amount of each Class A Note shall be equal to or greater than $100,000 (and in integral multiples of $1,000 in excess
thereof), and the percentage interest of each Certificate shall be equal to or greater than 5% (with no minimum incremental percentage interests
in excess thereof);
(ii) such issuance and the application of the proceeds thereof shall not result in the occurrence of (1) an Administrator Default, a
Rapid Amortization Event or an Event of Default, or (2) an event or occurrence, which, with the passing of time or the giving of notice thereof,
or both, would become an Administrator Default, a Rapid Amortization Event or an Event of Default; and
(iii) all required consents have been obtained and all other conditions precedent to the purchase of the Notes under the Note
Purchase Agreement shall have been satisfied.
accordance with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $20,907,000:
(c) Subject to satisfaction of the following conditions precedent, on the 2022-A Purchase Date, the Issuer will issue, in
(i) such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
(ii) the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the accuracy of
certain representations and warranties contained in the Note Purchase Agreement; and
(iii) the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law, Investment
Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
accordance with Section 2.16 hereof, additional Class A Notes in the aggregate initial principal amount equal to $9,060,000:
(d) Subject to satisfaction of the following conditions precedent, on the 2022-2 Purchase Date, the Issuer will issue, in
43
4149-1382-4069
(i) such issuance shall satisfy the conditions precedent set forth in subsection (b)(i) and (ii) of this Section 3.1;
(ii) the Initial Purchaser shall have received an officer’s certificate from each of the Seller and the Issuer confirming the accuracy of
certain representations and warranties contained in the Note Purchase Agreement; and
(iii) the Initial Purchaser shall have received an opinion of counsel as to (1) corporate, enforceability, securities law, Investment
Company Act and Volcker Rule matters, (2) UCC perfection matters and (3) certain tax matters.
shall, or shall cause the Transfer Agent and Registrar to, indicate in the Register the amount thereof.
(e) Upon receipt of the proceeds of any issuance under this Section 3.1 by or on behalf of the Issuer, the Indenture Trustee
Section 3.2. Certain Fees and Expenses. The Trustee Fees and Expenses, the Administration Fee and other fees, expenses and
indemnity amounts owed to the Indenture Trustee, Securities Intermediary and Depositary Bank, shall be paid by the cash flows from the Trust
Estate and in no event shall the Indenture Trustee be liable therefor. The foregoing amounts shall be payable to the Indenture Trustee,
Securities Intermediary and Depositary Bank, as applicable, solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 5.15(a)(i), (a)(ii) and (a)(viii), as applicable.
ARTICLE 4.
NOTEHOLDER LISTS AND REPORTS
Section 4.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders and Certificateholders . The Issuer
will furnish or cause the Transfer Agent and Registrar to furnish to the Indenture Trustee (a) not more than five (5) days after each Record Date
a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders and Certificateholders as of
such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Transfer Agent and Registrar, no such list shall be required to be furnished. The Issuer will
furnish or cause to be furnished by the Transfer Agent and Registrar to the Paying Agent (if not the Indenture Trustee) such list for payment of
distributions to Noteholders and Certificateholders.
Section 4.2. Preservation of Information; Communications to Noteholders and Certificateholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the
Noteholders and Certificateholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 4.1 and the names
and addresses of Noteholders and Certificateholders received by the Indenture Trustee in its capacity as Transfer Agent and Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such Section 4.1 upon receipt of a new list so furnished.
(b) Noteholders and Certificateholders may communicate with other Noteholders and Certificateholders with respect to their
rights under this Indenture or under the Securities. If holders of Securities evidencing in aggregate not less than (i) 20% of the outstanding
principal balance of the Notes or (ii) a percentage interest in the Certificates of at least 15% (the “Applicants”) apply in writing to the Indenture
Trustee, and furnish to the Indenture Trustee reasonable proof that each such Applicant has
44
4149-1382-4069
owned a Security for a period of at least 6 months preceding the date of such application, and if such application states that the Applicants
desire to communicate with other Noteholders or Certificateholders with respect to their rights under this Indenture or under the Securities and
is accompanied by a copy of the communication which such Applicants propose to transmit, then the Indenture Trustee, after having been
indemnified by such Applicants for its costs and expenses, shall within five (5) Business Days after the receipt of such application afford or
shall cause the Transfer Agent and Registrar to afford such Applicants access during normal business hours to the most recent list of
Noteholders and Certificateholders held by the Indenture Trustee and shall give the Issuer notice that such request has been made within five
(5) Business Days after the receipt of such application. Such list shall be as of the most recent Record Date, but in no event more than forty-
five (45) days prior to the date of receipt of such Applicants’ request.
(c) Every Noteholder and Certificateholder, by receiving and holding a Security, agrees with the Issuer and the Indenture
Trustee that neither the Issuer, the Indenture Trustee, the Transfer Agent and Registrar, nor any of their respective agents shall be held
accountable by reason of the disclosure of any such information as to the names and addresses of the Noteholders and Certificateholders in
accordance with this Section 4.2, regardless of the source from which such information was obtained.
Section 4.3. Reports by Issuer.
(a) (i) The Issuer or the Administrator shall deliver to the Indenture Trustee, on the date, if any, the Issuer is required to file
the same with the Commission, electronic copies of the annual reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) the Issuer or the Administrator shall file with the Indenture Trustee and the Commission in accordance with rules and
regulations prescribed from time to time by the Commission such additional information, documents and reports, if any, with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and
regulations;
(iii) the Issuer or the Administrator shall supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail or make
available on via a website to all Noteholders and Certificateholders) such summaries of any information, documents and reports required to be
filed by the Issuer (if any) pursuant to clauses (i) and (ii) of this Section 4.3(a) as may be required by rules and regulations prescribed from time
to time by the Commission; and
(iv) the Administrator shall prepare and distribute any other reports required to be prepared by the Administrator under any
Transaction Documents.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.
Section 4.4. [Reserved].
Section 4.5. Reports and Records for the Indenture Trustee and Instructions.
(a) On each Determination Date the Administrator shall forward to the Indenture Trustee a Monthly Report prepared by the
Administrator.
45
4149-1382-4069
(b) On each Payment Date, the Indenture Trustee or the Paying Agent shall make available in the same manner as the
Monthly Report to each Noteholder and Certificateholder of record of the outstanding Notes or Certificates, the Monthly Report with respect to
such Notes or Certificates.
ARTICLE 5.
ALLOCATION AND APPLICATION OF UNDERLYING PAYMENTS
Section 5.1. Rights of Noteholders and Certificateholders. The Securities shall be secured by the entire Trust Estate, including the
right to receive the Underlying Payments and other amounts at the times and in the amounts specified in this Article 5 to be deposited in the
Trust Accounts or to be paid to the Noteholders or Certificateholders of such Notes or Certificates, as applicable. In no event shall the grant of
a security interest in the entire Trust Estate be deemed to entitle any Noteholder to receive Underlying Payments or other proceeds of the Trust
Estate in excess of the amounts described in Article 5.
Section 5.2. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or
delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such
money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may, but shall
not be obligated to, take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture
and any right to proceed thereafter as provided in Article 9.
Section 5.3. Establishment of Accounts.
(a) Securities Accounts. Each Securities Account shall be a securities account established and maintained with the Securities
Intermediary. The Indenture Trustee shall be the entitlement holder of each Securities Account
(b) [Reserved].
(c) The Payment Account. The Indenture Trustee, for the benefit of the Secured Parties, shall establish and maintain in the State of New
York or in the city in which the Corporate Trust Office is located, with a Qualified Institution, in the name of the Issuer for the benefit of the
Indenture Trustee on behalf of the Secured Parties, a non-interest bearing segregated trust account (the “Payment Account”) bearing a
designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Secured Parties. The Indenture Trustee
shall be the entitlement holder of the Payment Account, and shall possess all right, title and interest in all moneys, instruments, securities and
other property on deposit from time to time in the Payment Account and the proceeds thereof for the benefit of the Secured Parties. The
Payment Account will be established with the Securities Intermediary. Funds on deposit in the Payment Account that are not both deposited
and to be withdrawn within two Business Days shall be invested in Permitted Investments, in accordance with a direction from the Issuer
pursuant to Section 5.3(e)
(d) [Reserved].
(e) Administration of the Securities Accounts.
46
4149-1382-4069
(i) Funds on deposit in the Payment Account that are not both deposited and to be withdrawn on the same date shall be invested in
Permitted Investments. Any such investment shall mature and such funds shall be available for withdrawal on or prior to the day immediately
preceding the Payment Date on which such funds are to be allocated or applied hereunder.
(ii) Wilmington Trust, National Association is hereby appointed as the initial securities intermediary hereunder (the “ Securities
Intermediary”) and accepts such appointment. The Securities Intermediary represents, warrants, and covenants, and the parties hereto agree,
that at all times prior to the termination of this Indenture: (i) the Securities Intermediary shall be a bank that in the ordinary course of its
business maintains securities accounts for others and is acting in that capacity hereunder; (ii) each Securities Account shall be an account
maintained with the Securities Intermediary to which financial assets may be credited and the Securities Intermediary shall treat the Indenture
Trustee as entitled to exercise the rights that comprise such financial assets; (iii) each item of property credited to a Securities Account shall be
treated as a financial asset; (iv) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without
further consent by the Issuer or any other Person; (v) the Securities Intermediary waives any Lien on each Securities Account and all property
credited to or on deposit in any Securities Account, and (vi) the Securities Intermediary agrees that its jurisdiction for purposes of Section 8-
110 and Section 9-305(a)(3) of the UCC shall be New York.
(iii) The Securities Intermediary shall maintain for the benefit of the Secured Parties, possession or control of each other Permitted
Investment (including any negotiable instruments, if any, evidencing such Permitted Investments) not credited to or deposited in a Trust
Account (other than such as are described in clause (b) of the definition thereof); provided that no Permitted Investment shall be disposed of
prior to its maturity date if such disposition would result in a loss.
(iv) Nothing herein shall impose upon the Securities Intermediary any duties or obligations other than those expressly set forth
herein and those applicable to a securities intermediary under the UCC. The Securities Intermediary shall be entitled to all of the protections
available to a securities intermediary under the UCC.
(v) At the end of each month, all interest and earnings (net of losses and investment expenses) on funds on deposit in the Payment
Account shall be treated as Investment Earnings. If at the end of a month losses and investment expenses on funds on deposit in the Payment
Account exceed interest and earnings on such funds during such month, losses and expenses to the extent of such excess will be allocated
among the Noteholders and the Issuer as provided in Section 5.15. Subject to the restrictions set forth above, the Issuer, or a Person designated
in writing by the Issuer, of which the Indenture Trustee shall have received written notification thereof, shall have the authority to instruct the
Indenture Trustee with respect to the investment of funds on deposit in the Payment Account. Notwithstanding anything herein to the contrary,
if the Issuer (or its designee) has not provided such direction, the funds in the Payment Account will remain uninvested. Neither the Indenture
Trustee nor the Securities Intermediary shall have any responsibility or liability for any loss which may result from any investment or sale of
investment made pursuant to this Indenture. Wilmington Trust, National Association (in any capacity hereunder) is hereby authorized, in
making or disposing of any investment permitted by this Indenture, to deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or any such affiliate is acting as agent of Wilmington Trust, National Association (acting in any capacity hereunder) or for
any third person or dealing as principal for its own account. The parties to the Transaction Documents acknowledge that Wilmington Trust,
National Association (individually and in any capacity hereunder) is not providing investment supervision, recommendations, or advice.
47
4149-1382-4069
(f) Wilmington Trust, National Association shall be the depositary bank hereunder with respect to certain deposit accounts, which shall
be non-interest bearing trust accounts, as may be established from time to time (the “Depositary Bank”). For the avoidance of doubt, there
currently is no such deposit account established hereunder.
(g) Qualified Institution. If, at any time, the institution holding any account established pursuant to this Section 5.3 ceases to be a
Qualified Institution, the Indenture Trustee shall, within ten (10) Business Days, establish a new account or accounts, as the case may be,
meeting the conditions specified above with a Qualified Institution, and shall transfer any cash or any investments to such new account or
accounts, as the case may be.
(h) Each of the Securities Intermediary and the Depositary Bank shall be entitled to all the same rights, privileges, protections,
immunities and indemnities as are contained in Article 11 of this Indenture, all of which are incorporated into this Section 5.3 mutatis
mutandis, in addition to any such rights, privileges, protections, immunities and indemnities contained in this Section 5.3; provided, however;
that nothing contained in this Section 5.3 or in Article 11 shall (i) relieve the Securities Intermediary of the obligation to comply with
entitlement orders as provided in Section 5.3(e) or (ii) relieve the Depositary Bank of the obligation to comply with instructions directing
disposition of the funds as provided in Section 5.3(f).
Section 5.4. Payments and Allocations.
(a) Underlying Payments in General. Until this Indenture is terminated pursuant to Section 12.1, the Issuer shall cause all Underlying
Payments due and to become due, as the case may be, to be transferred to the Payment Account as promptly as possible after the date of receipt
of such Underlying Payments (but in no event later than the Business Day of such receipt). All monies, instruments, cash and other proceeds
received in respect of the Trust Estate pursuant to this Indenture shall be deposited in the Payment Account as specified herein and shall be
applied as provided in this Article 5 and Article 6.
(b) [Reserved].
(c) [Reserved].
(d) [Reserved].
(e) Disqualification of Institution Maintaining Payment Account. Upon and after the establishment of a new Payment Account with a
Qualified Institution, Oportun shall deposit or cause to be deposited all Underlying Payments as set forth in Section 5.3(a) into the new
Payment Account, and in no such event shall deposit or cause to be deposited any Underlying Payments thereafter into any account established,
held or maintained with the institution formerly maintaining the Payment Account (unless it later becomes a Qualified Institution or qualified
corporate trust department maintaining the Payment Account). Any new Payment Account shall be subject to an account control agreement in
favor of the Indenture Trustee, on behalf of each Secured Party.
Section 5.5. [Reserved].
Section 5.6. [Reserved].
Section 5.7. General Provisions Regarding Accounts. Subject to Section 11.1(c), the Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Estate resulting from any loss on any Permitted Investment included therein except for
losses attributable to the Indenture Trustee’s failure to make
48
4149-1382-4069
payments on such Permitted Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in
accordance with their terms.
Section 5.8. [Reserved].
Section 5.9. [Reserved].
Section 5.10. [Reserved].
Section 5.11. [Reserved].
Section 5.12. Determination of Monthly Interest.
(a) The amount of monthly interest payable on the Class A Notes on each Payment Date will be determined as of each
Determination Date and will be an amount equal to the product of (i) a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360, times (ii) the Class A Note Rate, times (iii) the daily average outstanding principal
balance of the Class A Notes during the related Interest Period (after giving effect to any payments of principal on the immediately preceding
Payment Date) (the “Class A Monthly Interest ”); provided, however, that the Class A Monthly Interest due and payable on the August 2022
Payment Date shall be $964,161.27.
In addition to the Class A Monthly Interest, an amount equal to the sum of (i) the amount of any unpaid Class A Deficiency
Amount, as defined below, plus (ii) an amount equal to the product (such product being herein called the “Class A Additional Interest ”) of (A)
a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, times (B) a
rate equal to the Class A Note Rate, times (C) any Class A Deficiency Amount, as defined below (or the portion thereof which has not
theretofore been paid to the Class A Noteholders), will also be payable to the Class A Noteholders on each Payment Date. The “Class A
Deficiency Amount” payable on each such Payment Date, as determined on the applicable Determination Date, shall be equal to the excess, if
any, of (x) the sum of (i) the Class A Monthly Interest and the Class A Additional Interest, in each case for the Interest Period ended
immediately prior to the preceding Payment Date, plus (ii) any Class A Deficiency Amount for the preceding period, over (y) the amount
actually paid in respect thereof on the preceding Payment Date; provided, however, that the Class A Deficiency Amount on the first
Determination Date shall be zero.
(b) Upon the occurrence of a Benchmark Transition Event, Section 5.13(a) provides the mechanisms for determining an
alternative rate of interest. The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee
and the Paying Agent), pursuant to Section 5.13(e), of any change to the reference rate upon which the interest rate on Class A Notes is based.
The Noteholders, the Indenture Trustee and the Paying Agent do not warrant or accept any responsibility for, and shall not have any liability
with respect to, the administration, submission, performance or any other matter related to Term SOFR or with respect to any alternative or
successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate
implemented pursuant to Section 5.13(a), and (ii) the implementation of any Conforming Changes pursuant to Section 5.13(b), including
without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to,
or produce the same value or economic equivalence of, Term SOFR or have the same volume or liquidity as did the London interbank offered
rate prior to its discontinuance or unavailability. The Noteholders, the Indenture Trustee, the Paying Agent and their respective affiliates and/or
other related entities may engage in transactions that affect the calculation of any successor or alternative rate (including any Benchmark
Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Issuer. The Required Noteholders may select
information sources or services in their reasonable
49
4149-1382-4069
discretion to ascertain any Benchmark or any component thereof, in each case pursuant to the terms of this Indenture, and shall have no liability
to the Issuer, any Noteholder or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or
consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or
calculation of any such rate (or component thereof) provided by any such information source or service.
Section 5.13. Benchmark Replacement.
(a) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event
and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current
Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement”
for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any
Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action
or consent of any other party to, this Indenture or any other Transaction Document and (y) if a Benchmark Replacement is determined in
accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark
Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark
setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is
provided to the Noteholders (with a copy to the Indenture Trustee and Paying Agent) without any amendment to, or further action or consent of
any other party to, this Indenture or any other Loan Document so long as the Issuer has not received, by such time, written notice of objection
to such Benchmark Replacement from Noteholders comprising the Required Noteholders.
(b) In connection with the implementation of a Benchmark Replacement, the Required Noteholders will have the right to
make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any
amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this
Indenture or any other Transaction Document; provided that no such amendment may adversely affect the rights, duties, immunities,
protections or indemnification rights of the Indenture Trustee, Paying Agent, Registrar, Depositary Bank or Securities Intermediary without its
written consent.
(c)The Required Noteholders will promptly notify the Issuer and the Noteholders (with a copy to the Indenture Trustee and
the Paying Agent) of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the
effectiveness of any Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by any Noteholder (or group of Noteholders) pursuant to this Section 5.13, including any
determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any
decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its
or their sole discretion and without consent from any other party to this Indenture or any other Transaction Document, except, in each case, as
expressly required pursuant to this Section 5.13.
(d) During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an
Available Tenor but a Benchmark Transition Event with respect to such Benchmark has not occurred, the Class A Note Rate shall be
determined by the Calculation Agent by reference to the Alternative Rate and communicated to the Administrator and the Issuer, by facsimile
or e-mail.
50
4149-1382-4069
Section 5.14. [Reserved].
Section 5.15. Monthly Payments.
Underlying Payments received in respect of the Underlying Securities on such Underlying Payment Date.
(a) On each Underlying Payment Date, the Issuer will deposit, or cause to be deposited, into the Payment Account all
(b) On each Payment Date, the Indenture Trustee, acting in accordance with instructions provided by the Administrator in
the form of the Monthly Report for such Payment Date, shall apply Available Funds on deposit in the Payment Account for payment to the
following Persons in the following priority to the extent of funds available therefor:
(i) first, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis, an
amount equal to the Trustee Fees and Expenses for such Payment Date (plus any Trustee Fees and Expenses due but not paid on any prior
Payment Date);
(ii) second, to the Administrator, an amount equal to the Administration Fee for such Payment Date (plus any Administration Fee
due but not paid on any prior Payment Date);
(iii) third, to the Class A Noteholders, on a pari passu and pro rata basis, an amount equal to the sum of (A) the Class A Monthly
Interest for such Payment Date, (B) any Class A Deficiency Amount for such Payment Date and (C) any Class A Additional Interest for such
Payment Date;
(iv) fourth, to the Class A Noteholders, on a pari passu and pro rata basis, (A) prior to the occurrence of a Rapid Amortization
Event, an amount equal to the sum of (I) the greater of the Scheduled Principal Payment Amount for such Payment Date and the Minimum
Principal Payment Amount for such Payment Date and (II) following the application under clause (I), the product of all remaining Available
Funds multiplied by the Additional Principal Payment Percentage for such Payment Date, until the outstanding principal amount of the Class
A Notes has been reduced to zero; and (B) following the occurrence of a Rapid Amortization Event, all remaining Available Funds until the
outstanding principal amount of the Class A Notes has been reduced to zero;
(v) fifth, to the Indenture Trustee, the Securities Intermediary and the Depositary Bank, on a pari passu and pro rata basis, any
unreimbursed fees, expenses and indemnity amounts payable thereto (including due to the limitations set forth in the definition of Trustee Fees
and Expenses);
(vi) sixth, to the Class A Noteholders, on a pari passu and pro rata basis any other amounts (excluding the Note Principal Amount)
payable thereto on such Payment Date pursuant to the Transaction Documents; and
(vii) seventh, the balance, if any, shall be distributed to the Certificateholders.
