PALT Paltalk Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 4) *

 

PALTALK, INC.

(Name of Issuer)

 

Common Stock

(Title of Class of Securities)

 

69764K106

(CUSIP Number)

 

Greg R. Samuel, Esq.

Haynes and Boone, LLP

2801 N. Harwood Street, Suite 2300

Dallas, Texas 75201

(214) 651-5000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

August 13, 2024

(Date of Event which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

CUSIP No. 69764K106
1. Names of Reporting Persons.   Jason Katz
2. Check the Appropriate Box if a Member of a Group (See Instructions)   (a) ☐ (b) ☑
3. SEC Use Only
4. Source of Funds (See Instructions)   PF, OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ☐
6. Citizenship or Place of Organization   United States
Number of Shares Beneficially Owned by Each Reporting Person With	7. Sole Voting Power   700,912
	8. Shared Voting Power   0
	9. Sole Dispositive Power   700,912
	10. Shared Dispositive Power   0
11. Aggregate Amount Beneficially Owned by Each Reporting Person   700,912(1)
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ☑   Excludes 201,265 shares of the Issuer’s Common Stock held by the spouse of Mr. Katz. Mr. Katz disclaims beneficial ownership of these securities, and this report shall not be deemed an admission that Mr. Katz is the beneficial owner of these securities for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or for any other purpose.
13. Percent of Class Represented by Amount in Row (11)   7.5%(2)
14. Type of Reporting Person (See Instructions)   IN

 

(1)

Includes (i) 625,912 shares of common stock, $0.001 par value per share (“Common Stock”), of Paltalk, Inc. (the “Issuer”) held by Mr. Katz and (ii) 75,000 shares of Common Stock issuable upon exercise of a stock option held by Mr. Katz, which is exercisable within sixty (60) days of this Schedule 13D.

 

(2)

The percentage is calculated based on 9,222,157 shares of Common Stock of the Issuer outstanding as of August 9, 2024 as disclosed in the Issuer’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which was filed by the Issuer with the Securities and Exchange Commission (the “Commission”) on August 13, 2024.

 

 

CUSIP No. 69764K106
1. Names of Reporting Persons.   Judy Katz
2. Check the Appropriate Box if a Member of a Group (See Instructions)   (a) ☐ (b) ☑
3. SEC Use Only
4. Source of Funds (See Instructions)   PF, OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ☐
6. Citizenship or Place of Organization   United States
Number of Shares Beneficially Owned by Each Reporting Person With	7. Sole Voting Power   201,265
	8. Shared Voting Power   0
	9. Sole Dispositive Power   201,265
	10. Shared Dispositive Power   0
11. Aggregate Amount Beneficially Owned by Each Reporting Person   201,265
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ☑   Excludes 700,912 shares of the Issuer’s Common Stock beneficially owned by the spouse of Ms. Katz. Ms. Katz disclaims beneficial ownership of these securities, and this report shall not be deemed an admission that Ms. Katz is the beneficial owner of these securities for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or for any other purpose.
13. Percent of Class Represented by Amount in Row (11)   2.2%(1)
14. Type of Reporting Person (See Instructions)   IN

 

(1)	The percentage is calculated based on 9,222,157 shares of Common Stock outstanding as of August 9, 2024 as disclosed in the Issuer’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which was filed by the Issuer with the Commission on August 13, 2024.

 

 

Explanatory Note

 

This Amendment No. 4 (this “Amendment”) reflects changes to the information in the Schedule 13D relating to the Common Stock of the Issuer filed by the Reporting Persons with the Commission on October 17, 2016, as amended by Amendment No. 1 to Schedule 13D filed by the Reporting Persons with the Commission on June 7, 2017, Amendment No. 2 to Schedule 13D filed by the Reporting Persons with the Commission on August 18, 2020 and Amendment No. 3 to Schedule 13D filed by the Reporting Persons with the Commission on October 19, 2021 (as amended, the “Schedule 13D”). Each capitalized term used and not defined herein shall have the meaning assigned to such term in the Schedule 13D. Except as otherwise provided herein, each Item of the Schedule 13D remains unchanged. This Amendment is being filed as a result of Mr. Katz’s entry into the Voting Agreement (as defined below) in connection with the Merger Agreement (as defined below), pursuant to which Mr. Katz is restricted from selling or transferring Common Stock, subject to certain customary exceptions, until the earlier of (i) stockholder approval of the Parent Stock Issuance and the Divestiture Transaction (each as defined below) being obtained, and (ii) the termination of the Merger Agreement pursuant to and in compliance with the terms thereof.

