NOTE 13. SUBSEQUENT EVENTS

New Board Member

On November 6, 2023, the Board increased the size of the Board from five to six members and appointed Michael Zilis as a member of the Board, effective November 8, 2023, to serve as a Class II director until the Company’s 2025 annual meeting of stockholders and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Mr. Zilis was also appointed to serve as a member of the Audit Committee and Compensation Committee of the Board. The Board has determined that Mr. Zilis is an independent director under the listing standards of the NASDAQ Stock Market LLC (“Nasdaq”) and meets the additional independence requirements of Nasdaq with respect to members of the Audit Committee and Compensation Committee.

Term Loan

On November 7, 2023, Veritone entered into a commitment letter with certain funds managed by Highbridge Capital Management, LLC and with certain other lenders (collectively, the “Lenders”), pursuant to which the Lenders have committed, subject to the terms and conditions contained therein, to establish a senior secured term loan facility in an aggregate principal amount of $77.5 million (the “Term Loan”) and to provide the entire principal amount of the Term Loan. The full amount of the Term Loan must be drawn on the closing date of the Term Loan (the “Closing Date”) and may not be reborrowed.

The proceeds of the Term Loan would be used (i) to repurchase an aggregate $50.0 million principal amount of Veritone's existing Convertible Notes held by the Lenders for total consideration of $37.5 million, (ii) for general corporate purposes and (iii) to pay fees and

out-of-pocket expenses in connection with the Term Loan. The Convertible Notes would be repurchased, on the Closing Date, at a price equal to 75% of the principal amount of the Convertible Notes repurchased plus any accrued and unpaid interest on such notes as of the Closing Date.

Veritone will be the borrower under the Term Loan and all amounts under the Term Loan will be guaranteed by each of its direct and indirect material subsidiaries (Veritone and the guarantors, collectively being the “Credit Parties”). The Term Loan will generally be secured by a first-priority perfected security interest in and lien on substantially all tangible and intangible property of the Credit Parties and a pledge of equity interests held by the Credit Parties. The Term Loan will have certain customary default provisions, representations and warranties and affirmative and negative covenants, including a covenant to maintain unrestricted cash and cash equivalents of at least $15.0 million at all times.

The Term Loan will accrue interest at a rate of Term SOFR plus 8.50%, with a 3.00% floor for Term SOFR, payable quarterly. A default interest rate of an additional 3.00% per annum will apply on all outstanding obligations after the occurrence of an event of default.

The Term Loan will have a term of four years and will require quarterly amortization payments of 2.50% of the principal amount, commencing in June 2024, with the balance of the Term Loan payable on the scheduled maturity date. Veritone may, subject to certain conditions, elect to make any amortization payment in shares of its common stock. If Veritone elects to make any amortization payment in shares of its common stock, the principal amount will be proportionately prepaid over a 15 trading day period with the shares of common stock valued at a price per share equal to 95% of the volume weighted average price on each trading day during the 15 trading day period ending on the trading day immediately preceding the applicable date; provided that Veritone will pay any such amortization in cash if the common stock would be valued at less than the “Minimum Price”, as computed pursuant to Nasdaq Rule 5635(d), plus $0.0125.

The Term Loan will require mandatory prepayments from the net cash proceeds received by the Credit Parties for among other things (i) certain asset sales, but only to the extent net cash proceeds therefrom exceed $10.0 million, and (ii) insurance recoveries on loss of property that are not otherwise reinvested in other assets of the Credit Parties. The Term Loan will also require prepayment in full if $30.0 million or more of aggregate principal amount of the Convertible Notes are outstanding on August 14, 2026. Veritone may elect to prepay the Term Loans, in whole or in part, in cash, subject to a make-whole premium during the first year of the Term Loan, 14.0% prepayment premium during the second year of the Term Loan, and 7.0% premium during the third year of the Term Loan. Veritone may also prepay the Term Loan in shares of common stock, subject to a 13.0% prepayment premium, if the closing price of the common stock exceeds certain price thresholds for any 20 trading days during a 30 consecutive trading day period and subject to certain other conditions. If Veritone elects to prepay the Term Loan with shares of common stock, the principal amount will be proportionately prepaid over a 15-trading day period with the shares of common stock valued at price per share equal to 95% of the volume weighted average price of the common stock on the applicable prepayment date.

Veritone has agreed to issue warrants (the “Warrants”) to the Lenders to purchase up to 3,008,540 shares of its common stock. Veritone has agreed to issue a total of 20% of the Warrants to the Lenders in connection with the entry into the commitment letter, with the remaining 80% conditioned on the closing of the Term Loan. The Warrants will be exercisable for a period of five years following the closing of the Term Loan at a price per share of $2.576.

Pursuant to the Commitment Letter, Veritone will agree to enter into a registration rights agreement at or prior to the closing of the Term Loan for the resale of the shares of common stock issued pursuant to the terms of the Term Loan and the Warrants.

As of September 30, 2023, the Company held $72.1 million of unrestricted cash and cash equivalents. The Commitment Letter provides that the closing of the Term Loan is conditioned on, among other things, Veritone having unrestricted cash and cash equivalents of at least $55.0 million immediately prior to the funding of the Term Loan on the closing date and satisfaction of certain other conditions. The Commitment Letter will expire on December 15, 2023 if the Term Loan has not been consummated on or prior to that date. The Lenders will select a third party to serve as the sole administrative agent, collateral agent, and documentation agent in connection with the Term Loan.