Section 5.16. Failure to Make a Deposit or Payment. The Indenture Trustee shall not have any liability for any failure or
delay in making the payments or deposits described herein resulting from a failure or delay by the Issuer or the Administrator to make, or give
instructions to make, such payment or deposit in accordance with the terms herein. If the Issuer or the Administrator fails to make, or give
instructions to make, any payment, deposit or withdrawal required to be made or given by the Issuer or the Administrator at the time specified
in this Indenture (including applicable grace periods), the Indenture Trustee shall make such payment, deposit or withdrawal from the
applicable
51
4149-1382-4069
Trust Account without instruction from the Issuer or the Administrator. The Indenture Trustee shall be required to make any such payment,
deposit or withdrawal hereunder only to the extent that the Indenture Trustee has sufficient information to allow it to determine the amount
thereof. the Issuer or the Administrator shall, upon reasonable request of the Indenture Trustee, promptly provide the Indenture Trustee with all
information necessary and in its possession to allow the Indenture Trustee to make such payment, deposit or withdrawal. Such funds or the
proceeds of such withdrawal shall be applied by the Indenture Trustee in the manner in which such payment or deposit should have been made
(or instructed to be made) by the Issuer or the Administrator.
ARTICLE 6.
DISTRIBUTIONS AND REPORTS
Section 6.1. Distributions.
(a) On each Payment Date, the Indenture Trustee shall distribute (in accordance with the Monthly Report delivered by the
Administrator on or before the related Underlying Payment Date pursuant to subsection 2.09(a) of the Servicing Agreement) to each
Noteholder of record on the immediately preceding Record Date (other than as provided in Section 12.5 respecting a final distribution), such
Noteholder’s pro rata share (based on the Note Principal Amount held by such Noteholder) of the amounts on deposit in the Payment Account
that are payable to the Noteholders pursuant to Section 5.15 by wire transfer to an account designated by such Noteholders, except that, with
respect to Notes registered in the name of the nominee of a Clearing Agency, such distribution shall be made in immediately available funds.
(b) Notwithstanding anything to the contrary contained in this Indenture, if the amount distributable in respect of principal
on the Notes on any Payment Date is less than one dollar, then no such distribution of principal need be made on such Payment Date to the
Noteholders.
Section 6.2. Monthly Report.
(a) On or before each Payment Date, the Indenture Trustee shall make available electronically to each Noteholder and
Certificateholder, the Monthly Report prepared by the Administrator and delivered to the Indenture Trustee on the preceding Determination
Date and setting forth, among other things, the following information:
(i) the amount of Underlying Payments received on the related Underlying Payment Date;
(ii) the amount of Available Funds on deposit in the Payment Account on the related Underlying Payment Date;
(iii) the amount of Trustee Fees and Expenses, Administration Fee, Class A Monthly Interest, Class A Deficiency Amounts and
Additional Interest, respectively;
(iv) the total amount to be distributed to the Class A Noteholders on such Payment Date; and
(v) the outstanding principal balance of the Class A Notes as of the end of the day on the Payment Date.
On or before each Payment Date, to the extent the Administrator provides such information to the Indenture Trustee, the Indenture Trustee will
make available the Monthly Report via the Indenture Trustee’s Internet website and, with the consent or at the direction of the Issuer, such
52
4149-1382-4069
other information regarding the Securities and/or the Underlying Securities as the Indenture Trustee may have in its possession, but only with
the use of a password provided by the Indenture Trustee; provided, however, the Indenture Trustee shall have no obligation to provide such
information described in this Section 6.2 until it has received the requisite information from the Issuer or the Administrator and the applicable
Noteholder or Certificateholder has completed the information necessary to obtain a password from the Indenture Trustee. The Indenture
Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility
therefor.
(b) The Indenture Trustee’s internet website shall be initially located at “www.wilmingtontrustconnect.com” or at such other
address as shall be specified by the Indenture Trustee from time to time in writing to the Noteholders and Certificateholders. In connection with
providing access to the Indenture Trustee’s internet website, the Indenture Trustee may require registration and the acceptance of a disclaimer.
The Indenture Trustee shall not be liable for information disseminated in accordance with this Indenture.
(c) Annual Tax Statement . To the extent required by the Code or the Treasury regulations thereunder, on or before
January 31 of each calendar year, the Indenture Trustee shall distribute to each Person who at any time during the preceding calendar year was
a Noteholder or a Certificateholder, a statement prepared by the Administrator containing the information required to be contained in the
regular monthly report to Noteholders and Certificateholders, as set forth in subclauses (v) and (vi) above, aggregated for such calendar year,
and a statement prepared by Oportun or the Issuer with such other customary information (consistent with the treatment of the Notes as debt
and the Certificates as equity for tax purposes) required by applicable tax Law to be distributed to the Noteholders. Such obligations of the
Indenture Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the
Indenture Trustee pursuant to any requirements of the Code as from time to time in effect.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
Trustee and each of the Secured Parties that:
Section 7.1. Representations and Warranties of the Issuer. The Issuer hereby represents and warrants to the Indenture
(a) Organization and Good Standing, etc. The Issuer has been duly organized and is validly existing and in good standing
under the Laws of the State of Delaware, with power and authority to own its properties and to conduct its respective businesses as such
properties are presently owned and such business is presently conducted. The Issuer is not organized under the Laws of any other jurisdiction
or Governmental Authority. The Issuer is duly licensed or qualified to do business as a foreign entity in good standing in the jurisdiction where
its principal place of business and chief executive office is located and in each other jurisdiction in which the failure to be so licensed or
qualified would be reasonably likely to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization . The Issuer has (a) all necessary power, authority and legal right to (i) execute,
deliver and perform its obligations under this Indenture and each of the other Transaction Documents to which it is a party and (b) duly
authorized, by all necessary action, the execution, delivery and performance of this Indenture and the other Transaction Documents to which it
is a party and the borrowing, and the granting of security therefor, on the terms and conditions provided herein.
(c) No Violation. The consummation of the transactions contemplated by this Indenture and the other Transaction
Documents and the fulfillment of the terms hereof will not (a) conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without
53
4149-1382-4069
notice or lapse of time or both) a default under, (i) the organizational documents of the Issuer or (ii) any indenture, loan agreement, pooling and
servicing agreement, receivables purchase agreement, mortgage, deed of trust, or other agreement or instrument to which the Issuer is a party
or by which it or its properties is bound, (b) result in or require the creation or imposition of any Adverse Claim upon its properties pursuant to
the terms of any such indenture, loan agreement, pooling and servicing agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument, other than pursuant to the terms of the Transaction Documents, or (c) violate any Law applicable to the Issuer
or of any Governmental Authority having jurisdiction over the Issuer or any of its respective properties.
(d) Validity and Binding Nature . This Indenture is, and the other Transaction Documents to which it is a party when duly
executed and delivered by the Issuer and the other parties thereto will be, the legal, valid and binding obligation of the Issuer enforceable in
accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Law affecting creditors’ rights generally and by general principles of equity.
(e) Government Approvals . No authorization or approval or other action by, and no notice to or filing with, any
Governmental Authority required for the due execution, delivery or performance by the Issuer of any Transaction Document to which it is a
party remains unobtained or unfiled, except for the filing of the UCC financing statements.
(f) [Reserved].
(g) Margin Regulations. The Issuer is not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds with respect to the sale of the Notes, directly or indirectly, will be used for a purpose that violates, or
would be inconsistent with, Regulations T, U and X promulgated by the Federal Reserve Board from time to time.
(h) Perfection.
(i) On and after the Closing Date and each Payment Date, the Issuer shall be the owner of all of the Underlying Securities and
proceeds with respect thereto, free and clear of all Adverse Claims. Within the time required pursuant to the Perfection Representations, all
financing statements and other documents required to be recorded or filed in order to perfect and protect the assets of the Trust Estate against all
creditors (other than Secured Parties) of, and purchasers (other than Secured Parties) from, the Issuer and the Seller will have been duly filed in
each filing office necessary for such purpose, and all filing fees and taxes, if any, payable in connection with such filings shall have been paid
in full;
(ii) the Indenture constitutes a valid grant of a security interest to the Indenture Trustee for the benefit of the Secured Parties in all
right, title and interest of the Issuer in the Underlying Securities and all other assets of the Trust Estate, now existing or hereafter created or
acquired. Accordingly, to the extent the UCC applies with respect to the perfection of such security interest, upon the filing of any financing
statements described in Article 8 of the Indenture and the execution of the Transaction Documents, the Indenture Trustee shall have a first
priority perfected security interest in such property and the proceeds thereof (to the extent provided in Section 9-315), subject to Permitted
Encumbrances and, to the extent the UCC does not apply to the perfection of such security interest, all notices, filings and other actions
required by all applicable Law have been taken to perfect and protect such security interest or lien against and prior to all Adverse Claims with
respect to the Underlying Securities and all other assets of the Trust Estate. Except as otherwise specifically provided in the Transaction
Documents, neither the Issuer nor any Person claiming through or under the Issuer has any claim to or interest in the Payment Account; and
54
4149-1382-4069
(iii) immediately prior to, and after giving effect to, the initial purchase of the Notes, the Issuer will be Solvent.
(i) Offices. The principal place of business and chief executive office of the Issuer is located at the address referred to in
Section 15.4 (or at such other locations, notified to the Indenture Trustee in jurisdictions where all action required thereby has been taken and
completed).
(j) Tax Status. The Issuer has filed all tax returns (federal, state and local) required to be filed by it and has paid or made
adequate provision for the payment of all taxes (including all state franchise taxes), assessments and other governmental charges that have
become due and payable (including for such purposes, the setting aside of appropriate reserves for taxes, assessments and other governmental
charges being contested in good faith).
subject to Section 13 or 14 of the Exchange Act.
(k) Use of Proceeds. No proceeds of any Notes will be used by the Issuer to acquire any security in any transaction which is
(l) Compliance with Applicable Laws; Licenses, etc.
(i) The Issuer is in compliance with the requirements of all applicable Laws of all Governmental Authorities, a breach of any of
which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect.
(ii) The Issuer has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of its business, which violation or failure to obtain would be reasonably likely to have a Material
Adverse Effect.
(m) No Proceedings. Except as described in Schedule 4:
(i) there is no order, judgment, decree, injunction, stipulation or consent order of or with any court or other government authority to
which the Issuer is subject, and there is no action, suit, arbitration, regulatory proceeding or investigation pending, or, to the knowledge of the
Issuer, threatened, before or by any Governmental Authority, against the Issuer that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect; and
(ii) there is no action, suit, proceeding, arbitration, regulatory or governmental investigation, pending or, to the knowledge of the
Issuer, threatened, before or by any Governmental Authority (A) asserting the invalidity of this Indenture, the Securities or any other
Transaction Document, (B) seeking to prevent the issuance of the Securities pursuant hereto or the consummation of any of the other
transactions contemplated by this Indenture or any other Transaction Document or (C) seeking to adversely affect the federal income tax
attributes of the Issuer.
(n) Investment Company Act; Covered Fund. The Issuer is not an “investment company” within the meaning of the
Investment Company Act and the Issuer relies on the exception from the definition of “investment company” set forth in Rule 3a-7 under the
Investment Company Act, although other exceptions or exclusions may be available to the Issuer. The Issuer is not a “covered fund” as defined
in the final regulations issued December 10, 2013 implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act), as amended.
(o) [Reserved].
(p) [Reserved].
55
4149-1382-4069
(q) ERISA. (i) Each of the Issuer the Seller and their respective ERISA Affiliates is in compliance in all material respects
with ERISA unless any failure to so comply could not reasonably be expected to have a Material Adverse Effect and (ii) no Lien exists in favor
of the Pension Benefit Guaranty Corporation on any of the Underlying Securities. No ERISA Event has occurred with respect to any Pension
Plan that could reasonably be expected to have a Material Adverse Effect.
(r) Accuracy of Information. All information heretofore furnished by, or on behalf of, the Issuer to the Indenture Trustee or
any of the Noteholders in connection with any Transaction Document, or any transaction contemplated thereby, was, at the time it was
furnished, true and accurate in every material respect (without omission of any information necessary to prevent such information from being
materially misleading).
(i) financial condition, business, operations or prospects or (ii) ability to perform its obligations under any Transaction Document.
(s) No Material Adverse Change. Since September 30, 2021 there has been no material adverse change in the Issuer’s
(t) Subsidiaries. The Issuer has no Subsidiaries and does not own or hold, directly or indirectly, any equity interest in any
Person, other than Permitted Investments; provided that, for the avoidance of doubt, this clause (t) shall not prohibit the Issuer from owning
any Underlying Security.
(u) Securities. The Securities have been duly and validly authorized, and, when executed and authenticated in accordance
with the terms of the Indenture, and delivered to and paid for in accordance with the Note Purchase Agreement, will be duly and validly issued
and outstanding and will be entitled to the benefits of the Indenture.
(v) Sales by the Seller. Each sale of Underlying Securities by the Seller to the Issuer shall have been effected under, and in
accordance with the terms of, the applicable Purchase Agreement, including the payment by the Issuer to the Seller of an amount equal to the
purchase price therefor as described in such Purchase Agreement, and each such sale shall have been made for “reasonably equivalent value”
(as such term is used under Section 548 of the Federal Bankruptcy Code) and not for or on account of “antecedent debt” (as such term is used
under Section 547 of the Federal Bankruptcy Code) owed by the Issuer to such Seller.
Section 7.2. Reaffirmation of Representations and Warranties by the Issuer. On the Closing Date and on each Business
Day thereafter, the Issuer shall be deemed to have certified that all representations and warranties described in Section 7.1 hereof are true and
correct on and as of such day as though made on and as of such day (except to the extent they relate to an earlier or later date, and then as of
such earlier or later date).
ARTICLE 8.
COVENANTS
Section 8.1. Money for Payments To Be Held in Trust . At all times from the date hereof to the Indenture Termination
Date, unless the Required Noteholders shall otherwise consent in writing, all payments of amounts due and payable with respect to any
Securities that are to be made from amounts withdrawn from the applicable Payment Account shall be made on behalf of the Issuer by the
Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from such Payment Account for payments of such Securities shall
be paid over to the Issuer except as provided in this Indenture.
the Required Noteholders shall otherwise consent in writing, the Issuer shall:
Section 8.2. Affirmative Covenants of Issuer. At all times from the date hereof to the Indenture Termination Date, unless
56
4149-1382-4069
(a) Payment of Notes. Duly and punctually pay or cause to be paid principal of (and premium, if any), interest and other
amounts on and with respect to the Notes pursuant to the provisions of this Indenture. Principal, interest and other amounts shall be considered
paid on the date due if the Indenture Trustee or the Paying Agent holds on that date money designated for and sufficient to pay all principal,
interest and other amounts then due. Amounts properly withheld under the Code by any Person from a payment to any Noteholder or
Certificateholder of interest, principal and/or other amounts shall be considered as having been paid by the Issuer to such Noteholder or
Certificateholder for all purposes of this Indenture.
(b) Maintenance of Office or Agency . Maintain an office or agency (which may be an office of the Indenture Trustee,
Transfer Agent and Registrar or co-registrar) where Securities may be surrendered for registration of transfer or exchange, and where, at any
time when the Issuer is obligated to make a payment of principal and premium upon the Notes, the Notes may be surrendered for payment. The
Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer will give prompt written
notice to the Indenture Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to
maintain any such required office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such presentations and
surrenders may be made at the Corporate Trust Office of the Indenture Trustee , and the Issuer hereby appoints the Indenture Trustee as its
agent to receive all such presentations and surrenders.
The Issuer may also from time to time designate one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the
Indenture Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Issuer hereby designates the Corporate Trust Office of the Indenture Trustee as one such office or agency of the Issuer.
(c) Compliance with Laws, etc. Comply in all material respects with all applicable Laws.
(d) Preservation of Existence. Preserve and maintain its existence rights, franchises and privileges in the jurisdiction of its
incorporation or organization, and qualify and remain qualified in good standing as a foreign entity in the jurisdiction where its principal place
of business and its chief executive office are located and in each other jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualifications would have a Material Adverse Effect.
(e) Custody of Underlying Securities. Unless otherwise consented to by the Required Noteholders, deposit and maintain in
the Custody Accounts the percentage interests of each Underlying Security specified on Schedule 2 hereto, in each case until the final
distribution is made on such Underlying Security or such Underlying Security is released from the Lien of this Indenture.
(f) [Reserved].
(g) Reporting Requirements of The Issuer. Until the Indenture Termination Date, furnish to the Indenture Trustee:
(i) Financial Statements. In each case solely to the extent such information is not made available publicly on the Parent’s website or
through the Parent’s filings with the Commission:
57
4149-1382-4069
(A) as soon as available, and in any event within one hundred twenty (120) days after the end of each Fiscal Year of the
Issuer, a copy of the annual unaudited report for such Fiscal Year of the Issuer including a copy of the balance sheet of the Issuer, in each
case, as at the end of such Fiscal Year, together with the related statements of earnings and cash flows for such Fiscal Year;
(B) as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of
Consolidated Parent, a balance sheet of Consolidated Parent as of the end of such year and statements of income and retained earnings
and of source and application of funds of Consolidated Parent, for the period commencing at the end of the previous Fiscal Year and
ending with the end of such year, in each case setting forth comparative figures for the previous Fiscal Year, certified without material
qualification by Deloitte & Touche LLP or other nationally recognized independent public accountants with expertise in the preparation
of such reports, together with a certificate of such accounting firm stating that in the course of the regular audit of the business of
Consolidated Parent, which audit was conducted in accordance with GAAP (as then in effect), such accounting firm has obtained no
knowledge that an Event of Default, Default or Rapid Amortization Event has occurred and is continuing, or if, in the opinion of such
accounting firm, such an Event of Default, Default or Rapid Amortization Event has occurred and is continuing, a statement as to the
nature thereof; and
(C) as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter, quarterly balance
sheets and quarterly statements of source and application of funds and quarterly statements of income and retained earnings of
Consolidated Parent, certified by a Responsible Officer of Consolidated Parent (which certification shall state that such balance sheets
and statements fairly present the financial condition and results of operations for such fiscal quarter, subject to year-end audit
adjustments), delivery of which balance sheets and statements shall be accompanied by an Officer’s Certificate of the Issuer to the effect
that no Event of Default, Default or Rapid Amortization Event has occurred and is continuing.
For so long as Consolidated Parent is subject to the reporting requirements of Section 13(a) of the Exchange Act, its filing of the annual
and quarterly reports required under the Exchange Act, on a timely basis, shall be deemed compliance with this Section 8.2(g)(i).
(ii) Notice of Default, Event of Default or Rapid Amortization Event. Immediately, and in any event within one (1) Business Day
after the Issuer obtains knowledge of the occurrence of each Default, Event of Default or Rapid Amortization Event a statement of a
Responsible Officer of the Issuer setting forth details of such Default, Event of Default or Rapid Amortization Event and the action which the
Issuer proposes to take with respect thereto;
(iii) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any ERISA Event which
either (i) the Issuer, the Seller or any of their respective ERISA Affiliates files under ERISA with the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or (ii) the Issuer, the Seller or any of their respective ERISA Affiliates receives
from the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor. The Issuer shall give the
Indenture Trustee and each Noteholder prompt written notice of any event that could result in the imposition of a Lien on the assets of the
Issuer or any of its ERISA Affiliates under Section 430(k) of the Code or Section 303(k) or 4068 of ERISA; and
58
4149-1382-4069
(iv) If a Responsible Officer of the Issuer shall have actual knowledge of the occurrence of an Administrator Default, notice thereof
to the Indenture Trustee, which notice shall specify the action, if any, the Issuer is taking in respect of such default. If an Administrator Default
shall arise from the failure of the Administrator to perform any of its duties or obligations under the Administrative Services Agreement, the
issuer shall take all reasonable steps available to it to remedy such failure, including any action reasonably requested by the Indenture Trustee.
(v) On or before April 1, 2022 and on or before April 1 of each year thereafter, an Officer’s Certificate of the Issuer stating, as to
the Responsible Officer signing such Officer’s Certificate, that:
(A) a review of the activities of the Issuer during such year and of performance under this Indenture has been made under
such Responsible Officer’s supervision; and
(b) to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has complied with all conditions
and covenants under this Indenture throughout such year, or, if there has been a Default, Event of Default or Rapid Amortization Event
specifying each such Default, Event of Default or Rapid Amortization Event known to such Responsible Officer and the nature and status
thereof.
(h) [Reserved].
(i) Protection of Trust Estate. At its expense, perform all acts and execute all documents necessary and desirable at any time
to evidence, perfect, maintain and enforce the title or the security interest of the Indenture Trustee in the Trust Estate and the priority thereof.
The Issuer will prepare, deliver and authorize the filing of financing statements relating to or covering the Trust Estate sold to the Issuer and
subsequently conveyed to the Indenture Trustee (which financing statements may cover “all assets” of the Issuer).
(j) Inspection of Records. Permit the Indenture Trustee, any one or more of the Notice Persons or their duly authorized
representatives, attorneys or auditors to inspect the Records at such times as such Person may reasonably request. Upon instructions from the
Indenture Trustee, the Required Noteholders or their duly authorized representatives, attorneys or auditors, the Issuer shall release any
document related to the Underlying Securities to such Person.
(k) Furnishing of Information. Provide such cooperation, information and assistance, and prepare and supply the Indenture
Trustee with such data regarding the performance by the Issuer and Administrator of their respective obligations under the Transaction
Documents, as may be reasonably requested by the Indenture Trustee or any Notice Person from time to time.
(l) [Reserved].
(m) [Reserved].
(n) Enforcement of Transaction Documents. Use commercially reasonable efforts to enforce all rights held by it under any of
the Transaction Documents, shall not amend, supplement or otherwise modify any of the Transaction Documents and shall not waive any
breach of any covenant contained thereunder without the prior written consent of the Required Noteholders. The Issuer shall take all actions
necessary and desirable to enforce the Issuer’s rights and remedies under the Transaction Documents. The Issuer agrees that it will not waive
timely performance or observance by the Administrator or the Seller of their respective duties under the Transaction Documents if the effect
thereof would adversely affect any of the Secured Parties.
59
4149-1382-4069
(o) Separate Legal Entity. The Issuer hereby acknowledges that the Indenture Trustee and the Noteholders are entering into
the transactions contemplated by this Indenture and the other Transaction Documents in reliance upon the Issuer’s identity as a legal entity
separate from any other Person. Therefore, from and after the date hereof, the Issuer shall take all reasonable steps to continue the Issuer’s
identity as a separate legal entity and to make it apparent to third Persons that the Issuer is an entity with assets and liabilities distinct from
those of any other Person, and is not a division of any other Person. Without limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth herein, the Issuer shall take such actions as shall be required in order to remain in compliance with
Section 9(j)(iv) of the Issuer LLC Agreement.
(p) [Reserved].
otherwise required by the relevant Governmental Authority, the Issuer will treat the Notes as debt.
(q) Income Tax Characterization . For purposes of U.S. federal income, state and local income and franchise taxes, unless
Section 8.3. Negative Covenants. So long as any Securities are outstanding, the Issuer shall not, unless the Required Noteholders
shall otherwise consent in writing:
(a) Sales, Liens, etc. Except pursuant to, or as contemplated by, the Transaction Documents, the Issuer shall not sell,
transfer, exchange, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or, for a period in
excess of thirty (30) days, involuntarily any Adverse Claims upon or with respect to any of its assets, including, without limitation, the Trust
Estate, any interest therein or any right to receive any amount from or in respect thereof.
(b) Claims, Deductions. Claim any credit on, or make any deduction from the principal or interest payable in respect of, the
Securities (other than amounts properly withheld from such payments under the Code or other applicable Law) or assert any claim against any
present or former Noteholder or Certificateholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate.
(c) Mergers, Acquisitions, Sales, Subsidiaries, etc. The Issuer shall not:
(i) be a party to any merger or consolidation, or directly or indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, except for Permitted Investments, or sell,
transfer, assign, convey or lease any of its property and assets (or any interest therein) other than pursuant to, or as contemplated by, this
Indenture or the other Transaction Documents;
(ii) make, incur or suffer to exist an investment in, equity contribution to, loan or advance to, or payment obligation in respect of the
deferred purchase price of property from, any other Person, except for Permitted Investments or pursuant to the Transaction Documents;
(iii) create any direct or indirect Subsidiary or otherwise acquire direct or indirect ownership of any equity interests in any other
Person other than pursuant to the Transaction Documents; or
(iv) enter into any transaction with any Affiliate except for the transactions contemplated by the Transaction Documents and other
transactions upon fair and reasonable terms materially no less favorable to the Issuer than would be obtained in a comparable arm’s length
transaction with a Person not an Affiliate.
Material Adverse Effect.
(d) Change in Business Policy. The Issuer shall not make any change in the character of its business which would have a
60
4149-1382-4069
(e) Other Debt. Except as provided for herein, the Issuer shall not create, incur, assume or suffer to exist any Indebtedness
whether current or funded, other than (i) the Notes, (ii) Indebtedness of the Issuer representing fees, expenses and indemnities arising
hereunder or under any Purchase Agreement for the purchase price of the applicable Underlying Securities under any such Purchase
Agreement and (iii) other Indebtedness permitted pursuant to Section 8.3(h).
LLC Agreement unless the Required Noteholders have agreed to such amendment.
(f) Certificate of Formation and Issuer LLC Agreement. The Issuer shall not amend its certificate of formation or the Issuer
(g) Financing Statements. The Issuer shall not authorize the filing of any financing statement (or similar statement or
instrument of registration under the Laws of any jurisdiction) or statements relating to the Trust Estate other than the financing statements
authorized and filed in connection with and pursuant to the Transaction Documents.
(h) Business Restrictions. The Issuer shall not (i) engage in any business or transactions, or be a party to any documents,
agreements or instruments, other than the Transaction Documents or those incidental to the purposes thereof, or (ii) make any expenditure for
any assets (other than the Trust Estate) if such expenditure, when added to other such expenditures made during the same calendar year would,
in the aggregate, exceed Ten Thousand Dollars ($10,000); provided, however, that the foregoing will not restrict the Issuer’s ability to pay
servicing compensation as provided herein and, so long as no Default, Event of Default or Rapid Amortization Event shall have occurred and
be continuing, the Issuer’s ability to make payments or distributions legally made to the Issuer’s members.
(i) ERISA Matters.
(i) To the extent applicable, the Issuer will not (A) engage or permit any of its respective ERISA Affiliates, in each case over which
the Issuer has control, to engage in any prohibited transaction (as defined in Section 4975 of the Code and Section 406 of ERISA) for which an
exemption is not available or has not previously been obtained from the U.S. Department of Labor; (B) fail to make, or permit the Seller, or any
of its ERISA Affiliates, in each case over which the Issuer has control, to fail to make, any payments to any Multiemployer Plan that the Issuer,
the Seller or any of their respective ERISA Affiliates is required to make under the agreement relating to such Multiemployer Plan or any Law
pertaining thereto; (C) terminate, or permit the Seller, or any of its ERISA Affiliates, in each case over which the Issuer has control, to
terminate, any Pension Plan so as to result in any liability to the Issuer, the Seller or any of their ERISA Affiliates; or (D) permit to exist any
occurrence of any reportable event described in Title IV of ERISA with respect to a Pension Plan, if such prohibited transactions, failures to
make payment, terminations and reportable events described in clauses (A), (B), (C) and (D) above would in the aggregate have a Material
Adverse Effect.
(ii) The Issuer will not permit to exist any failure to satisfy the minimum funding standard (as described in Section 302 of ERISA
and Section 412 of the Code) with respect to any Pension Plan.
(iii) The Issuer will not cause or permit, nor permit any of its ERISA Affiliates over which the Issuer has control, to cause or permit,
the occurrence of an ERISA Event with respect to any Pension Plans that could result in a Material Adverse Effect.
(j) Name; Jurisdiction of Organization. The Issuer will not change its name or its jurisdiction of organization (within the
meaning of the applicable UCC) without prior written notice to the Indenture Trustee. Prior to or upon a change of its name, the Issuer will
make all filings (including filings of financing statements on form UCC-1) and recordings necessary to maintain the perfection of the interest
of the Indenture Trustee in the Trust Estate pursuant to this Indenture. The Issuer further
61
4149-1382-4069
agrees that it will not become or seek to become organized under the Laws of more than one jurisdiction. In the event that the Issuer desires to
so change its jurisdiction of organization or change its name, the Issuer will make any required filings and prior to actually making such change
the Issuer will deliver to the Indenture Trustee (i) an Officer’s Certificate and an Opinion of Counsel confirming that all required filings have
been made to continue the perfected interest of the Indenture Trustee in the Trust Estate in respect of such change and (ii) copies of all such
required filings with the filing information duly noted thereon by the office in which such filings were made.
could cause, the Issuer to become taxable as a corporation for U.S. federal income tax purposes.
(k) Tax Matters . The Issuer will not take any action that could cause, and will not omit to take any action, which omission
(l) Accounts. The Issuer shall not maintain any bank accounts other than the Trust Accounts; provided, however, that the
Issuer may maintain a general bank account to, among other things, receive and hold funds distributed to it, and to pay ordinary-course
operating expenses, as applicable. The Issuer shall not add any additional Trust Accounts unless the Indenture Trustee (subject to Section 15.1
hereto) shall have consented thereto and received a copy of any documentation with respect thereto. The Issuer shall not terminate any Trust
Accounts or close any Trust Accounts unless the Indenture Trustee shall have received at least thirty (30) days’ prior notice of such termination
and (subject to Section 15.1 hereto) shall have consented thereto.
Section
8.4. Further Instruments and Acts. The Issuer will execute and deliver such further instruments, furnish such other
information and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
Section 8.5. [Reserved].
Indenture for all purposes.
Section 8.6. Perfection Representations. The parties hereto agree that the Perfection Representations shall be a part of this
ARTICLE 9.
RAPID AMORTIZATION EVENTS AND REMEDIES
following events:
Section 9.1. Rapid Amortization Events. A “Rapid Amortization Event,” wherever used herein, means any one of the
(a) default in the payment of any interest on the Notes on any Payment Date, and such default shall continue (and shall not
have been waived by the Required Noteholders) for a period of three (3) Business Days after receipt of notice thereof from the Indenture
Trustee or the Required Noteholders;
(b) default in the payment of the principal of or any installment of the principal of the Notes when the same becomes due
and payable, and such default shall continue (and shall not have been waived by the Required Noteholders) for a period of three (3) Business
Days after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
Average Underlying Loss Percentage shall have been greater than 13.0% on three (3) consecutive Payment Dates;
(c) commencing with the three (3) consecutive Payment Dates ending with the March 2023 Payment Date, the Three-Month
any Underlying Issuer;
(d) a “Rapid Amortization Event” (as defined in the applicable Underlying Indenture) shall have occurred with respect to
62
4149-1382-4069
(e) the failure of the Issuer to maintain any Financial Covenant;
unremedied for a period of three (3) days after receipt of notice thereof from the Indenture Trustee or the Required Noteholders;
(f) the failure of the Issuer to provide, or cause to be provided, the Monthly Report when due, which failure shall continue
(g) a failure on the part of the Seller duly to observe or perform any other covenants or agreements of the Seller set forth in
any Purchase Agreement or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as
reasonably determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on which
notice of such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Seller by the Indenture
Trustee, or to the Seller and the Indenture Trustee by the Required Noteholders;
(h) any representation, warranty or certification made by the Seller in any Purchase Agreement, in the other Transaction
Documents or in any certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such
inaccuracy has a material adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues
unremedied for a period of thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring
the same to be remedied, shall have been given by registered or certified mail to the Seller by the Indenture Trustee, or to the Seller and the
Indenture Trustee by the Required Noteholders; or
thereof from the Indenture Trustee or the Required Noteholders;
(i) the occurrence of an Administrator Default that continues unremedied for a period of three (3) days after receipt of notice
(j) the occurrence of an Event of Default;
The Required Noteholders may waive any Rapid Amortization Event and its consequences.
ARTICLE 10.
REMEDIES
Section 10.1. Events of Default. An “Event of Default,” wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(i) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer, the Seller, or any
substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar Law now
or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days;
(ii) the commencement by the Issuer or the Seller of a voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar Law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any
such Law, or the consent by the Issuer to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general assignment
for the benefit of creditors, or the failure by the Issuer generally to pay its debts as
63
4149-1382-4069
such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing;
(iii) a failure on the part of the Issuer duly to observe or perform any other covenants or agreements of the Issuer set forth in this
Indenture or the other Transaction Documents, which failure has a material adverse effect on the interests of the Noteholders (as reasonably
determined by the Required Noteholders) and which continues unremedied for a period of thirty (30) days after the date on which notice of
such failure, requiring the same to be remedied, shall have been given by registered or certified mail to the Issuer by the Indenture Trustee, or
to the Issuer and the Indenture Trustee by the Required Noteholders;
(iv) any representation, warranty or certification made by the Issuer in this Indenture, in the other Transaction Documents or in any
certificate delivered pursuant thereto shall prove to have been inaccurate when made or deemed made and such inaccuracy has a material
adverse effect on the Noteholders (as reasonably determined by the Required Noteholders) and which continues unremedied for a period of
thirty (30) days after the date on which a notice specifying such incorrect representation or warranty and requiring the same to be remedied,
shall have been given by registered or certified mail to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the
Required Noteholders;
(v) the Indenture Trustee shall cease to have a first-priority perfected security interest in all or a material portion of the Trust Estate;
(vi) the Issuer shall have become subject to regulation by the Securities and Exchange Commission as an “investment company”
under the Investment Company Act;
(vii) the Issuer shall become taxable as an association or a publicly traded partnership taxable as a corporation for U.S. federal
income tax purposes; or
(viii) a lien shall be filed pursuant to Section 430 or Section 6321 of the Code with regard to the Issuer and such lien shall not have
been released within thirty (30) days.
Section 10.2. Rights of the Indenture Trustee Upon Events of Default.
(a) If and whenever an Event of Default (other than in clause (i) and (ii) of Section 10.1) shall have occurred and be
continuing, the Indenture Trustee may, and at the written direction of the Required Noteholders shall, cause (x) the principal amount of all
Notes outstanding to be immediately due and payable at par, together with interest thereon and (y) all remaining amounts payable on the
Certificates to be immediately due and payable. If an Event of Default with respect to the Issuer specified in clause (i) or (ii) of Section 10.1
shall occur, all unpaid principal of and accrued interest on all the Notes outstanding and all remaining amounts payable shall ipso facto become
and be immediately due and payable without any declaration or other act on the part of the Indenture Trustee or any Noteholder or
Certificateholder. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may exercise from time to time any rights
and remedies available to it under applicable Law and Section 10.4. Any amounts obtained by the Indenture Trustee on account of or as a result
of the exercise by the Indenture Trustee of any right shall be held by the Indenture Trustee as additional collateral for the repayment of the
Secured Obligations and shall be applied in accordance with Article 5 hereof.
(b) If an Event of Default shall have occurred and be continuing, then at any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article 10 provided, the Required Noteholders, by written notice to the Issuer and the Indenture Trustee, may rescind and
annul such declaration and its consequences if:
64
4149-1382-4069
(i) the Issuer has paid to or deposited with the Indenture Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had not occurred; and
(B) all sums paid by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements of the
Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal of the Notes and amounts payable on the Certificates that have
become due solely by such acceleration, have been cured or waived as provided in Section 10.6.
No such rescission shall affect any subsequent default or impair any right consequent thereto.
(c) Additional Remedies. In addition to any rights and remedies now or hereafter granted hereunder or under applicable Law
with respect to the Trust Estate, the Indenture Trustee shall have all of the rights and remedies of a secured party under the UCC as enacted in
any applicable jurisdiction.
Section 10.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of any interest on any Note when the same becomes due
and payable, and such default continues for a period of five (5) days, or (ii) default is made in the payment of the principal of any Note when
the same becomes due and payable on the Legal Final Payment Date, the Issuer will pay to it, for the benefit of the Noteholders and
Certificateholders, the whole amount then due and payable on the Notes and Certificates for principal, interest and other amounts, with interest
upon the overdue principal, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of
interest, at the applicable Note Rate and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Indenture Trustee may (in its discretion) and, at the written direction
of the Required Noteholders, shall proceed to protect and enforce its rights and the rights of the Secured Parties by such appropriate
Proceedings to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by Law; provided, however, that the Indenture Trustee shall sell or otherwise liquidate the Trust Estate or any
portion thereof only in accordance with Section 10.4(d) and Section 10.5.
(c) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any
provision of this Indenture), the Indenture Trustee shall be held to represent all the Secured Parties, and it shall not be necessary to make any
such Person a party to any such Proceedings.
(d) In case there shall be pending, relative to the Issuer or any other obligor upon the Securities or any Person having or
claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or
65
4149-1382-4069
other similar Law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the
Indenture Trustee, irrespective of whether the principal or other amount of any Securities shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in respect of
the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence, bad faith or willful misconduct) and of the Secured Parties allowed in such
Proceedings;
(ii) unless prohibited by applicable Law, to vote on behalf of the Secured Parties in any election of a trustee, a standby trustee or
Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Secured Parties and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Secured Parties allowed in any judicial Proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Secured
Parties to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly
to such Secured Parties, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence, bad faith or willful
misconduct.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or
accept or adopt on behalf of any Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Securities or
the rights of any Secured Party or to authorize the Indenture Trustee to vote in respect of the claim of any Secured Party in any such Proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture or under any of the Securities may be enforced by the
Indenture Trustee without the possession of any of the Securities or the production thereof in any Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for the Secured Parties.
66
4149-1382-4069
the written direction of the Required Noteholders, shall do one or more of the following:
Section 10.4. Remedies. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may and, at
(a) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable
under the Transaction Documents, enforce any judgment obtained, and collect from the Issuer and any other obligor under the Transaction
Documents moneys adjudged due;
with respect to the Trust Estate;
(b) subject to Section 10.5, institute Proceedings from time to time for the complete or partial foreclosure of this Indenture
(c) subject to the limitations set forth in clause (d) below and Section 10.5, exercise any remedies of a secured party under
the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Secured Parties;
and
(d) subject to Section 10.5, sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by Law; provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default unless:
(i) the Holders of 100% of the outstanding Notes direct such sale and liquidation,
(ii) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due
and unpaid with respect to all outstanding Notes for principal and interest and any other amounts due Noteholders, or
(iii) the Indenture Trustee determines that the proceeds of the Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on all outstanding Notes as such amounts would have become due if such Notes had not been declared due
and payable and the Required Noteholders direct such sale and liquidation.
In determining such sufficiency or insufficiency with respect to clauses (d)(ii) and (d)(iii), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Underlying Securities in the Trust Estate for such purpose.
The Indenture Trustee may maintain a Proceeding even if it does not possess any of the Notes or does not produce any of them
in the Proceeding, and any such Proceeding instituted by the Indenture Trustee shall be in its own name as trustee. All remedies are cumulative
to the extent permitted by Law.
Section 10.5. Priority of Remedies Exercised Against the Underlying Securities . Notwithstanding any other provision of
this Indenture, if any remedies available under this Article X are to be exercised against the Trust Estate consisting of the Underlying
Securities, such remedies shall be exercised first against the Underlying Securities in the First Priority Custody Account and shall only by
exercised against the Underlying Securities in the Second Priority Custody Account if the proceeds of exercising remedies against the
Underlying Securities in the First Priority Custody Account are insufficient to discharge in full all amounts then due and unpaid with respect to
all outstanding Notes for principal and interest and any other amounts due Noteholders (such sufficiency being determined in accordance with
Section 10.4(d)). For the avoidance of doubt, the agreement to exercise any such remedies against the Underlying Securities in accordance with
this Section 10.5, shall in no way mitigate, minimize, waive and/or otherwise affect the remedies available under this Article X.
67
4149-1382-4069
Section 10.6. Waiver of Past Events. If an Event of Default shall have occurred and be continuing, prior to the declaration
of the acceleration of the maturity of the Notes as provided in Section 10.2(a), the Required Noteholders may waive any past Default or Event
of Default and its consequences except a Default in payment of principal of any of the Notes. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Holders of the Securities shall be restored to their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any
Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
Section
10.7. Limitation on Suits. No Noteholder or Certificateholder have any right to institute any Proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Noteholder or Certificateholder previously has given written notice to the Indenture Trustee of a continuing Event of
Default;
(ii) the Holders of not less than 25% of the outstanding principal amount of all Notes (or, if all Notes have been paid in full,
Certificateholders representing 25% of the Certificates) have made written request to the Indenture Trustee to institute such Proceeding in
respect of such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Noteholder has offered and provided to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60) day period by
the Required Noteholders;
it being understood and intended that no one or more Noteholder or Certificateholder shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Noteholder or Certificateholder or to
obtain or to seek to obtain priority or preference over any other Noteholder or Certificateholder or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of
Secured Parties, each representing less than the Required Noteholders, the Indenture Trustee shall proceed in accordance with the request of
the greater majority of the outstanding principal amount or par value of the Notes, as determined by reference to such requests.
Section 10.8. Unconditional Rights of Holders to Receive Payment; Withholding Taxes.
(a) Notwithstanding any other provision of this Indenture except as provided in Section 10.8(b) and (c), the right of any
Noteholder or Certificateholder to receive payment of principal, interest or other amounts, if any, on the Securities, on or after the respective
due dates expressed in the
68
4149-1382-4069
Securities or in this Indenture (or, in the case of redemption, on or after the Redemption Date), or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the
Noteholder or Certificateholder .
(b) Promptly upon request, each Noteholder or Certificateholder shall provide to the Indenture Trustee and/or the Issuer (or
other person responsible for withholding of taxes, including but not limited to FATCA Withholding Tax, or delivery of information under
FATCA) with the Tax Information.
(c) The Paying Agent shall (or if the Indenture Trustee is not the Paying Agent, the Indenture Trustee shall cause the Paying
Agent to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee that
such Paying Agent shall) comply with the provisions of this Indenture applicable to it, comply with all requirements of the Code with respect to
the withholding from any payments to Noteholders or Certificateholders, including FATCA Withholding Tax (including obtaining and
retaining from Persons entitled to payments with respect to the Notes or Certificates any Tax Information and making any withholdings with
respect to the Notes or Certificates as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate
Governmental Authority), comply with respect to any applicable reporting requirements in connection with any payments to Noteholders or
Certificateholders, and, upon request, provide any Tax Information to the Issuer.
Section 10.9. Restoration of Rights and Remedies. If any Noteholder or Certificateholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined
adversely to the Indenture Trustee or to such Noteholder or Certificateholder, then and in every such case the Issuer, the Indenture Trustee, the
Noteholders and Certificateholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders and Certificateholders shall continue as
though no such Proceeding had been instituted.
Section 10.10. The Indenture Trustee May File Proofs of Claim. The Indenture Trustee is authorized to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel) and the
Noteholders and Certificateholders allowed in any judicial Proceedings relative to the Issuer (or any other obligor upon the Securities), its
creditors or its property, and shall be entitled and empowered to collect, receive and distribute any money or other property payable or
deliverable on any such claim and any custodian in any such judicial Proceeding is hereby authorized by each Noteholder and Certificateholder
to make such payments to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of such payments
directly to the Noteholders and Certificateholders to pay the Indenture Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel, and any other amounts due the Indenture Trustee under
Section 11.6 and 11.17. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture Trustee under Section 11.6 and 11.17 out of the estate in any such
Proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, notes and other properties which the Noteholders and Certificateholders may be entitled to receive in such
Proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed
to authorize the Indenture Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder or Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Noteholder or Certificateholder thereof, or
to authorize the
69
4149-1382-4069
Indenture Trustee to vote in respect of the claim of any Noteholder or Certificateholder in any such Proceeding.
Section 10.11. Priorities. Following the declaration of an Event of Default or a Rapid Amortization Event pursuant to Section 9.1 or
10.2, all amounts in any Payment Account, including any money or property collected pursuant to Section 10.4 (after deducting the reasonable
costs and expenses of such collection), shall be applied by the Indenture Trustee on the related Payment Date in accordance with the provisions
of Article 5.
The Indenture Trustee may fix a record date and payment date for any payment to Secured Parties pursuant to this Section. At
least fifteen (15) days before such record date the Issuer shall mail to each Secured Party and the Indenture Trustee a notice that states the
record date, the payment date and the amount to be paid.
Section 10.12. Undertaking for Costs. All parties to this Indenture agree, and each Secured Party shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the
Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of the aggregate outstanding principal balance of the Notes on the
date of the filing of such action, (c) any suit instituted by any Certificateholder, or group of Certificateholders, in each case holding in the
aggregate more than 10% of the Certificates on the date of the filing of such action, (d) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date) or (e) any suit instituted by any Certificateholder for the
enforcement of the payment of any amount on any Certificate on or after the respective due dates expressed in such Certificate and in this
Indenture.
Section 10.13. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Secured Parties is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent
permitted by Law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 10.14. Delay or Omission Not Waiver. No delay or omission of the Indenture Trustee or any Secured Party to
exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any
such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article 10 or by Law to the Indenture
Trustee or to the Secured Parties may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Secured Parties, as the case may be.
Section 10.15. Control by Noteholders. The Required Noteholders shall have the right to direct the time, method and place
of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any Law or with this Indenture;
70
4149-1382-4069
(ii) subject to the express terms of Section 10.4 and Section 10.5, any direction to the Indenture Trustee to sell or liquidate the
Underlying Securities shall be by the Holders of Notes representing not less than 100% of the aggregate outstanding principal balance of all the
Notes;
(iii) the Indenture Trustee shall have been provided with indemnity satisfactory to it; and
(iv) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 11.1, the Indenture Trustee need not take any action that it determines might involve it in liability or
might materially adversely affect the rights of any Noteholders not consenting to such action.
Section 10.16. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension Law
wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to
the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such Law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such Law had been enacted.
Section 10.17. Action on Securities. The Indenture Trustee’s right to seek and recover judgment on the Securities or under
this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither
the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Secured Parties shall be impaired by the recovery of any
judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer.
Section 10.18. Performance and Enforcement of Certain Obligations.
(a) The Issuer agrees to take all such lawful action as is necessary and desirable to compel or secure the performance and
observance by the Seller and the Parent, as applicable, of each of their obligations to the Issuer under or in connection with the Transaction
Documents in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Transaction Documents, including the transmission of notices of default on the part of the Seller or the
Parent thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance by the Seller or the
Parent of each of their obligations under the Transaction Documents.
(b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction
shall be in writing) of the Required Noteholders shall, subject to Section 10.2(b), exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller or the Parent under or in connection with the Transaction Documents, including the right or power to take any
action to compel or secure performance or observance by the Seller or the Parent of each of their obligations to the Issuer thereunder and to
give any consent, request, notice, direction, approval, extension or waiver under the Transaction Documents, and any right of the Issuer to take
such action shall be suspended.
10.19. Reassignment of Surplus. Promptly after termination of this Indenture and the payment in full of the
Secured Obligations, any proceeds of all the Underlying Securities and other assets in the Trust Estate received or held by the Indenture
Trustee shall be turned over to the Issuer and the Underlying Securities and other assets in the Trust Estate shall be released to
Section
71
4149-1382-4069
the Issuer by the Indenture Trustee without recourse to the Indenture Trustee and without any representations, warranties or agreements of any
kind.
ARTICLE 11.
THE INDENTURE TRUSTEE
Section 11.01. Duties of the Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, and of which a Trust Officer of the Indenture Trustee has written
notice, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture and any related document, and use the
same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such
person’s own affairs; provided, however, that the Indenture Trustee shall have no liability in connection with any action or inaction taken, or
not taken, by it upon the deemed occurrence of an Event of Default of which a Trust Officer has not received written notice; and provided,
further that the preceding sentence shall not have the effect of insulating the Indenture Trustee from liability arising out of the Indenture
Trustee’s negligence or willful misconduct.
has written notice:
(b) Except during the occurrence and continuance of an Event of Default of which a Trust Officer of the Indenture Trustee
(i) the Indenture Trustee undertakes to perform only those duties that are specifically set forth in this Indenture and no others, and
no implied covenants or obligations shall be read into this Indenture or any related document against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely (without independent confirmation,
verification, inquiry or investigation of the contents thereof), as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided,
however, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture and, if applicable, the Transaction Documents to which the Indenture Trustee is a party, provided, further, that
the Indenture Trustee shall not be responsible for the accuracy or content of any of the aforementioned documents and the Indenture Trustee
shall have no obligation to verify or recompute any numeral information provided to it pursuant to the Transaction Documents.
action, its own negligent failure to act, or its own willful misconduct except that:
(c) No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent
(i) this clause does not limit the effect of clause (b) of this Section 11.1;
(ii) the Indenture Trustee shall not be personally liable for any error of judgment made in good faith by a Trust Officer or Trust
Officers of the Indenture Trustee, unless it is conclusively determined by the final judgment of a court of competent jurisdiction, no longer
subject to appeal or review that the Indenture Trustee was negligent in ascertaining the pertinent facts; or
(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to the terms of this Indenture or the Transaction Documents.
72
4149-1382-4069
(d) Notwithstanding anything to the contrary contained in this Indenture or any of the Transaction Documents, no provision
of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights and powers, if there is reasonable ground (as determined by the Indenture
Trustee in its sole discretion) for believing that the repayment of such funds or adequate indemnity against such risk is not reasonably assured
to it by the security afforded to it by the terms of this Indenture.
Indenture Trustee shall be subject to the provisions of this Article .
(e) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the
the Servicing Agreement.
(f) The Indenture Trustee shall, and hereby agrees that it will, perform all of the obligations and duties required of it under
(g) Without limiting the generality of this Section 11.1 and subject to the other provisions of this Indenture, the Indenture
Trustee shall have no duty (i) to see to any recording, filing or depositing of this Indenture or any agreement referred to herein, or to see to the
maintenance of any such recording or filing or depositing or to any recording, refiling or redepositing of any thereof or to see to the validity,
perfection, continuation, or value of any lien or security interest created herein, (ii) to see to the payment or discharge of any tax, assessment or
other governmental Lien owing with respect to, assessed or levied against any part of the Issuer, (iii) to confirm or verify the contents of any
reports or certificates delivered to the Indenture Trustee pursuant to this Indenture or the Servicing Agreement believed by the Indenture
Trustee to be genuine and to have been signed or presented by the proper party or parties, or (iv) to confirm or effect the acquisition or
maintenance of any insurance. The Indenture Trustee shall be authorized to, but shall in no event have any duty or responsibility to, file any
financing or continuation statements or record any documents or instruments in any public office at any time or times or otherwise perfect or
maintain any security interest in the Trust Estate.
(h) Subject to Section 11.1(d), in the event that the Paying Agent or the Transfer Agent and Registrar (if other than the
Indenture Trustee) shall fail to perform any obligation, duty or agreement in the manner or on the day required to be performed by the Paying
Agent or the Transfer Agent and Registrar, as the case may be, under this Indenture, the Indenture Trustee shall be obligated as soon as
practicable upon written notice to a Trust Officer thereof and receipt of appropriate records and information, if any, to perform such obligation,
duty or agreement in the manner so required.
(i)[Reserved].
(j) Subject to Section 11.4, all moneys received by the Indenture Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by Law or
the Transaction Documents.
(k) Nothing contained herein shall be deemed to authorize the Indenture Trustee to engage in any business operations or any
activities other than those set forth in this Indenture. Specifically, the Indenture Trustee shall have no authority to engage in any business
operations, acquire any assets other than those specifically included in the Trust Estate under this Indenture or otherwise vary the assets held by
the Issuer. Similarly, the Indenture Trustee shall have no discretionary duties other than performing those ministerial acts set forth above
necessary to accomplish the purpose of this Indenture.
(l) The Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of any Default or
Event of Default unless a Trust Officer of the Indenture Trustee shall have received written notice thereof. In the absence of receipt of such
notice, the Indenture Trustee may conclusively assume that there is no Default or Event of Default.
73
4149-1382-4069
(m) [Reserved].
(n) The Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Issuer, Oportun and/or a specified percentage of Noteholders or Certificateholders under circumstances in
which such direction is required or permitted by the terms of this Indenture or other Transaction Document.
Indenture Trustee shall not be construed to be the imposition of a duty.
(o) The enumeration of any permissive right or power herein or in any other Transaction Document available to the
separately agree in writing with the Issuer.
(p) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may
protection to the Indenture Trustee shall be subject to the provisions of this Article.
(q) Every provision of the Indenture or any related document relating to the conduct or affecting the liability of or affording
Section 11.2. Rights of the Indenture Trustee. Except as otherwise provided by Section 11.1:
(a) The Indenture Trustee may conclusively rely on and shall be protected in acting upon or refraining from acting upon and
in accord with, without any duty to verify the contents or recompute any calculations therein, any document (whether in its original or facsimile
form), including the annual certificate, the monthly payment instructions and notification to the Indenture Trustee, the Monthly Report, any
resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document, believed by it to be genuine and to have been signed by or presented by the proper Person.
Without limiting the Indenture Trustee’s obligations to examine pursuant to Section 11.1(b)(ii), the Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, the Indenture Trustee may require an Officer’s Certificate or an
Opinion of Counsel or consult with counsel of its selection and the Officer’s Certificate or the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, custodians and nominees and the Indenture Trustee shall not be liable for any misconduct or negligence
on the part of, or for the supervision of, any such agent or attorneys, custodian or nominee so long as such agent, custodian or nominee is
appointed with due care.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers conferred upon it by this Indenture; provided, however, that the Indenture Trustee’s conduct does not
constitute willful misconduct or negligence.
(e) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture,
or to institute, conduct or defend any litigation hereunder or in relation hereto, at the request, order or direction of any of the Noteholders or
Certificateholders, pursuant to the provisions of this Indenture, unless such Noteholders or Certificateholders shall have offered to the
Indenture Trustee security or indemnity satisfactory to the Indenture Trustee (in its sole discretion) against the costs, expenses (including
attorneys’ fees and expenses) and liabilities which may
74
4149-1382-4069
be incurred therein or thereby; nothing contained herein shall, however, relieve the Indenture Trustee of the obligations, upon the occurrence of
an Event of Default (which has not been cured or waived), to exercise such of the rights and powers vested in it by this Indenture, and to use the
same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such
person’s own affairs.
(f) The Indenture Trustee shall not be bound to make any investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document (including, the
annual certificate, the monthly payment instructions and notification to the Indenture Trustee or the Monthly Report), unless requested in
writing so to do by the Holders of Securities evidencing not less than 25% of the aggregate outstanding principal balance or par value of the
Securities, but the Indenture Trustee may, but is not obligated to, make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation; provided, however, that if the payment within a reasonable time to the Indenture
Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture
Trustee, not assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require
indemnity satisfactory to it against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the Indenture Trustee, shall be reimbursed by the Person making
such request.
(g) The Indenture Trustee shall have no liability for the selection of Permitted Investments and shall not be liable for any
losses or liquidation penalties in connection with Permitted Investments, unless such losses or liquidation penalties were incurred through the
Indenture Trustee’s own willful misconduct or negligence. The Indenture Trustee shall have no obligation to invest or reinvest any amounts
except as directed by the Issuer (or the Administrator) in accordance with this Indenture.
such acts or omissions were not the result of the negligence, bad faith or willful misconduct of the predecessor Indenture Trustee.
(h) The Indenture Trustee shall not be liable for the acts or omissions of any successor to the Indenture Trustee so long as
(i) The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation,
its right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee and the entity serving as Indenture Trustee (a) in
each of its capacities hereunder and under the Transaction Documents, and to each agent, custodian and other Person employed to act
hereunder or thereunder and (b) in each document to which it is a party (in any capacity) whether or not specifically set forth herein or therein;
provided that the Securities Intermediary and the Depositary Bank shall comply with Section 5.3.
(j) Except as may be required by Sections 11.1(b)(ii) , 11.2(a) and 11.2(f), the Indenture Trustee shall not be required to
make any initial or periodic examination of any documents or records related to the Trust Estate for the purpose of establishing the presence or
absence of defects, the compliance by the Seller, the Parent or the Administrator with their respective representations and warranties or for any
other purpose.
(k) Without limiting the Indenture Trustee’s obligation to examine pursuant to Section 11.1(b)(ii) , the Indenture Trustee
shall not be bound to make any investigation into (i) the performance or observance by the Issuer or any other Person of any of the covenants,
agreements or other terms or conditions set forth in this Indenture or in any related document, (ii) the occurrence of any default, or the validity,
enforceability, effectiveness or genuineness of this Indenture, any related
75
4149-1382-4069
document or any other agreement, instrument or document, (iii) the creation, perfection or priority of any Lien purported to be created by this
Indenture or any related document, (iv) the value or the sufficiency of any collateral or (v) the satisfaction of any condition set forth in this
Indenture or any related document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Issuer, personally or by agent or attorney, and shall incur no liability of any kind by reason of
such inquiry or investigation.
(l) In no event shall the Indenture Trustee be responsible or liable for special, indirect, punitive or consequential loss or
damage of any kind whatsoever (including, but not limited to, loss of profit), even if the Indenture Trustee has been advised of the likelihood of
such loss or damage and regardless of the form of action.
(m) The Indenture Trustee may, from time to time, request that the Issuer and any other applicable party deliver a certificate
(upon which the Indenture Trustee may conclusively rely) setting forth the names of individuals and/or titles of officers authorized at such time
to take specified actions pursuant to this Indenture or any related document together with a specimen signature of such authorized officers;
provided, however, that from time to time, the Issuer or such other applicable party may, by delivering to the Indenture Trustee a revised
certificate, change the information previously provided by it pursuant to the Indenture, but the Indenture Trustee shall be entitled to
conclusively rely on the then current certificate until receipt of a superseding certificate.
shall not be construed as a duty.
(n) The right of the Indenture Trustee to perform any discretionary act enumerated in this Indenture or any related document
(o) Except for notices, reports and other documents expressly required to be furnished to the Holders by the Indenture
Trustee hereunder, the Indenture Trustee shall not have any duty or responsibility to provide any Holder with any other information concerning
the Issuer or any other parties to any related documents which may come into the possession of the Indenture Trustee or any of its officers,
directors, employees, agents, representatives or attorneys-in-fact.
(p) If the Indenture Trustee requests instructions from the Issuer, the Administrator or the Holders with respect to any action
or omission in connection with this Indenture, the Indenture Trustee shall be entitled (without incurring any liability therefor) to refrain from
taking such action and continue to refrain from acting unless and until the Indenture Trustee shall have received written instructions from the
Issuer, the Administrator or the Holders, as applicable, with respect to such request.
(q) In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking
institutions, including those relating to the funding of terrorist activities and money laundering (“Applicable Law”), the Indenture Trustee is
required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the
Indenture Trustee. Accordingly, each of the parties agrees to provide to the Indenture Trustee upon its request from time to time such
identifying information and documentation as may be available for such party in order to enable the Indenture Trustee to comply with
Applicable Law.
(r) In no event shall the Indenture Trustee be liable for any failure or delay in the performance of its obligations under this
Indenture or any related documents because of circumstances beyond the Indenture Trustee’s control, including, but not limited to, a failure,
termination, or suspension of a clearing house, securities depositary, settlement system or central payment system in any applicable part of the
world or acts of God, flood, war (whether declared or undeclared), civil or military disturbances or hostilities, nuclear or natural catastrophes,
political unrest, explosion, severe weather or accident, earthquake, terrorism, fire, riot, labor disturbances, strikes or work stoppages for
76
4149-1382-4069
any reason, embargo, government action, including any laws, ordinances, regulations or the like (whether domestic, federal, state, county or
municipal or foreign) which delay, restrict or prohibit the providing of the services contemplated by this Indenture or any related documents, or
the unavailability of communications or computer facilities, the failure of equipment or interruption of communications or computer facilities,
or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or any other causes beyond the
Indenture Trustee’s control whether or not of the same class or kind as specified above.
(s) The Indenture Trustee shall not be liable for failing to comply with its obligations under this Indenture in so far as the
performance of such obligations is dependent upon the timely receipt of instructions and/or other information from any other Person which are
not received or not received by the time required.
(t) The Indenture Trustee shall be fully justified in failing or refusing to take any action under this Indenture or any other
related document if such action (A) would, in the reasonable opinion of the Indenture Trustee, in good faith (which may be based on the advice
or opinion of counsel), be contrary to applicable Law, this Indenture or any other related document, or (B) is not provided for in the Indenture
or any other related document.
(u) The Indenture Trustee shall not be required to take any action under this Indenture or any related document if taking such
action (A) would subject the Indenture Trustee to a tax in any jurisdiction where it is not then subject to a tax, or (B) would require the
Indenture Trustee to qualify to do business in any jurisdiction where it is not then so qualified.
(v) The Indenture Trustee shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of
any other agreement, instrument or document other than this Indenture or any other Transaction Document to which it is a party, whether or not
an original or a copy of such agreement has been provided to the Indenture Trustee.
the Credit Risk Retention Rules or any other laws, rules or regulations of any other jurisdiction related to risk retention.
(w) The Indenture Trustee shall have no obligation or duty to determine or otherwise monitor any Person’s compliance with
(x) Notwithstanding anything contained in this Indenture or any other Transaction Document to the contrary, the Indenture
Trustee shall be under no obligation (i) to monitor, determine or verify the unavailability or cessation of any applicable benchmark interest rate,
or whether or when there has occurred, or to give notice to any other Person of the occurrence of, any date on which such rate may be required
to be transitioned or replaced in accordance with the terms of the Transaction Documents, applicable law or otherwise, (ii) to select, determine
or designate any replacement to such rate, or other successor or replacement benchmark index, or whether any conditions to the designation of
such a rate have been satisfied, (iii) to select, determine or designate any modifier to any replacement or successor index, or (iv) to determine
whether or what any amendments to this Indenture or the other Transaction Documents are necessary or advisable, if any, in connection with
any of the foregoing.
Section 11.3. Indenture Trustee Not Liable for Recitals in Securities. The Indenture Trustee assumes no responsibility for
the correctness of the recitals contained in this Indenture and in the Securities (other than the signature and authentication of the Indenture
Trustee on the Securities). Except as set forth in Section 11.16, the Indenture Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Securities (other than the signature and authentication of the Indenture Trustee on the Securities) or of any asset of
the Trust Estate or related document. The Indenture Trustee shall not be accountable for the use or application by the Issuer or the Seller of any
of the Securities or of the proceeds of such Securities, or for the use or application of any funds paid to the Seller or to the Issuer in respect of
the Trust Estate or deposited in or withdrawn from the Payment Account by Oportun.
77
4149-1382-4069
Section 11.4. Individual Rights of the Indenture Trustee; Multiple Capacities. The Indenture Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuer or an Affiliate of the Issuer with the
same rights it would have if it were not Indenture Trustee. Any Paying Agent, Transfer Agent and Registrar, co-registrar or co-paying agent
may do the same with like rights. However, the Indenture Trustee must comply with Sections 11.9 and 11.11. It is expressly acknowledged,
agreed and consented to that Wilmington Trust, National Association will be acting in the capacities of Indenture Trustee, Paying Agent,
Depositary Bank and Securities Intermediary. Wilmington Trust, National Association may, in such multiple capacities, discharge its separate
functions fully, without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the
extent that any such conflict or breach arises from the performance by Wilmington Trust, National Association of express duties set forth in
this Indenture or any other Transaction Documents in any such capacities, all of which defenses, claims or assertions are hereby expressly
waived by the Issuer, the Holders and any other Person having rights pursuant hereto or thereto and to disclaim any potential liability. For the
avoidance of doubt, any actions taken by the Securities Intermediary with respect to the First Priority Custody Account or the Second Priority
Custody Account shall be taken pursuant to the terms of the Custody Agreement and, so long as this Indenture is in effect, the provisions of this
Indenture applicable to the Securities Intermediary; it being understood that any such actions shall be taken solely in accordance with the
Custody Agreement and, so long as this Indenture is in effect, the provisions of this Indenture applicable to the Securities Intermediary, and
Wilmington Trust, National Association will discharge its separate functions fully, without hindrance or regard to conflict of interest principles,
duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by
Wilmington Trust, National Association of express duties set forth in this Indenture or any other Transaction Documents in any such capacities,
all of which defenses, claims or assertions are hereby expressly waived by the Issuer, the Holders and any other Person having rights pursuant
hereto or thereto and to disclaim any potential liability.
Section 11.5. Notice of Defaults. If a Default, Event of Default or Rapid Amortization Event occurs and is continuing and
if a Trust Officer of the Indenture Trustee receives written notice or has actual knowledge thereof, the Indenture Trustee shall promptly provide
each Notice Person (and, with respect to any Event of Default or Rapid Amortization Event, each Noteholder and Certificateholder), to the
extent possible by email or facsimile, and, otherwise, by first class mail at their respective addresses appearing in the Register.
Section 11.6. Compensation.
(a) To the extent not otherwise paid pursuant to the Indenture, the Issuer covenants and agrees to pay to the Indenture
Trustee from time to time, and the Indenture Trustee shall be entitled to receive, such compensation as the Issuer and the Indenture Trustee
shall agree in writing from time to time (which compensation shall not be limited by any provision of Law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of the trust hereby created and in the exercise and performance of any
of the powers and duties hereunder of the Indenture Trustee, and, the Issuer will pay or reimburse the Indenture Trustee (without
reimbursement from the Payment Account or otherwise) all reasonable expenses, disbursements and advances (including legal fees and costs
and costs of persons not regularly employed by the Indenture Trustee) incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Indenture except any such expense, disbursement or advance as may arise from its own willful misconduct or negligence.
(b) The obligations of the Issuer under this Section 11.6 shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee.
Section 11.7. Replacement of the Indenture Trustee.
78
4149-1382-4069
effective only upon the successor Indenture Trustee’s acceptance of appointment as provided in this Section 11.7.
(a) A resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee shall become
(b) The Indenture Trustee may, after giving sixty (60) days’ prior written notice to the Issuer, resign at any time and be
discharged from the trust hereby created; provided, however, that no such resignation of the Indenture Trustee shall be effective until a
successor trustee has assumed the obligations of the Indenture Trustee hereunder. The Issuer may remove the Indenture Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor
trustee if:
(i) the Indenture Trustee fails to comply with Section 11.9;
(ii) a court or federal or state bank regulatory agency having jurisdiction in the premises in respect of the Indenture Trustee shall
have entered a decree or order granting relief or appointing a receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator (or
similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s property, or ordering the winding-up or
liquidation of the Indenture Trustee’s affairs;
(iii) the Indenture Trustee consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Indenture Trustee or for any substantial part of the Indenture Trustee’s property, or
makes any assignment for the benefit of creditors or fails generally to pay its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing; or
(iv) the Indenture Trustee becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the Indenture Trustee for any reason, the
Issuer shall promptly appoint a successor Indenture Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered
to the resigning and one copy to the successor trustee.
(c) If a successor Indenture Trustee does not take office within thirty (30) days after the retiring Indenture Trustee provides
written notice of its resignation or is removed, the retiring Indenture Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring or removed Indenture Trustee
and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders and Certificateholders. The retiring
Indenture Trustee shall, at the expense of the Issuer, promptly transfer to the successor Indenture Trustee all property held by it as Indenture
Trustee and all documents and statements held by it hereunder; provided, however, that all sums owing to the retiring Indenture Trustee
hereunder (and its agents and counsel) have been paid, and the Issuer and the predecessor Indenture Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Indenture
Trustee all such rights, powers, duties and obligations. Notwithstanding replacement of the Indenture Trustee pursuant to this Section 11.7, the
Issuer’s obligations under Sections 11.6 and 11.17 shall continue for the benefit of the retiring Indenture Trustee.
79
4149-1382-4069
(d) Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of
the provisions of this Section 11.7 shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to
this Section 11.7 and payment of all fees and expenses owed to the retiring Indenture Trustee.
acceptance such successor Indenture Trustee shall be eligible under the provisions of Section 11.9 hereof.
(e) No successor Indenture Trustee shall accept appointment as provided in this Section 11.7 unless at the time of such
Section 11.8. Successor Indenture Trustee by Merger, etc . Any Person into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any Person succeeding to the corporate trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, provided such Person shall be eligible under the provisions of Section 11.9 hereof, without the execution or filing
of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any successor to the Indenture Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Indenture
Trustee shall have.
Section
11.9. Eligibility: Disqualification. The Indenture Trustee hereunder shall at all times be organized and doing
business under the Laws of the United States of America or any State thereof authorized under such Laws to exercise corporate trust powers,
having a long-term unsecured debt rating of at least BBB- (or the equivalent thereof) by a Rating Agency, having, in the case of an entity that
is subject to risk-based capital adequacy requirements, risk-based capital of at least $50,000,000 or, in the case of an entity that is not subject to
risk-based capital adequacy requirements, having a combined capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to Law, then for the
purpose of this Section 11.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 11.7.
In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section 11.9, the
Section 11.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute
and deliver all instruments to appoint one or more persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of this Section 11.10 such powers, duties, obligations, rights and trusts as
80
4149-1382-4069
the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 11.9 and no notice to Noteholders or Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.7. No co-trustee shall be appointed without the consent of the Issuer unless such
appointment is required as a matter of Law or to enable the Indenture Trustee to perform its functions hereunder. The appointment of any co-
trustee or separate trustee shall not relieve the Indenture Trustee of any of its obligations hereunder.
provisions and conditions:
(b) Every separate trustee and co-trustee shall, to the extent permitted by Law, be appointed and act subject to the following
(i) the Securities shall be authenticated and delivered solely by the Indenture Trustee or an authenticating agent appointed by the
Indenture Trustee;
(ii) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any
Law (whether as Indenture Trustee hereunder), the Indenture Trustee shall be incompetent or unqualified to perform, such act or acts, in which
event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;
(iii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustees, hereunder, including acts
or omissions of predecessor or successor trustees;
(iv) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee; and
(v) the Indenture Trustee shall remain primarily liable for the actions of any co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the
then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee
shall refer to this Indenture and the conditions of this Article 11. Each separate trustee and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee and a copy thereof given to Oportun.
(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by Law, to do any lawful act under or in respect to this Indenture on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies
and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by Law, without the appointment of a new or
successor Indenture Trustee.
Section 11.11. [Reserved].
81
4149-1382-4069
Section 11.12. Taxes. The Indenture Trustee shall not be liable for any liabilities, costs or expenses of the Issuer, the
Noteholders, the Note Owners or the Certificateholders arising under any tax Law, including without limitation federal, state, local or foreign
income or franchise taxes or any other tax imposed on or measured by income (or any interest or penalty with respect thereto or arising from a
failure to comply therewith).
Section 11.13. [Reserved].
Section 11.14. Suits for Enforcement. If an Event of Default shall occur and be continuing, the Indenture Trustee, may (but
shall not be obligated to) subject to the provisions of Section 2.01 of the Servicing Agreement, proceed to protect and enforce its rights and the
rights of any Secured Party under this Indenture or any other Transaction Document by a Proceeding, whether for the specific performance of
any covenant or agreement contained in this Indenture or such other Transaction Document or in aid of the execution of any power granted in
this Indenture or such other Transaction Document or for the enforcement of any other legal, equitable or other remedy as the Indenture
Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee or any Secured
Party.
Certificateholder such information as may be expressly required by the Code.
Section
11.15. Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver to each Noteholder and
Issuer and the Secured Parties that:
Section 11.16. Representations and Warranties of Indenture Trustee. The Indenture Trustee represents and warrants to the
(i) the Indenture Trustee is a national banking association with trust powers duly organized, existing and authorized to engage in the
business of banking under the Laws of the United States;
(ii) the Indenture Trustee has full power, authority and right to execute, deliver and perform this Indenture and to authenticate the
Securities, and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and to authenticate the
Securities;
(iii) this Indenture has been duly executed and delivered by the Indenture Trustee; and
(iv) the Indenture Trustee meets the requirements of eligibility hereunder set forth in Section 11.9.
Section 11.17. The Issuer Indemnification of the Indenture Trustee. The Issuer shall fully indemnify, defend and hold harmless the
Indenture Trustee (and any predecessor Indenture Trustee) and its directors, officers, agents and employees from and against any and all loss,
liability, claim, expense, damage or injury suffered or sustained of whatever kind or nature regardless of their merit, demanded, asserted, or
claimed directly or indirectly relating to any acts, omissions or alleged acts or omissions arising out of the activities of the Indenture Trustee
pursuant to this Indenture and any other Transaction Document to which it is a party or any transaction contemplated hereby or thereby,
including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with
the defense of any actual or threatened action, Proceeding or claim; provided, however, that the Issuer shall not indemnify the Indenture
Trustee or its directors, officers, employees or agents if such acts, omissions or alleged acts or omissions constitute negligence or willful
misconduct by the Indenture Trustee. The indemnity provided herein shall (i) survive the termination of this Indenture and the resignation and
removal of the Indenture Trustee, and (ii) apply to the Indenture
82
4149-1382-4069
Trustee (including (a) in its capacity as Agent and (b) Wilmington Trust, National Association, as Securities Intermediary and Depositary
Bank).
Section 11.18. Indenture Trustee’s Application for Instructions from the Issuer . Any application by the Indenture Trustee
for written instructions from the Issuer or the Administrator may, at the option of the Indenture Trustee, set forth in writing any action
proposed to be taken or omitted by the Indenture Trustee under this Indenture and the date on and/or after which such action shall be taken or
such omission shall be effective. Subject to Section 11.1, the Indenture Trustee shall not be liable for any action taken by, or omission of, the
Indenture Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall
not be less than thirty (30) days after the date any Responsible Officer of the Issuer or the Administrator actually receives such application,
unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the
case of an omission), the Indenture Trustee shall have received written instructions in response to such application specifying the action to be
taken or omitted.
Section 11.19. [Reserved].
Section 11.20. Maintenance of Office or Agency. The Indenture Trustee will maintain an office or offices, or agency or
agencies, where notices and demands to or upon the Indenture Trustee in respect of the Securities and this Indenture may be served. The
Indenture Trustee initially appoints its Corporate Trust Office as its office for such purposes. The Indenture Trustee will give prompt written
notice to the Issuer, Oportun, the Noteholders and the Certificateholders of any change in the location of the Register or any such office or
agency.
11.21. Concerning the Rights of the Indenture Trustee . The rights, privileges and immunities afforded to the
Indenture Trustee in the performance of its duties under this Indenture shall apply equally to the performance by the Indenture Trustee of its
duties under each other Transaction Document to which it is a party.
Section
Section
Transaction Documents.
11.22. Direction to the Indenture Trustee. The Issuer hereby directs the Indenture Trustee to enter into the
ARTICLE 12.
DISCHARGE OF INDENTURE
Section 12.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the
Securities except as to (i) rights of Noteholders to receive payments of principal thereof and interest thereon and any other amount due to
Noteholders, (ii) rights of Certificateholders to receive payments of amount distributable to Certificateholders, (iii) Sections 8.1, 11.6, 11.12,
11.17, 12.2, 12.5(b), 15.16 and 15.17, (iv) the rights, obligations under Sections 12.2 and 15.17 and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Sections 11.6 and 11.17) and (v) the rights of Noteholders and Certificateholders
as beneficiaries hereof with respect to the property deposited with the Indenture Trustee as described below payable to all or any of them, and
the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Securities (and their related Secured Parties), on the Payment Date (the “Indenture Termination
Date”) on which the Issuer has paid, caused to be paid or irrevocably deposited or caused to be irrevocably deposited in the applicable Payment
Account funds sufficient to pay in full all Secured Obligations, and the Issuer has delivered to the Indenture Trustee an Officer’s Certificate and
an Opinion of Counsel, each meeting the applicable requirements of Section 15.1(a) and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have been complied with.
83
4149-1382-4069
After any irrevocable deposit made pursuant to Section 12.1 and satisfaction of the other conditions set forth herein, the
Indenture Trustee promptly upon request shall acknowledge in writing the discharge of the Issuer’s obligations under this Indenture except for
those surviving obligations specified above.
Section 12.2. Application of Issuer Money. All moneys deposited with the Indenture Trustee pursuant to Section 12.1 shall
be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or
through any Paying Agent to the Noteholder or Certificateholders of the particular Securities for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and other amounts;
but such moneys need not be segregated from other funds except to the extent required herein or in the other Transaction Documents or
required by Law.
The provisions of this Section 12.2 shall survive the expiration or earlier termination of this Indenture.
Section
12.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this
Indenture with respect to the Securities, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this
Indenture with respect to such Securities shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 8.1 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.
Section 12.4. [Reserved].
Section 12.5. Final Payment.
(a) Written notice of any termination, specifying the Payment Date upon which the Noteholders or Certificateholders may
surrender their Securities for final payment and cancellation, shall be given (subject to at least two (2) Business Days’ prior notice from the
Issuer to the Indenture Trustee) by the Indenture Trustee to Noteholders or Certificateholders mailed not later than five (5) Business Days
preceding such final payment specifying (i) the Payment Date (which shall be the Payment Date in the month in which the Termination Date
occurs) upon which final payment of such Securities will be made upon presentation and surrender of such Securities at the office or offices
therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the Securities at the office or offices therein specified. The Issuer’s
notice to the Indenture Trustee in accordance with the preceding sentence shall be accompanied by an Officer’s Certificate of the Issuer setting
forth the information specified in Article 6 of this Indenture covering the period during the then current calendar year through the date of such
notice and setting forth the date of such final distribution. The Indenture Trustee shall give such notice to the Transfer Agent and the Paying
Agent at the time such notice is given to such Noteholders or Certificateholders.
(b) Notwithstanding the termination or discharge of the trust of the Indenture pursuant to Section 12.1 or the occurrence of
the Termination Date, all funds then on deposit in the Payment Account shall continue to be held in trust for the benefit of the Noteholders or
Certificateholders and the Paying Agent or the Indenture Trustee shall pay such funds to the Noteholders or Certificateholders upon surrender
of their Securities. In the event that all of the Noteholders or Certificateholders shall not surrender their Securities for cancellation within six
(6) months after the date specified in the above-mentioned written notice, the Indenture Trustee shall give second written notice to the
remaining Noteholders or Certificateholders upon receipt of the appropriate records from the Transfer Agent and Registrar to surrender their
Securities for cancellation and receive the final distribution with respect thereto. If within one and one-half years after the second notice all the
Securities shall not have been
84
4149-1382-4069
surrendered for cancellation, the Indenture Trustee may take appropriate steps or may appoint an agent to take appropriate steps, to contact the
remaining Noteholders or Certificateholders concerning surrender of their Securities, and the cost thereof shall be paid out of the funds in the
Payment Account held for the benefit of such Noteholders or Certificateholders. The Indenture Trustee and the Paying Agent shall pay to the
Issuer upon request any monies held by them for the payment of principal or interest which remains unclaimed for two (2) years. After such
payment to the Issuer, Noteholders or Certificateholders entitled to the money must look to the Issuer for payment as general creditors unless
an applicable abandoned property Law designates another Person.
cancelled by the Transfer Agent and Registrar and be disposed of in a manner satisfactory to the Indenture Trustee and the Issuer.
(c) All Securities surrendered for payment of the final distribution with respect to such Securities and cancellation shall be
Section 12.6. Termination Rights of Issuer. Upon the termination of the Lien of the Indenture pursuant to Section 12.1, and
after payment of all amounts due hereunder on or prior to such termination, the Indenture Trustee shall execute a written release and
reconveyance substantially in the form of Exhibit A hereto pursuant to which it shall release the Lien of the Indenture and reconvey to the
Issuer (without recourse, representation or warranty) all right, title and interest in the Trust Estate, whether then existing or thereafter created,
all moneys due or to become due with respect to such Trust Estate and all proceeds of the Trust Estate, except for amounts held by the
Indenture Trustee or any Paying Agent pursuant to Section 12.5(b). The Indenture Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably requested by the Issuer to vest in the Issuer all right, title and
interest in the Trust Estate.
written request any excess money or, pursuant to Sections 2.10 and 2.13, return any Securities held by them at any time.
Section 12.7. Repayment to the Issuer. The Indenture Trustee and the Paying Agent shall promptly pay to the Issuer upon
ARTICLE 13.
AMENDMENTS
Section 13.1. Supplemental Indentures without Consent of the Noteholders. Without the consent of the Holders of any
Notes, and, if the Certificateholders’ rights and/or obligations are materially and adversely affected thereby, with the consent of the Required
Certificateholders, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indenture supplements or amendments hereto, in form satisfactory to the Indenture Trustee for any of the following purposes:
(a) to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject to the
Lien of this Indenture additional property;
assumption by any such successor of the covenants of the Issuer herein and in the Securities;
(b) to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the
conferred upon the Issuer;
(c) to add to the covenants of the Issuer for the benefit of any Secured Parties or to surrender any right or power herein
(d) to convey, transfer, assign, mortgage or pledge to the Indenture Trustee any property or assets as security for the Secured
Obligations and to specify the terms and conditions upon which such property or assets are to be held and dealt with by the Indenture Trustee
and to set forth such
85
4149-1382-4069
other provisions in respect thereof as may be required by this Indenture or as may, consistent with the provisions of this Indenture, be deemed
appropriate by the Issuer and the Indenture Trustee, or to correct or amplify the description of any such property or assets at any time so
mortgaged, pledged, conveyed and transferred to the Indenture Trustee;
provision of this Indenture;
(e) to cure any ambiguity, or correct or supplement any provision of this Indenture which may be inconsistent with any other
(f) to make any other provisions of this Indenture with respect to matters or questions arising under this Indenture; provided,
however, that such action shall not adversely affect the interests of any Holder of the Notes in any material respect without consent being
provided as set forth in Section 13.2; or
(g) to evidence and provide for the acceptance of appointment hereunder by a successor Indenture Trustee with respect to
the Securities or to add to or change any of the provisions of this Indenture as shall be necessary and permitted to provide for or facilitate the
administration of the trusts hereunder by more than one trustee pursuant to the requirements of Article 11;
provided, however, that no amendment or supplement shall be permitted unless a Tax Opinion is delivered to the Indenture Trustee.
Upon the request of the Issuer, the Indenture Trustee shall join with the Issuer in the execution of any supplemental indenture or
amendment authorized or permitted by the terms of this Indenture and shall make any further appropriate agreements and stipulations that may
be therein contained, but the Indenture Trustee shall not be obligated to enter into such supplemental indenture or amendment that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section
13.2. Supplemental Indentures with Consent of Noteholders. The Issuer and the Indenture Trustee, when
authorized by an Issuer Order, also may, with the consent of the Required Noteholders and, if the Certificateholders’ rights and/or obligations
are materially and adversely affected thereby, the Required Certificateholders enter into one or more indenture supplements or amendments
hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such indenture supplement or
amendment shall, without the consent of the Required Noteholders and without the consent of the Holder of each outstanding Note affected
thereby (and in the case of clause (iii) below, the consent of each Secured Party):
(i) change the date of payment of any installment of principal of or interest on, or any premium payable upon the redemption of, any
Note or reduce in any manner the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto, modify the
provisions of this Indenture relating to the application of payments on, or the proceeds of the sale of, the Trust Estate to payment of principal
of, or interest on, the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is
payable;
(ii) change the Noteholder voting requirements with respect to any Transaction Document;
(iii) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article 9, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
86
4149-1382-4069
(iv) reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required for any such indenture supplement or amendment, or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;
(v) modify or alter the provisions of this Indenture regarding the voting of Notes held by the Issuer, the Seller or an Affiliate of the
foregoing;
(vi) reduce the percentage of the aggregate outstanding principal amount of the Notes, the consent of the Holders of which is
required to direct the Indenture Trustee to sell or liquidate the Trust Estate pursuant to Section 10.4 if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on the outstanding Notes;
(vii) modify any provision of this Section 13.2, except to increase any percentage specified herein or to provide that certain
additional provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected
thereby;
(viii) modify any of the provisions of this Indenture in such manner as to affect in any material respect the calculation of the amount
of any payment of interest or principal due on any Note on any Payment Date (including the calculation of any of the individual components of
such calculation), to alter the application of payments or to affect the rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained in this Indenture; or
(ix) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the
Trust Estate for the Notes (except for Permitted Encumbrances) or, except as otherwise permitted or contemplated in this Indenture, terminate
the Lien of this Indenture on any such collateral at any time subject hereto or deprive any Secured Party of the security provided by the Lien of
this Indenture.
The Indenture Trustee may, but shall not be obligated to, enter into any such amendment or supplement that affects the
Indenture Trustee’s rights, duties or immunities under this Indenture or otherwise.
It shall not be necessary for any consent of Noteholders or Certificateholders under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Additionally, with respect to
a Book-Entry Note, such consent may be provided directly by the Note Owner or indirectly through a Clearing Agency.
The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Note shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture or amendment to this
Indenture pursuant to this Section, the Indenture Trustee shall mail to each Holder of the Securities a copy of such supplemental indenture or
amendment. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture or amendment.
87
4149-1382-4069
Section 13.3. Execution of Supplemental Indentures. In executing any amendment or supplemental indenture permitted by
this Article 13 or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject
t o Section 11.1, shall be fully protected in relying upon, an Officer’s Certificate of the Issuer and an Opinion of Counsel stating that the
execution of such amendment or supplemental indenture is authorized, permitted or not prohibited (as the case may be) by this Indenture and
all conditions precedent to the execution of such amendment or supplemental indenture have been satisfied. Such Opinion of Counsel may be
subject to reasonable qualifications and assumptions of fact. The Indenture Trustee may, but shall not be obligated to, enter into any such
amendment or supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or
otherwise. No amendment or supplemental indenture may adversely affect the rights, duties, immunities, protections or indemnification rights
of any Agent, the Depositary Bank or the Securities Intermediary without its consent.
Section 13.4. Effect of Supplemental Indenture. Upon the execution of any amendment or supplemental indenture pursuant
to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the
Securities affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Securities shall thereafter be determined, exercised and enforced hereunder subject in
all respects to such modifications and amendments, and all the terms and conditions of any such amendment or supplemental indenture shall be
and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 13.5. [Reserved].
Section 13.6. [Reserved].
Section 13.7. [Reserved].
Section 13.8. Revocation and Effect of Consents. Until an amendment, supplemental indenture or waiver becomes
effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of
a Note that evidences the same debt or other amount payable as the consenting Holder’s Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the consent as to such Holder’s Security or portion of a Security
if the Indenture Trustee receives written notice of revocation before the date the amendment, supplemental indenture or waiver becomes
effective. An amendment, supplemental indenture or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
The Issuer may fix a record date for determining which Holders must consent to such amendment, supplemental indenture or waiver.
Section
13.9. Notation on or Exchange of Securities Following Amendment. The Indenture Trustee may place an
appropriate notation about an amendment, supplemental indenture or waiver on any Security thereafter authenticated. If the Issuer shall so
determine, new Securities so modified as to conform to any such amendment, supplemental indenture or waiver may be prepared and executed
by the Issuer and authenticated and delivered by the Indenture Trustee (upon receipt of an Issuer Order) in exchange for outstanding Securities.
Failure to make the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplemental
indenture or waiver.
Section
13.10. The Indenture Trustee to Sign Amendments, etc. The Indenture Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article 13 if the amendment or supplemental indenture does not adversely affect in any
material respect the rights, duties, liabilities or immunities of the Indenture Trustee. If any amendment or supplemental indenture does have
such a materially adverse effect, the Indenture Trustee may, but need not, sign it. In signing
88
4149-1382-4069
such amendment or supplemental indenture, the Indenture Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive and, subject to Section 11.1, shall be fully protected in relying upon, an Officer’s Certificate of the Issuer and an
Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized, permitted or not prohibited (as the
case may be) by this Indenture and that it will be valid and binding upon the Issuer in accordance with its terms and all conditions precedent to
the execution of such amendment or supplemental indenture have been satisfied.
ARTICLE 14.
REDEMPTION AND REFINANCING OF NOTES
Section 14.1. Redemption and Refinancing.
(a) The Notes are subject to redemption by the Issuer, at its option, in accordance with the terms of this Article 14, in full or
in part, on any Payment Date; provided that the Issuer has available funds sufficient to pay the Redemption Price. If the Notes are to be
redeemed pursuant to this Section 14.1, the Issuer shall furnish notice of such election to the Indenture Trustee and the Noteholders not later
than fifteen (15) days prior to the Redemption Date and the Issuer shall deposit with the Indenture Trustee in a Trust Account that is within the
sole control of the Indenture Trustee no later than 10:00 a.m. New York time on the Redemption Date the Redemption Price of the Notes to be
redeemed (or portion thereof) whereupon all such redeemed Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 14.2 to each Holder of such Notes.
(b) The redemption price for the Notes will be equal to the sum of (i) the Note Principal amount being redeemed
(determined without giving effect to any Notes owned by the Issuer), plus (ii) accrued and unpaid interest on such Notes through the day
preceding the Payment Date on which the redemption occurs, plus (iii) any other amounts payable to such Noteholders pursuant to the
Transaction Documents, plus (iv) any other amounts due and owing by the Issuer to the other Secured Parties pursuant to the Transaction
Documents, minus (v) the amounts, if any, on deposit on such Payment Date in the Payment Account for the payment of the foregoing
amounts.
(c) Unless otherwise consented to by the Holders of 100% of the Certificates outstanding, concurrent with any redemption
of any Notes by the Issuer, the Issuer shall make a distribution on the Certificates in accordance with this Article 14 in an amount equal to the
sum of (i) the amount distributable on the Certificates on the Payment Date on which the redemption occurs (calculated as though the Notes
were not redeemed on such Payment Date), plus (ii) any other amounts due and owing to the Holders of the outstanding Certificates pursuant
to the Transaction Documents, in each case, without duplication and net of any amounts payable in connection with the redemption of the
Notes.
Section 14.2. Form of Redemption Notice. Subject to Section 2.17, notice of redemption under Section 14.1 shall be given
by the Indenture Trustee by facsimile or by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to
each Holder of Notes to be redeemed, as of the close of business on the Record Date preceding the applicable Redemption Date, at such
Holder’s address appearing in the Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Issuer’s good faith estimate of the Redemption Price;
89
4149-1382-4069
(iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as provided in Section 8.2); and
(iv) that interest on the Notes shall cease to accrue on the Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. For the
avoidance of doubt, the Issuer shall provide the Indenture Trustee with the actual Redemption Price prior to the applicable Redemption Date.
Failure to give notice of redemption, or any defect therein, to any Holder of any Note to be redeemed shall not impair or affect the validity of
the redemption of any other Note.
Section 14.3. Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as
required by Section 14.2, on the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE 15.
MISCELLANEOUS
Section 15.1. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee if requested thereby (i) an Officer’s Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been complied with, and (ii) an Opinion of Counsel (subject to
reasonable assumptions and qualifications) stating that in the opinion of such counsel all such conditions precedent, if any, have been complied
with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of the Underlying Securities or other property or securities (other than cash) with the Indenture
Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition
to any obligation imposed in
90
4149-1382-4069
Section 15.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee upon the Indenture Trustee’s request an Officer’s Certificate
certifying or stating the opinion of each individual signing such certificate as to the fair value (within ninety (90) days of such deposit) to the
Issuer of the Underlying Securities or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the then-current Fiscal Year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or more of the aggregate outstanding principal amount or par value of all the
Securities issued by the Issuer, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to
the Issuer as set forth in the related Officer’s Certificate is less than $25,000 or less than 1% percent of the aggregate outstanding principal
amount or par value of all the Securities issued by the Issuer of the Securities.
(iii) Other than with respect to the release of any cash (including Underlying Payments), and except for discharges of this Indenture
as described in Section 12.1, whenever any property or securities are to be released from the Lien of this Indenture, the Issuer shall also furnish
to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each individual signing such certificate as to the fair value
(within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such individual
the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or securities and of all other property other than cash (including Underlying
Payments) or securities released from the Lien of this Indenture since the commencement of the then current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or more of the aggregate outstanding principal amount or par value of
all Securities issued by the Issuer, but such certificate need not be furnished in the case of any release of property or securities if the fair value
thereof as set forth in the related Officer’s Certificate is less than $25,000 or less than 1% percent of the then aggregate outstanding principal
amount or par value of all Securities issued by the Issuer of the Securities.
Section 15.2. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any
such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller, the Administrator or the
91
4149-1382-4069
Issuer, stating that the information with respect to such factual matters is in the possession of or known to the Seller, the Administrator or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements,
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any
term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate
or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to
affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided
in Article 10.
Section 15.3. Acts of Noteholders and Certificateholders.
(a) Wherever in this Indenture a provision is made that an action may be taken or a notice, demand or instruction given by
Noteholders or Certificateholders, such action, notice or instruction may be taken or given by any Noteholder or Certificateholder, unless such
provision requires a specific percentage of Noteholders or Certificateholders. Notwithstanding anything in this Indenture to the contrary, so
long as any other Person is a Noteholder or Certificateholder, none of the Seller, the Issuer or any Affiliate controlled by Oportun or controlling
Oportun shall have any right to vote with respect to any Security.
(b) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders or Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders or Certificateholders in person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where
it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Noteholders or Certificateholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to
Section 11.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section.
manner of the Indenture Trustee.
(c) The fact and date of the execution by any Person of any such instrument or writing may be proved in any customary
(d) The ownership of Securities shall be proved by the Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any such
Securities shall bind such Noteholder or Certificateholder and the Holder of every Security and every subsequent Holder of such Securities
issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Security.
92
4149-1382-4069
Section 15.5. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered at, sent by facsimile to, sent by courier (overnight or hand-delivered) at or mailed by certified mail,
return receipt requested, to (a) in the case of the Issuer, to 2 Circle Star Way, Room 322, San Carlos, California 94070, Attention: Secretary,
and (b) in the case of the Indenture Trustee, to the Corporate Trust Office. Unless expressly provided herein, any notice required or permitted
to be mailed to a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at the address of such Noteholder or
Certificateholder as shown in the Register. Any notice so mailed within the time prescribed in this Indenture shall be conclusively presumed to
have been duly given, whether or not the Noteholder or Certificateholder receives such notice.
The Issuer or the Indenture Trustee by notice to the other may designate additional or different addresses for subsequent notices
or communications; provided, however, the Issuer may not at any time designate more than a total of three (3) addresses to which notices must
be sent in order to be effective.
Any notice (i) given in person shall be deemed delivered on the date of delivery of such notice, (ii) given by first class mail shall
be deemed given five (5) days after the date that such notice is mailed, (iii) delivered by telex or telecopier shall be deemed given on the date
of confirmation of the delivery of such notice by e-mail or telephone, and (iv) delivered by overnight air courier shall be deemed delivered one
(1) Business Day after the date that such notice is delivered to such overnight courier.
Notwithstanding any provisions of this Indenture to the contrary, the Indenture Trustee shall have no liability based upon or
arising from the failure to receive any notice required by or relating to this Indenture or the Securities.
If the Issuer mails a notice or communication to Noteholders or Certificateholder, it shall mail a copy to the Indenture Trustee at
the same time.
Section
15.5. Notices to Noteholders and Certificateholders; Waiver. Where this Indenture provides for notice to
Noteholders or Certificateholders of any event, such notice shall be sufficiently given if sent in accordance with Section 15.4 hereof. In any
case where notice to Noteholders or Certificateholders is given by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder or Certificateholder shall affect the sufficiency of such notice with respect to other Noteholders or
Certificateholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders or
Certificateholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken
in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders or Certificateholders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
Section 15.6. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the
Securities to the contrary, the Indenture Trustee on behalf of the Issuer may enter into any agreement with any Holder of a Security providing
for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the
93
4149-1382-4069
methods provided for in this Indenture for such payments or notices, provided that such methods are consented to by the Issuer (which consent
shall not be unreasonably withheld). The Indenture Trustee will cause payments to be made and notices to be given in accordance with such
agreements.
Section 15.7. [Reserved].
Section 15.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents
and Cross-Reference Table are for convenience of reference only, are not to be considered a part hereof, and shall not affect the meaning or
construction hereof.
Section 15.9. Successors and Assigns. All covenants and agreements in this Indenture and the Securities by the Issuer shall
bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.
Section 15.10. Separability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this
Indenture or Securities shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the Securities or rights of the Holders thereof.
Section 15.11. Benefits of Indenture. Except as set forth in this Indenture, nothing in this Indenture or in the Securities,
expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Secured Parties, any benefit
or any legal or equitable right, remedy or claim under the Indenture.
Section 15.12. Legal Holidays. In any case where the date on which any payment is due to any Secured Party shall not be a
Business Day, then (notwithstanding any other provision of the Securities or this Indenture) any such payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
Section
15.13. GOVERNING LAW; JURISDICTION . THIS INDENTURE AND THE SECURITIES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. EACH OF THE PARTIES TO THIS INDENTURE AND EACH SECURED
PARTY HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENT
THEREOF. EACH OF THE PARTIES AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.
Section 15.14. Counterparts; Electronic Execution. This Indenture may be executed in any number of counterparts, and by
different parties on separate counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument. Each of the parties hereto agrees that this transaction may be conducted by electronic means. Each
party agrees, and acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing,
adopting, and accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its
94
4149-1382-4069
handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this
Indenture in a usable format.
Section 15.15. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices,
such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture
Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders, the Certificateholders or any other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 15.16. Issuer Obligation. Neither any trustee nor any member of the Issuer nor any of their respective officers,
directors, employers or agents will have any liability with respect to this Indenture, and no recourse may be had solely to the assets of the Issuer
respect thereto. In addition, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Securities or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) any
assets of the Issuer other than the Trust Estate, (ii) the Seller, or the Indenture Trustee in their respective individual capacities, or (iii) any
partner, owner, incorporator, member, manager, beneficiary, beneficial owner, agent, officer, director, employee, shareholder or agent of the
Issuer, the Seller, or the Indenture Trustee, except as any such Person may have expressly agreed. Nothing in this Section 15.16 shall be
construed to limit the Indenture Trustee from exercising its rights hereunder with respect to the Trust Estate.
Section
15.17. No Bankruptcy Petition Against the Issuer . Each of the Secured Parties and the Indenture Trustee by
entering into the Indenture or any Note Purchase Agreement, and in the case of a Noteholder, Certificateholder and Note Owner, by accepting a
Security, hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of the latest maturing
Security and the termination of the Indenture, it will not institute against, or join with any other Person in instituting against, the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation Proceedings, or other Proceedings, under any United States federal or state
bankruptcy or similar Law in connection with any obligations relating to the Securities, the Indenture or any of the Transaction Documents. In
the event that any such Secured Party or the Indenture Trustee takes action in violation of this Section 15.17, the Issuer shall file an answer
with the bankruptcy court or otherwise properly contesting the filing of such a petition by any such Secured Party or the Indenture Trustee
against the Issuer or the commencement of such action and raising the defense that such Secured Party or the Indenture Trustee has agreed in
writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it
may assert. The provisions of this Section 15.17 shall survive the termination of this Indenture, and the resignation or removal of the Indenture
Trustee. Nothing contained herein shall preclude participation by any Secured Party or the Indenture Trustee in the assertion or defense of its
claims in any such Proceeding involving the Issuer.
Section 15.18. No Joint Venture. Nothing herein contained shall be deemed or construed to create a co-partnership or joint
venture between the parties hereto and the services of Oportun shall be rendered as an independent contractor and not as agent for the Indenture
Trustee or the Issuer.
Section 15.19. Rule 144A Information. For so long as any of the Securities are “restricted securities” within the meaning of
Rule 144(a)(3) under the Securities Act, the Issuer agrees to reasonably cooperate to provide to any Noteholders or Certificateholders and to
any prospective purchaser of Securities designated by such Noteholder or Certificateholder upon the request of such Noteholder or
Certificateholder or prospective purchaser, any information required to be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act if at the time of the request the Issuer is not a reporting company under Section
13 or
95
4149-1382-4069
Section 15(d) of the Exchange Act and the Administrator agrees to reasonably cooperate with the Issuer and the Indenture Trustee in
connection with the foregoing.
Section 15.20. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the
Indenture Trustee or any Secured Party, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by Law.
Section 15.21. Third-Party Beneficiaries. This Indenture will inure to the benefit of and be binding upon the parties hereto,
the Secured Parties, and their respective successors and permitted assigns. Except as otherwise provided in this Article 15, no other Person will
have any right or obligation hereunder.
Section 15.22. Merger and Integration. Except as specifically stated otherwise herein, this Indenture sets forth the entire
understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Indenture.
meeting of any Secured Parties.
Section 15.23. Rules by the Indenture Trustee. The Indenture Trustee may make reasonable rules for action by or at a
enough to prove this Indenture.
Section 15.24. Duplicate Originals. The parties may sign any number of copies of this Indenture. One signed copy is
Section 15.25. Waiver of Trial by Jury. To the extent permitted by applicable Law, each of the Secured Parties irrevocably
waives all right of trial by jury in any action or Proceeding arising out of or in connection with this Indenture or the Transaction Documents or
any matter arising hereunder or thereunder.
Section 15.26. No Impairment. Except for actions expressly authorized by this Indenture, the Indenture Trustee shall take
no action reasonably likely to impair the interests of the Issuer in any asset of the Trust Estate now existing or hereafter created or to impair the
value of any asset of the Trust Estate now existing or hereafter created.
[THIS SPACE LEFT INTENTIONALLY BLANK]
96
4149-1382-4069
this Indenture to be duly executed by their respective duly authorized officers as of the day and year first written above.
IN WITNESS WHEREOF, the Indenture Trustee, the Issuer, the Securities Intermediary and the Depositary Bank have caused
OPORTUN RF, LLC,
as Issuer
By:
Name: Jonathan Coblentz
Title: Treasurer
4149-1382-4069
[Indenture (Oportun RF, LLC)]
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Indenture Trustee
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Securities Intermediary
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Depositary Bank
By:
Name:
Title:
4149-1382-4069
[Indenture (Oportun RF, LLC)]
EXHIBIT A
TO INDENTURE
Form of Release and Reconveyance of Trust Estate
RELEASE AND RECONVEYANCE OF TRUST ESTATE
RELEASE AND RECONVEYANCE OF TRUST ESTATE, dated as of __________, _____, between Oportun RF, LLC (the
“Issuer”) and Wilmington Trust, National Association, a national banking association with trust powers (the “ Indenture Trustee”) pursuant to
the Indenture referred to below.
W I T N E S S E T H :
WHEREAS, the Issuer and the Indenture Trustee are parties to the Indenture dated as of December 20, 2021 (hereinafter as such
agreement may have been, or may from time to time be, amended, supplemented or otherwise modified, the “Indenture”);
WHEREAS, pursuant to the Indenture, upon the termination of the Lien of the Indenture pursuant to Section 12.1 of the
Indenture and after payment of all amounts due under the terms of the Indenture on or prior to such termination, the Indenture Trustee shall at
the request of the Issuer reconvey and release the Lien on the Trust Estate;
WHEREAS, the conditions to termination of the Indenture pursuant to Sections 12.1 and 12.6 have been satisfied;
WHEREAS, the Issuer has requested that the Indenture Trustee terminate the Lien of the Indenture on the Trust Estate pursuant
to Section 12.6; and
hereof;
WHEREAS, the Indenture Trustee is willing to execute such release and reconveyance subject to the terms and conditions
NOW, THEREFORE, the Issuer and the Indenture Trustee hereby agree as follows:
unless otherwise defined herein.
1 . Defined Terms . All terms defined in the Indenture and used herein shall have such defined meanings when used herein,
2 . Release and Reconveyance. (a) The Indenture Trustee does hereby release and reconvey to the Issuer, without recourse,
representation or warranty, on and after ____, ____ (the “Reconveyance Date”) all right, title and interest in the Trust Estate whether then
existing or thereafter created, all monies due or to become due with respect thereto and all proceeds of such Trust Estate, except for amounts, if
any, held by the Indenture Trustee or any Paying Agent pursuant to Section 12.5 of the Indenture.
(b) In connection with such transfer, the Indenture Trustee does hereby release the Lien of the Indenture on the Trust Estate
and agrees, upon the reasonable request and at the expense of the Issuer, to authorize the filing of any necessary or reasonably desirable UCC
termination statements in connection therewith.
3. [Reserved]
different parties on separate counterparts), each
4. Counterparts; Electronic Execution. This Release and Reconveyance may be executed in two or more counterparts (and by
A-1
4149-1382-4069
of which shall be an original, but all of which together shall constitute one and the same instrument. Each of the parties hereto agrees that this
transaction may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs
this Release and Reconveyance using an electronic signature, it is signing, adopting, and accepting this Release and Reconveyance and that
signing this Release and Reconveyance using an electronic signature is the legal equivalent of having placed its handwritten signature on this
Release and Reconveyance on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Release and
Reconveyance in a usable format.
5. Governing Law. THIS RELEASE AND RECONVEYANCE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
A-2
4149-1382-4069
IN WITNESS WHEREOF, the undersigned have caused this Release and Reconveyance of Trust Estate to be duly executed and delivered by
their respective duly authorized officers on the day and year first above written.
OPORTUN RF, LLC, as Issuer
By:
Name:
Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Indenture Trustee
By:
Name:
Title:
A-3
4149-1382-4069
B-1
4149-1382-4069
EXHIBIT B
TO INDENTURE
[Reserved]
EXHIBIT C
TO INDENTURE
FORM OF CLASS A RESTRICTED GLOBAL NOTE
RESTRICTED GLOBAL NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS NOTE MAY BE OFFERED, SOLD,
PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 144A, IN
COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN THE
SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT EITHER (I) IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS
DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT
TO SECTION 4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE
FOREGOING, A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW
THAT IS SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (II) (A)
ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR
LAW, AND (B) IT ACKNOWLEDGES AND AGREES THAT THIS NOTE IS NOT ELIGIBLE FOR ACQUISITION BY BENEFIT PLAN
INVESTORS OR GOVERNMENTAL OR OTHER PLANS SUBJECT TO SIMILAR LAW AT ANY TIME THAT THIS NOTE HAS BEEN
CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES OR IS RATED BELOW
INVESTMENT GRADE.
C-1
4149-1382-4069
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE,
SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH TRANSFEREE OF THIS NOTE,
BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE
INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND CONDITIONS SET FORTH IN
THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
C-2
4149-1382-4069
No. R-[_] $[_]
CUSIP No. 68378L AA2
THE PRINCIPAL OF THIS CLASS A NOTE MAY BE PAYABLE IN INSTALLMENTS AS SET FORTH IN THE INDENTURE
DEFINED HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED NOTES, CLASS A
Oportun RF, LLC, a Delaware limited liability company (herein referred to as the “Issuer”), for value received, hereby promises to
pay Cede & Co., or registered assigns, the principal sum set forth above or such other principal sum set forth on Schedule A attached hereto
(which sum shall not exceed $[_]), payable on each Payment Date as set forth in the Indenture, in an amount equal to the amount available for
distribution under Section 5.15(b)(iv) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or otherwise modified from
time to time, the “Indenture”), between the Issuer and the Indenture Trustee; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the Legal Final Payment Date (as defined in the Indenture). The Issuer will pay interest on this Class A Note
at the Class A Note Rate (as defined in the Indenture) on each Payment Date until the principal of this Class A Note is paid or made available
for payment, which interest will be computed on the basis set forth in the Indenture. Such principal of and interest on this Class A Note shall be
paid in the manner specified on the reverse hereof.
The Class A Notes are subject to optional redemption in accordance with the Indenture by the Issuer on any Payment Date.
The principal of and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Class A Note set forth on the reverse hereof and to the Indenture, which shall have
the same effect as though fully set forth on the face of this Class A Note.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual
signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory
for any purpose.
C-3
4149-1382-4069
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
C-4
4149-1382-4069
This is one of the Class A Notes referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Indenture Trustee
By:_____________________________________
Authorized Signatory
C-5
4149-1382-4069
[REVERSE OF NOTE]
This Class A Note is one of a duly authorized issue of Class A Notes of the Issuer, designated as its Asset Backed Notes, Class A,
(herein called the “Class A Notes ”), all issued under the Indenture dated as of December 20, 2021 (such Indenture, as supplemented or
amended, is herein called the “Indenture”), between the Issuer and Wilmington Trust, National Association, as trustee (the “ Indenture Trustee,”
which term includes any successor Indenture Trustee under the Indenture), as securities intermediary and as depositary bank, to which
Indenture reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and
the Class A Noteholders. The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the
Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
Principal of the Class A Notes will be payable on each Payment Date, and may be prepaid, in each case, as set forth in the Indenture.
“Payment Date” means the second (2 ) Business Day immediately following each Underlying Payment Date, commencing on [__], 202[_].
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the next
succeeding Business Day.
nd
All principal payments on the Class A Notes shall be made pro rata to the Class A Noteholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of interest on this Class A Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in full payment of this Class A Note, shall be made by wire transfer in
immediately available funds to the Person whose name appears as the Class A Noteholder on the Register as of the close of business on the
immediately preceding Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the
principal amount of this Class A Note effected by any payments made on any Payment Date or date of prepayment shall be binding upon all
future Class A Noteholders and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted on Schedule A attached hereto. If funds are expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Class A Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record Date immediately preceding such Payment Date prior to such
Payment Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the
Indenture Trustee’s principal Corporate Trust Office.
On any redemption, purchase, exchange or cancellation of any of the beneficial interests represented by this Restricted Global Note,
details of such redemption, purchase, exchange or cancellation shall be entered by the Paying Agent in Schedule A hereto recording any such
redemption, purchase, exchange or cancellation and shall be signed by or on behalf of the Issuer. Upon any such redemption, purchase,
exchange or cancellation, the principal amount of this Restricted Global Note and the beneficial interests represented by the Restricted Global
Note shall be reduced or increased, as appropriate, by the principal amount so redeemed, purchased, exchanged or cancelled.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Class A Noteholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security of the
Issuer and the termination of the Indenture institute against the Issuer or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any United States federal or state bankruptcy or
similar
C-6
4149-1382-4069
Law in connection with any obligations relating to the Securities, the Indenture or the Transaction Documents.
Each Class A Noteholder, by acceptance of a Class A Note, covenants and agrees that by accepting the benefits of the Indenture that
such Noteholder will treat such Note as debt for all federal, state and local income and franchise tax purposes.
Prior to the due presentment for registration of transfer of this Class A Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Class A Note (as of the date of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and
neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the
Indenture Trustee on the Securities or under the Indenture, including this Class A Note, against (i) any assets of the Issuer other than the Trust
Estate, (ii) the Seller or the Indenture Trustee in their respective individual capacities, or (iii) any partner, owner, incorporator, beneficiary,
beneficial owner, agent, officer, director, employee, shareholder or agent of the Issuer the Seller or the Indenture Trustee except as any such
Person may have expressly agreed.
The term “Issuer” as used in this Class A Note includes any successor to the Issuer under the Indenture.
The Class A Notes are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture,
subject to certain limitations therein set forth.
This Class A Note and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and interest on this Class A Note.
C-7
4149-1382-4069
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
_____________________________________
the within Class A Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Class A Note on the books kept for registration thereof, with full power of substitution in the premises.
(name and address of assignee)
Dated: _______________
Signature Guaranteed:
1
1
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without
alteration, enlargement or any change whatsoever.
——————————
C-8
4149-1382-4069
SCHEDULE A
SCHEDULE OF REDEMPTIONS
OR PURCHASES AND CANCELLATIONS
The following increases or decreases in principal amount of this Restricted Global Note or redemptions, purchases or cancellation of this
Restricted Global Note have been made:
Date of redemption or purchase
or cancellation
Increase or decrease in principal amount of this
Restricted Global Note due to redemption or
purchase or cancellation of this Restricted Global
Note
Remaining principal amount of this
Restricted Global Note following such
redemption or purchase or cancellation
Notation made by or on behalf of
the Issuer
__________
__________
__________
________________
________________
________________
_____________
_____________
_____________
_____________
_____________
_____________
C-9
4149-1382-4069
EXHIBIT D
FORM OF MONTHLY REPORT
(attached)
D-1
4149-1382-4069
EXHIBIT E
TO INDENTURE
FORM OF CERTIFICATE
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY
DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THIS CERTIFICATE MAY
BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) IN TRANSACTIONS MEETING THE REQUIREMENTS
OF RULE 144A, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF THE SELLER’S PROPERTY OR THE PROPERTY OF AN INVESTMENT ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN THE SELLER’S OR ACCOUNT’S CONTROL. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY TRANSFEREE FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
BY ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND ANY
FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE) SHALL BE DEEMED TO REPRESENT AND WARRANT
THAT IT IS NOT AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), WHICH IS SUBJECT TO TITLE I OF ERISA, A “PLAN” AS DESCRIBED IN
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), WHICH IS SUBJECT TO SECTION
4975 OF THE CODE, AN ENTITY DEEMED TO HOLD PLAN ASSETS OF ANY OF THE FOREGOING (EACH OF THE FOREGOING,
A “BENEFIT PLAN INVESTOR”), OR A GOVERNMENTAL OR OTHER PLAN SUBJECT TO APPLICABLE LAW THAT IS
SUBSTANTIALLY SIMILAR TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
THE INDENTURE (AS DEFINED BELOW) CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER AND RESALE OF
THIS CERTIFICATE. EACH TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE
ACCEPTED THIS CERTIFICATE, SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY. IN ADDITION, EACH
TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE MADE THE REPRESENTATIONS AND
AGREEMENTS SET FORTH IN THE INDENTURE.
BY ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO THE TERMS AND CONDITIONS SET
FORTH IN THE INDENTURE AND HEREIN.
EACH PURCHASER OF THIS CERTIFICATE IS HEREBY NOTIFIED THAT THE SELLER OF THIS CERTIFICATE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
E-1
4149-1382-4069
No. R144A-[_] Percentage of this Certificate: [_]%
SEE REVERSE FOR CERTAIN DEFINITIONS
OPORTUN RF, LLC
ASSET BACKED CERTIFICATE
Oportun RF, LLC, a limited liability company organized and existing under the laws of the State of Delaware (herein referred to as
the “Issuer”), for value received, hereby promises to pay Cede & Co., or registered assigns, on each Payment Date, an amount equal to 100% of
the amount available for distribution under Section 5.15(b)(vii) of the Indenture, dated as of December 20, 2021 (as amended, supplemented or
otherwise modified from time to time, the “Indenture”), between the Issuer and the Indenture Trustee. This Certificate will not accrue interest
and will represent 100% of the aggregate amount of Certificates issued under the Indenture. Payments with respect to this Certificate will be
made in the manner specified on the reverse hereof.
The Certificates may be subject to redemption in connection with the optional redemption of the Notes in accordance with the
Indenture.
The payments with respect to this Certificate are payable in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Certificate set forth on the reverse hereof and to the Indenture, which shall have the
same effect as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.
E-2
4149-1382-4069
IN WITNESS WHEREOF, the Issuer, has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer as of
the date set forth below.
OPORTUN RF, LLC
By:_____________________________________
Authorized Officer
Attested to:
By:
Authorized Officer
E-3
4149-1382-4069
This is one of the Certificates referred to in the within mentioned Indenture.
CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Indenture Trustee
By:_____________________________________
Authorized Officer
E-4
4149-1382-4069
[REVERSE OF CERTIFICATE]
This Certificate is one of a duly authorized issue of Certificates of the Issuer, designated as its Asset Backed Certificates (herein called
the “Certificates”), all issued under the Indenture, dated as of December 20, 2021 (the “Indenture”), between the Issuer and Wilmington Trust,
National Association, as indenture trustee (the “Indenture Trustee,” which term includes any successor Trustee under the Indenture), as
securities intermediary and as depositary bank, to which Indenture reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Certificateholders. The Certificates are subject to all terms of the Indenture.
All terms used in this Certificate that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.
“Payment Date” means the second (2nd) Business Day immediately following each Underlying Payment Date, commencing on January
12, 2022.
“Underlying Payment Date” means the eighth (8th) day of each calendar month, or if such eighth (8th) day is not a Business Day, the
next succeeding Business Day.
All payments with respect to the Certificates shall be made pro rata to the Certificateholders entitled thereto.
Subject to certain limitations set forth in the Indenture, payments of amounts with respect to the Certificates shall be made by wire
transfer in immediately available funds to the Person whose name appears as the Certificateholder on the Register as of the close of business
on the immediately preceding Record Date without requiring that this Certificate to be submitted for notation of payment.
Each Certificateholder, by acceptance of a Certificate, covenants and agrees that by accepting the benefits of the Indenture that such
Certificateholder will not prior to the date which is one year and one day after the payment in full of the last maturing Security institute against
the Issuer or join in any institution against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings, under any United States federal or state bankruptcy or similar Law in connection with any obligations relating to the
Securities, the Indenture or the Transaction Documents.
Prior to the due presentment for registration of transfer of this Certificate, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Certificate (as of the date of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not this Certificate be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the
Indenture, including this Certificate, against any Seller, the Servicer, the Trustee or any partner, owner, incorporator, beneficiary, beneficial
owner, agent, officer, director, employee, shareholder or agent of the Issuer, any Seller, the Servicer or the Trustee except as any such Person
may have expressly agreed.
The term “Issuer” as used in this Certificate includes any successor to the Issuer under the Indenture.
The Certificates are issuable only in registered form as provided in the Indenture in denominations as provided in the Indenture, subject
to certain limitations therein set forth.
E-5
4149-1382-4069
This Certificate and the Indenture shall be construed in accordance with the Laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance
with such Laws.
No reference herein to the Indenture and no provision of this Certificate or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay amounts payable under Section 5.15(b)(vii) of the Indenture.
E-6
4149-1382-4069
Social Security or taxpayer I.D. or other identifying number of assignee
ASSIGNMENT
_____________________________________
FOR
VALUE
RECEIVED,
the
undersigned
hereby
sells,
assigns
and
transfers
unto
(name and address of assignee)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints ____________, attorney, to transfer said
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated: _______________
Signature Guaranteed:
2
——————————
2
NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever.
E-7
4149-1382-4069
Schedule 1
AMORTIZATION SCHEDULE
Scheduled Note
Principal Amount
$75,484,000
$75,484,000
$75,484,000
$75,484,000
$75,484,000
$75,484,000
$71,981,000
$68,404,000
$64,753,000
$61,041,000
$57,237,000
$53,353,000
$49,388,000
$45,341,000
$41,240,000
$28,961,000
$20,148,000
$18,571,000
$16,261,000
$11,529,000
$0
Minimum Principal
Payment Amount
$0
$0
$0
$0
$0
$0
$3,503,000
$3,577,000
$3,651,000
$3,712,000
$3,804,000
$3,884,000
$3,965,000
$4,047,000
$4,101,000
$12,279,000
$8,813,000
$1,577,000
$2,310,000
$4,732,000
$11,529,000
Date / Payment Date
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Schedule 1-1
4149-1382-4069
Schedule 2
CUSTODY ACCOUNT ALLOCATIONS
Underlying Securities
2019-A Certificates
2021-A Certificates
2021-B Certificates
2021-C Certificates
2022-A Certificates
2022-2 Certificates
Percentage Interest Maintained in
First Priority Custody Account
84.00%
82.00%
83.50%
83.00%
77.00%
46.50%
Percentage Interest Maintained in
Second Priority Custody Account
16.00%
18.00%
16.50%
17.00%
23.00%
53.50%
Schedule 2-1
4149-1382-4069
Schedule 3
PERFECTION REPRESENTATIONS, WARRANTIES
AND COVENANTS
With respect to such of the Trust Estate as constitutes securities entitlements:
(1) This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Trust Estate in favor of the
Indenture Trustee, which security interest is prior to all other security interests, and is enforceable as such against creditors of and purchasers
from the Issuer.
(2) All of the Trust Estate has been and will have been credited to a securities account. The securities intermediary for each securities
account has agreed to treat all assets credited to such securities account as “financial assets” within the meaning of the UCC.
(3) The Issuer owns and has good and marketable title to the Trust Estate free and clear of any security interest, claim, or encumbrance
of any Person.
(4) The Issuer has received all consents and approvals required by the terms of the Trust Estate to the transfer to the Indenture Trustee
of its interest and rights in the Trust Estate hereunder.
(5) The Issuer has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted in the Trust Estate to the Indenture
Trustee hereunder.
(6) Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the Trust Estate. The Issuer has not authorized the filing of and is not aware of
any financing statements against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement
relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment
or tax lien filings against the Issuer.
Schedule 3-1
4149-1382-4069
Schedule 4
LIST OF PROCEEDINGS
[None]
4162-8896-5957.3
SCHEDULE III
Reissued Monthly Report for February 2023 Payment Date
EXECUTION VERSION
Exhibits B and C to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
OPORTUN CCW TRUST
MASTER AMENDMENT TO TRANSACTION DOCUMENTS
This MASTER AMENDMENT TO TRANSACTION DOCUMENTS, dated as of March 8, 2023 (this “Amendment”), is
entered into among:
(i)
(ii)
OPORTUN CCW TRUST, as issuer (the “Issuer”);
OPORTUN CCW DEPOSITOR, LLC, as depositor (the “Depositor”);
(iii)
OPORTUN, INC., as seller (in such capacity, the “ Seller”), as servicer (in such capacity, the “Servicer” and, together
with the Issuer, the Depositor and the Seller, the “Oportun Entities”);
(iv) WILMINGTON TRUST, NATIONAL ASSOCIATION (“ WTNA”), as indenture trustee (in such capacity, the
“Indenture Trustee”), as securities intermediary (in such capacity, the “Securities Intermediary”), and as depositary bank (in such capacity, the
“Depositary Bank”); and
(v) WEBBANK, as Holder of 100% of the outstanding Notes (the “Note Purchaser”).
RECITALS
WHEREAS, the Issuer, the Indenture Trustee, the Securities Intermediary and the Depositary Bank have previously entered into
that certain Indenture, dated as of December 20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Indenture”);
WHEREAS, the Issuer, the Depositor, the Seller, the Servicer and the Note Purchaser have previously entered into that certain
Note Purchase Agreement, dated as of December 20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Note Purchase
Agreement”);
20, 2021 (as amended, modified or supplemented prior to the date hereof, the “Servicing Agreement”);
WHEREAS, the Issuer and the Servicer have previously entered into that certain Servicing Agreement, dated as of December
WHEREAS, the parties hereto desire to amend the Indenture, the Note Purchase Agreement and the Servicing Agreement, in
each case to the extent such party is party thereto, as provided herein; and
WHEREAS, as evidenced by their signature hereto, the Required Noteholders have consented to the amendments provided for
herein.
the receipt and adequacy of which are hereby acknowledged, each party hereto agrees as follows:
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration,
ARTICLE I
DEFINITIONS
SECTION1.01
Defined Terms Not Defined Herein . All capitalized terms used herein that are not defined herein shall have the
meanings assigned to them in, or by reference in, the Indenture.
ARTICLE II
AMENDMENTS TO THE TRANSACTION DOCUMENTS
SECTION 2.01. Amendments to the Indenture. In accordance with Section 13.2 of the Indenture, the Issuer, the Indenture Trustee,
the Securities Intermediary and the Depositary Bank agree that the Indenture is hereby amended to incorporate the changes reflected on the
marked pages of the Indenture attached hereto as Exhibit A.
SECTION 2.02. Amendments to the Note Purchase Agreement . In accordance with Section 10.1 of the Note Purchase Agreement,
the Issuer, the Depositor, the Seller, the Servicer and the Note Purchaser agree that the Note Purchase Agreement is hereby amended to
incorporate the changes reflected on the marked pages of the Purchase Agreement attached hereto as Exhibit B.
SECTION 2.03. Amendments to the Servicing Agreement . In accordance with Section 8.6 of the Servicing Agreement, the Issuer
and the Servicer agree that the Servicing Agreement is hereby amended to incorporate the changes reflected on the marked pages of the
Servicing Agreement attached hereto as Exhibit C.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties. Each Oportun Entity hereby represents and warrants to the other parties hereto
that:
(a)
Representations and Warranties. Both before and immediately after giving effect to this Amendment, the representations and
warranties made by such Oportun Entity in the Transaction Documents to which it is a party are true and correct as of the date hereof (unless
stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).
(b)
No Defaults. No Rapid Amortization Event, Event of Default, Servicer Default or Default has occurred and is continuing or
shall result from the execution and delivery of this Amendment.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Ratification of Transaction Documents. As amended by this Amendment, each Transaction Documented amended
hereby is in all respects ratified and confirmed, and each such Transaction Document, as amended by this Amendment, shall be read, taken and
construed together with this Amendment as one and the same instrument.
SECTION 4.02. Counterparts. This Amendment may be executed in any number of counterparts, and by different parties in separate
counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the
same instrument. Each of the parties hereto agrees that the transaction consisting of this Amendment may be conducted by electronic means.
Each party agrees, and acknowledges that it is such party’s intent, that if
4135-8437-4341.6
2
such party signs this Amendment using an electronic signature, it is signing, adopting, and accepting this Amendment and that signing this
Amendment using an electronic signature is the legal equivalent of having placed its handwritten signature on this Amendment on paper. Each
party acknowledges that it is being provided with an electronic or paper copy of this Amendment in a usable format.
SECTION 4.03. Recitals. The recitals contained in this Amendment shall be taken as the statements of the Oportun Entities, and no
other party assumes any responsibility for their correctness.
SECTION 4.04. Rights of the Indenture Trustee, the Securities Intermediary and the Depositary Bank . The rights, privileges and
immunities afforded to the Indenture Trustee, the Securities Intermediary and the Depositary Bank under the Indenture shall apply hereunder
as if fully set forth herein.
SECTION 4.05. GOVERNING LAW; JURISDICTION.
(a)
AS IT RELATES TO EACH TRANSACTION DOCUMENT, THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
(b)
EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE PARTIES HERETO AND
EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION
TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 4.06. Effectiveness. This Amendment shall become effective as of the date hereof upon:
(a)
receipt by the Indenture Trustee of an Administrator Order directing it to execute and deliver this Amendment;
(b)
receipt by the Indenture Trustee of an Opinion of Counsel and an Officer’s Certificate of the Administrator stating that the
execution of this Amendment is authorized and permitted by the Indenture and all conditions precedent to the execution of this Amendment
under the Indenture have been satisfied;
(c)
receipt by the parties hereto of counterparts of this Amendment, duly executed by each of the parties hereto and consented to by
the Required Noteholders;
(d)
receipt by the Indenture Trustee of such other instruments, documents, agreements and opinions reasonably requested by the
Indenture Trustee prior to the date hereof; and
(e)
receipt by the Note Purchaser of a certificate of each of the Seller, the Depositor and the Issuer addressing certain matters
reasonably requested by the Note Purchaser prior to the date hereof.
SECTION 4.07. Limitation of Liability.
4135-8437-4341.6
3
(a)
It is expressly understood and agreed by the parties hereto that (i) this Amendment is executed and delivered by Wilmington
Savings Fund Society, FSB (“WSFS”), not individually or personally but solely as owner trustee of the Issuer (the “Owner Trustee ”), in the
exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on
the part of the Issuer is made and intended not as personal representations, undertakings and agreements by WSFS but made and intended for
the purpose of binding only the Issuer, (iii) nothing herein contained shall be construed as creating any liability on WSFS, individually or
personally, to perform any covenants, either expressed or implied, contained herein, all personal liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under the parties hereto, (iv) WSFS has made no investigation as to the accuracy or
completeness of any representations and warranties made by the Issuer in this Amendment and (v) under no circumstances shall WSFS be
personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related document.
4135-8437-4341.6
(Signature page follows)
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of
the day and year first above written.
OPORTUN CCW TRUST,
as Issuer
By: Wilmington Savings Fund Society, FSB, not in its individual capacity, but solely as Owner
Trustee of the Issuer
By: /s/ James Smith
Name: James Smith
Title: Assistant Vice President
Master Amendment to Transaction Documents
OPORTUN CCW DEPOSITOR, LLC,
as Depositor
By: /s/ Kathleen Layton
Name: Kathleen Layton
Title: Secretary
OPORTUN, INC.,
as Seller and Servicer
By: /s/ Jonathan Coblentz
Name: Jonathan Coblentz
Title: Chief Financial Officer
Master Amendment to Transaction Documents
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities Intermediary
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Depositary Bank
By: /s/ Drew H. Davis
Name: Drew H. Davis
Title: Vice President
Master Amendment to Transaction Documents
WEBBANK,
as Holder of 100% of the outstanding Notes
By: /s/ Jason Lloyd
Name: Jason Lloyd
Title: President & CEO
Master Amendment to Transaction Documents
EXHIBIT A
Amendments to the Indenture
(Attached)
Master Amendment to Transaction Documents
CONFORMED COPY
As amended by the Master Amendment to
Transaction Documents, dated as of March 8, 2023
OPORTUN CCW TRUST,
as Issuer
and
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Indenture Trustee, as Securities Intermediary and as Depositary Bank
INDENTURE
Dated as of December 20, 2021
Variable Funding Asset Backed Notes
Master Amendment to Transaction Documents
(b)
the failure of Oportun Financial Corporation to, directly or indirectly through its Subsidiaries, own 100% of the equity
interest of the Seller free and clear of any Lien (other than a Parent Term Loan Lien); or
(c)
the failure of the Seller to, directly or indirectly through its Subsidiaries, own 100% of the equity interest of the Depositor
and the Issuer, in each case free and clear of any Lien (other than a Parent Term Loan Lien).
“Class A Additional Interest” has the meaning specified in Section 5.12(a). “Class A Deficiency Amount” has the meaning
specified in Section 5.12(a).
“Class A Initial Principal Amount ” means the aggregate initial principal amount of the Class A Notes on the Closing Date, which was
$41,000,000.00.
“Class A Maximum Principal Amount” means $150,000,000120,000,000. “Class A Monthly Interest” has the meaning
specified in Section 5.12(a).
“Class A Note Principal ” means, on any date of determination and with respect to any Class A Note, the outstanding principal amount
of such Class A Note.
“Class A Note Rate” means, with respect to any day, a variable rate per annum equal to the sum of (i) the Benchmark on such day (or if
the Alternative Rate applies on such day pursuant to Section 5.17, the Alternative Rate), plus (ii) (x) during the Revolving Period, the
Applicable Margin and (y) otherwise, the Default Margin.
“Class A Noteholder” means a Holder of a Class A Note.
“Class A Notes” has the meaning specified in paragraph (a) of the Designation.
“Closing Date” means December 20, 2021.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and Treasury Regulations promulgated thereunder.
“Collateral Trustee” means initially Wilmington Trust, National Association, acting in the capacity of collateral trustee under the
Collateral Trustee Appointment, and its successors and any corporation resulting from or surviving any consolidation or merger to which it or
its successors may be a party and any successor collateral trustee.
“Collateral Trustee Appointment ” means the Collateral Trustee Appointment, dated as of June 21, 2022, among the Indenture Trustee,
the Servicer, PF Servicing, LLC, Oportun Financial Corporation and the Collateral Trustee.
“Collection Account” has the meaning specified in Section 5.3(a).
Master Amendment to Transaction Documents
“Collections” means, for any Transferred Receivable for any period (if applicable), (a) the sum of all amounts (including insurance
proceeds), whether in the form of cash, checks,
“Initial Cut-Off Date” has the meaning set forth in the Transfer Agreement.
“Initial Originator” means WebBank, a Utah state-chartered bank.
“Insolvency Event” shall be deemed to have occurred with respect to a Person if:
(a)
a Proceeding shall be commenced, without the application or consent of such Person, before any Governmental Authority,
seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or adjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee or the like for such Person or all or substantially all of its assets, or any
similar action with respect to such Person under any Law relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and in the case of any Person, such Proceeding shall continue undismissed, or unstayed and in effect, for a period of sixty
(60) consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy Laws
or other similar Laws now or hereafter in effect; or
(b)
such Person shall (i) consent to the institution of any Proceeding or petition described in clause (a) of this definition, or (ii)
commence a voluntary Proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar
Law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or other similar official for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its
board of directors shall vote to implement any of the foregoing.
“Interest Period” means, with respect to any Payment Date, the prior Monthly Period.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“Investment Earnings” means all interest and earnings (net of losses and investment expenses) accrued on funds on deposit in the Trust
Accounts.
“Issuer” has the meaning specified in the preamble of this Indenture. “Issuer Distributions” has the meaning
specified in Section 5.4(c).
“Issuer Order” and “Issuer Request” means a written order or request signed in the name of the Issuer by any one of its Responsible
Officers and delivered to the Indenture Trustee.
“Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
“Legacy Additional Interest” has the meaning specified in the Fee Letter, as notified by
the Issuer to the Servicer in writing.
Master Amendment to Transaction Documents
“Legacy Expiration Date” means February 5, 2023.
“Legal Final Payment Date” means the Payment Date immediately following the 365th day after the commencement of the
Amortization Period.
“Leverage Ratio” means, on any date of determination, the ratio of (i) Liabilities to (ii) Tangible Net Worth.
“Leverage Ratio Covenant” means that the Parent will have a maximum Leverage Ratio equal to the lesser of (i) 11.5:1 and (ii) the
maximum leverage ratio or similar covenant for the Parent set forth in any Oportun Comparable Facility.
“Liabilities” means, on any date of determination, the total liabilities which would appear on the balance sheet of the Parent and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
“LIBOR” has the meaning assigned to such term in Section 5.12(b).
“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC or comparable Law of
any jurisdiction).
“Liquidity Covenant” means that the Seller will have a minimum liquidity equal to the greater of (i) $10,000,000, equal to unrestricted
cash or Cash Equivalents, and (ii) the minimum liquidity or similar covenant for the Seller set forth in any Oportun Comparable Facility.
“London Banking Day” means, for the purpose of determining One-Month LIBOR, any day that banking institutions in London,
England are open for business other than a Saturday, Sunday or other day on which banking institutions in London, England trading in Dollar
deposits in the London interbank market are authorized or obligated by law or executive order to be closed.
“Material Adverse Effect” means any event or condition which would have a material adverse effect on (i) the collectability of any
material portion of the Receivables, (ii) the condition (financial or otherwise), businesses or properties of the Issuer, the Depositor, the Servicer
or the Seller, (iii) the ability of the Issuer, the Depositor or the Seller to perform its respective obligations under the Transaction Documents or
the ability of the Servicer to perform its obligations under the Servicer Transaction Documents or (iv) the interests of the Indenture Trustee or
any Secured Party in the Trust Estate or under the Transaction Documents.
“Monthly Period” means the period from and including the first day of a calendar month to and including the last day of a calendar
month; provided, however, that the first Monthly
Master Amendment to Transaction Documents
“Required Monthly Payments” has the meaning specified in Section 5.4(c).
“Required Noteholders” means each of (a) WebBank (but only if WebBank or an affiliate thereof is then holding any Notes) and (b) the
holders of the Class A Notes representing (i) in excess of 50% of the aggregate principal balance of the Class A Notes outstanding or (ii) if no
amount is then outstanding under the Class A Notes, Committed Purchase Amounts in excess of 50% of the Aggregate Committed Purchase
Amount (or, if the Class A Notes have been paid in full, the Required Certificateholders).
“Requirements of Law” means, as to any Person, the organizational documents of such Person and any Law applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is subject.
“Reserve Account” has the meaning specified in Section 5.3(b).
“Reserve Account Requirement ” means, for any Monthly Period, (a) initially, and for so long as the Three-Month Average Default
Percentage for such Monthly Period is less than 18.0%, zero, (b) commencing with the third Monthly Period, (i) if the Three-Month Average
Default Percentage for such Monthly Period is equal to or greater than 18.0% but less than 19.0%, an amount equal to 1.0% of the Aggregate
Eligible Receivables Balance, and (ii) if the Three-Month Average Default Percentage for such Monthly Period is equal to or greater than
19.0%, an amount equal to 2.0% of the Aggregate Eligible Receivables Balance.
“Responsible Officer” means (i) with respect to any Person, the member, the Chairman, the President, the Controller, any Vice
President, the Secretary, the Treasurer, or any other officer of such Person or of a direct or indirect managing member of such Person, who
customarily performs functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter
any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and (ii)
with respect to the Indenture Trustee, in any of its capacities hereunder, a Trust Officer.
“Revolving Period” means the period from and including the Closing Date to, but not including, the earlier of (i) the Scheduled
Amortization Period Commencement Date and (ii) the Rapid Amortization Date.
“Rule 144A” has the meaning specified in Section 2.9(a).
“Scheduled Amortization Period Commencement Date” means December 1, 20232024 (as such date may be extended pursuant to
Section 2.4 of the Note Purchase Agreement).
“Secured Obligations” means (i) all principal and interest, at any time and from time to time, owing by the Issuer on the Notes
(including any Note held by the Seller, the Depositor, the Servicer, the Parent or any Affiliate of any of the foregoing), and (ii) all costs, fees,
expenses, indemnity and other amounts owing or payable by, or obligations of, the Issuer to any Secured Party under the Indenture or the other
Transaction Documents.
“Secured Parties” has the meaning specified in the Granting Clause of this Indenture.
Master Amendment to Transaction Documents
(a) An amount equal to the Distributable Funds for such Payment Date shall be distributed by the Indenture Trustee on such
Payment Date in the following priority to the extent of funds available therefor:
(i)
first, to the Indenture Trustee, the Securities Intermediary, the Depositary Bank, the Certificate Registrar, the Collateral
Trustee, the Owner Trustee, the Depositor Receivables Trustee, the Back-Up Servicer and any successor Servicer (distributed on a pari
passu and pro rata basis), an amount equal to the accrued and unpaid Trustee, Back-Up Servicer and Successor Servicer Fees and
Expenses for such Payment Date (plus the Trustee, Back-Up Servicer and Successor Servicer Fees and Expenses due but not paid on
any prior Payment Date);
(ii)
second, if Oportun, Inc. is the Servicer, to the Servicer an amount equal to the accrued and unpaid Servicing Fee for such
Payment Date (plus any Servicing Fee due but not paid on any prior Payment Date);
(iii)
third, (A) to the Class A Noteholders, an amount equal to the sum of (I) the Class A Monthly Interest for such Payment
Date, plus (II) the amount of any Class A Deficiency Amount for such Payment Date, plus (III) the amount of any Class A Additional
Interest for such Payment Date, and (B) to the Class A Noteholders, an amount equal to the aggregate accrued and unpaid Unused Fees
for the prior Monthly Period and (C) to the Class A Noteholders, an amount equal to the aggregate accrued
and unpaid Legacy Additional Interest for the prior Monthly Period;
(iv)
fourth, to the Class A Noteholders, an amount equal to the Borrowing Base Shortfall, if any;
(v)
fifth, to the Class A Noteholders, any other amounts payable thereto (excluding the Aggregate Class A Note Principal but
including any unreimbursed fees, expenses and indemnity amounts) pursuant to the Transaction Documents;
(vi)
sixth, during the Amortization Period and at any time on or after the Legal Final Payment Date, to the Class A
Noteholders, all remaining amounts until the Class A Notes have been paid in full;
(vii) seventh, to the Indenture Trustee, the Securities Intermediary, the Depositary Bank, the Certificate Registrar, the
Collateral Trustee, the Owner Trustee, the Depositor Receivables Trustee, the Back-Up Servicer and any successor Servicer
(distributed on a pari passu and pro rata basis), an amount equal to any unreimbursed fees, expenses and indemnity amounts of the
Indenture Trustee, the Securities Intermediary, the Depositary Bank, the Certificate Registrar, the Collateral Trustee, the Owner
Trustee, the Depositor Receivables Trustee, the Back-Up Servicer and any successor Servicer;
(viii) eighth, so long as no Rapid Amortization Event or Event of Default has occurred and is continuing, an amount equal to
the lesser of (A) the remaining Distributable Funds and (B) the amount, if any, necessary to increase the amounts
Execution Version
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to the Credit Agreement (this “Amendment”), dated as of November 22, 2022, is entered into by and among
Oportun Financial Corporation, a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto, Wilmington Trust,
National Association, in its capacity as administrative agent (the “Administrative Agent”) and Wilmington Trust, National Association, in its
capacity as collateral agent (the “Collateral Agent”).
WHEREAS, the Borrower, the Lenders, the Administrative Agent and the Collateral Agent are parties to that certain Credit Agreement,
dated as of September 14, 2022 (as further amended or modified from time to time, the “Credit Agreement”);
WHEREAS, the parties hereto agree to now amend the terms of the Credit Agreement as provided for herein; and
NOW, THEREFORE, based on the mutual premises and agreements contained herein, and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS
Except as otherwise defined in this Amendment, capitalized terms used but not defined herein will have the meanings specified in the
Credit Agreement.
Section 2. AMENDMENTS TO THE CREDIT AGREEMENT
(1)
(2)
References in the Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein” and “hereof”)
shall be deemed to be references to the Credit Agreement as amended hereby.
Language being inserted into the applicable section of the Credit Agreement or applicable Schedule or Exhibit thereto is evidenced by
bold and underlined formatting in the same manner as the following example: double-underlined text. Language being deleted from
the applicable section of the Credit Agreement or applicable Schedule or Exhibit thereto is evidenced by strike through formatting in the
same manner as the following example: stricken text.
(3)
Section 1.01 of the Credit Agreement shall be amended by replacing the definition of the term “Excluded Account” with the following:
““Excluded Account” means (i) each Deposit Account or other account of a Loan Party which is used exclusively for the payment of
payroll, payroll taxes, employee benefits, withholding or escrow or fiduciary deposits, (ii) each Deposit Account or other account of a
Loan Party which is used exclusively for Cash or other assets held by a Loan Party or its banking partners or broker-dealer partners
solely for the benefit of customers in the ordinary course of business, (iii) each Bank Product Partner Account and each Other Product
Partner Account, (iv) accounts used to satisfy the requirements of an applicable Governmental Authority (including but not limited to
state licensing obligations), with the amounts therein not to exceed $500,000 in any individual account or $2,500,000 for all such
accounts in the aggregate (or, with respect to any such accounts of the Residual Financing Facility Limited Guarantor, $100,000 in any
individual account or $500,000 for all such accounts in the aggregate) (or in each case, such higher amount as may be agreed by the
Administrative Agent at the direction of the Required Lenders), (v) zero
balance accounts, (vi) any account the purpose of which is solely to hold Cash or Cash Equivalents as collateral for letters of credit
permitted to be issued under Section 7.05 or for Banking Services, and each Letter of Credit Proceeds Account, (vii) money market
accounts and accounts holding funds in respect of prepaid corporate cards held by a Loan Party, with the amounts held in such
accounts not to exceed $150,000 in the aggregate, and (viii)(vii) any such other account with a balance of less than $500,000 in any
individual account or $2,500,000 for all such accounts in the aggregate.”
(4)
Section 6.18 of the Credit Agreement shall be amended by replacing such section with the following:
“The Loan Parties agree, within ninety (90) forty-five (45) days after the Closing Date or, for accounts opened or acquired or which
cease to be Excluded Accounts after the Closing Date, within forty-five (45) days after the date any such account is opened or acquired,
or in each case such later date as reasonably agreed by the Required Lenders, to maintain as a Controlled Account, with an Account
Control Agreement in favor of the Collateral Agent, each Deposit Account or Securities Account of the Loan Parties that is not an
Excluded Account.”
(5)
Section 7.04(d) of the Credit Agreement shall be amended by replacing such section with the following:
“Investments received by any Loan Party in connection with workouts with, or bankruptcy, insolvency or other similar proceedings with
respect to, customers, working interest owners, other industry partners or any other Person;”
(6)
Section 7.15(b) of the Credit Agreement shall be amended by replacing such section with the following:
“For so long as the obligations under Residual Financing Facility remain outstanding, open or acquire any Deposit Account, Securities
Account or other account held by the Residual Financing Facility Limited Guarantor, except (x) any such account that is an Excluded
Account pursuant to any of clauses (i) through (vii)(vi) of the definition thereof or (y) to the extent that such account is subject to an
Account Control Agreement in favor of the Collateral Agent; provided that notwithstanding anything to the contrary in the foregoing,
the Residual Financing Facility Limited Guarantor shall be permitted to hold accounts in existence on the Closing Date that are not
subject to an Account Control Agreement in favor of the Collateral Agent during the time period following the Closing Date for
implementing Account Control Agreements on Controlled Accounts pursuant to Section 6.18.”
Section 3. MISCELLANEOUS.
(1)
(2)
The parties hereto hereby agree that, except as specifically amended herein, the Credit Agreement shall remain unchanged and continue
to be in full force and effect and is hereby ratified and confirmed in all respects. Except as specifically provided herein, the execution,
delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any party hereto under the
Credit Agreement, or constitute a waiver of any provision of any other agreement.
Each of the undersigned Lenders (in aggregate constituting all of the Lenders under the Credit Agreement) hereby authorizes and
instructs the Agents, in their respective capacity under the Loan Documents, to execute and deliver this Amendment and any other Loan
Documents entered into in connection herewith on its behalf and, by its execution below,
2
each of the undersigned Lenders agrees to be bound by the terms and conditions of this Amendment and such other Loan Documents
relating thereto. The Agents shall have all of the same rights, protections, indemnities and immunities afforded to it under the Credit
Agreement.
The Borrower agrees to pay or reimburse the Agents and the Lenders for all of their reasonable costs and expenses incurred in connection
with this Amendment as set forth in Section 10.04 of the Credit Agreement.
This Amendment is a Loan Document and all references to a “Loan Document” in the Credit Agreement and the other Loan Documents
(including, without limitation, all such references in the representations and warranties in the Credit Agreement and the other Loan
Documents) shall be deemed to include this Amendment.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and
assigns as provided in the Credit Agreement.
Section headings are for convenience of reference only and shall in no way affect the interpretation of this Amendment.
This Amendment may be executed in any number of counterparts by facsimile, electronic transmission or other written form of
communication, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument.
(3)
(4)
(5)
(6)
(7)
(8)
[Remainder of page left intentionally blank.]
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BORROWER:
OPORTUN FINANCIAL CORPORATION
By: /s/ Jonathan Coblentz
Name: Jonathan Coblentz
Title: Jonathan Coblentz
AGENTS:
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Administrative Agent and as
Collateral Agent
By: /s/ Jay Campbell
Name: Jay Campbell
Title: Assistant Vice President
LENDERS:
NB SPECIALTY FINANCE FUND II LP , as a Lender
By: /s/ Zhengyuan Lu
Name: Zhengyuan Lu
Title: Managing Director
NBSF CANADA 2021 TRUST, as a Lender
By: /s/ Zhengyuan Lu
Name: Zhengyuan Lu
Title: Managing Director
LIST OF SUBSIDIARIES OF OPORTUN FINANCIAL CORPORATION
Exhibit 21.1
The following is a list of subsidiaries of Oportun Financial Corporation and the state or other jurisdiction in which each was organized. This list does not include dormant subsidiaries or
subsidiaries which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary within the meaning of Item 601(b)(21)(ii) of Regulation S-K.
Subsidiary
Digit Advisors, LLC
Hello Digit, LLC
Oportun CCW Depositor, LLC
Oportun CCW Trust
Oportun Depositor, LLC
Oportun Funding XIII, LLC
Oportun Funding XIV, LLC
Oportun Global Holdings, Inc.
Oportun Issuance Trust 2021-B
Oportun Issuance Trust 2021-C
Oportun Issuance Trust 2022-A
Oportun Issuance Trust 2022-2
Oportun Issuance Trust 2022-3
Oportun Funding A, LLC
Oportun PLW Depositor, LLC
Oportun PLW Trust
Oportun Receivables Holdings, LLC
Oportun RF, LLC
Oportun, Inc
Oportun, LLC
Oportun Canada, Inc.
OPRT Development Center Private Limited
OPTNSVC Mexico, S. de R.L. de C.V.
PF Servicing, LLC
PF Servicing, S. de R.L. de C.V.
Jurisdiction of Formation
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada
India
Mexico
Delaware
Mexico
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We consent to the incorporation by reference in Registration Statement No. 333-233979, 333-236893, 333-253375, 333-261964, and 333-263133 on Form S-8 of our reports dated
March 13, 2023, relating to the financial statements of Oportun Financial Corporation and subsidiaries and the effectiveness of Oportun Financial Corporation and subsidiaries’ internal
control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2022.
/s/ DELOITTE & TOUCHE LLP
San Francisco, CA
March 13, 2023
Exhibit 31.1
CERTIFICATIONS
I, Raul Vazquez, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Oportun Financial Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 14, 2023
/s/ Raul Vazquez
Raul Vazquez
Chief Executive Officer and Director
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATIONS
I, Jonathan Coblentz, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Oportun Financial Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 14, 2023
/s/ Jonathan Coblentz
Jonathan Coblentz
Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
CERTIFICATIONS
Exhibit 32.1
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. §1350), Raul Vazquez, Chief Executive Officer of Oportun Financial Corporation (the “Company”), and Jonathan Coblentz, Chief Financial Officer and
Chief Administrative Officer of the Company, each hereby certifies that, to the best of his knowledge:
1.
The Company’s Annual Report on Form 10-K for the fiscal period ended December 31, 2022, to which this Certification is attached as Exhibit 32.1 (the “Annual Report”), fully
complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
2.
The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 14, 2023
IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 14th day of March 2023.
/s/ Raul Vazquez
Raul Vazquez
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Jonathan Coblentz
Jonathan Coblentz
Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of
Oportun Financial Corporation. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K),
irrespective of any general incorporation language contained in such filing.