 

Item 3. Source and Amount of Funds or Other Consideration.

 

Item 3 of the Schedule 13D is hereby amended and supplemented as follows:

 

“Between November 19, 2021 and November 22, 2021, Mr. Katz expended an aggregate of approximately $56,650 of his personal funds to purchase 15,000 shares of Common Stock in the open market at various purchase prices.

 

On March 29, 2022, Mr. Katz was granted a stock option to purchase 75,000 shares of Common Stock pursuant to the Paltalk, Inc. 2016 Long-Term Incentive Plan. One-third of the shares underlying such stock option vested and became exercisable on the date of grant. The remaining shares vested in twenty-four equal monthly installments on each of the first twenty-four monthly anniversaries of the grant date.

 

Between June 10, 2022 and June 13, 2022, Mr. Katz expended an aggregate of approximately $54,150 of his personal funds to purchase 25,000 shares of Common Stock in the open market at various purchase prices.

 

Between August 23, 2022 and August 24, 2022, Mr. Katz expended an aggregate of approximately $26,850 of his personal funds to purchase 15,000 shares of Common Stock in the open market at various purchase prices.”

 

Item 4. Purpose of Transaction

 

Item 4 of the Schedule 13D is hereby amended and supplemented as follows:

 

“On August 11, 2024 (the “Execution Date”), the Issuer entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Issuer, PALT Merger Sub 1, Inc., a New York corporation and a direct and wholly owned subsidiary of the Issuer, PALT Merger Sub 2, LLC, a Delaware limited liability company and a direct and wholly owned subsidiary of the Issuer, Newtek Technology Solutions, Inc., a New York corporation (“NTS”), and NewtekOne, Inc., a Maryland corporation and the sole stockholder of NTS (“Newtek”), pursuant to which the Issuer will acquire NTS through a two-step merger process (the “Mergers”).

 

Pursuant to the Merger Agreement, as partial consideration for the Mergers, the Issuer agreed to issue Newtek 4,000,000 shares (the “Closing Stock Consideration”) of a newly created series of preferred stock, the Series A Non-Voting Common Equivalent Stock of the Issuer, par value $0.001 per share (the “Preferred Stock”). In the event of a Convertible Transfer (as defined in the certificate of designations governing the Preferred Stock), each share of Preferred Stock will automatically convert into one share (the “Conversion Shares”) of Common Stock, subject to certain customary anti-dilution adjustments.

 

In addition, the Merger Agreement provides that Newtek is entitled to receive an amount up to $5,000,000 (the “Earn-Out Amount”) based on the Issuer’s achievement of certain cumulative average Adjusted EBITDA thresholds for the 2025 and 2026 fiscal years. The Earn-Out Amount may be paid, at the Issuer’s sole discretion, in cash, in shares of Preferred Stock (the “Earn-Out Stock Consideration”) or in a combination thereof. The issuance of the Closing Stock Consideration, the Earn-Out Stock Consideration (if any) and the Conversion Shares issuable upon conversion of the Preferred Stock is referred to herein as the “Parent Stock Issuance”.

 

 

As a condition to the closing of the Mergers and the transactions contemplated by the Merger Agreement (the “Closing”), the Merger Agreement provides that the Issuer must effectuate the sale of its “Paltalk”, “Camfrog”, and “Tinychat” applications and all assets and liabilities related to such applications in one or more transactions, such that upon the completion of such transaction or transactions, the Issuer and its Parent Related Persons (as defined in the Merger Agreement) no longer hold any right to operate or control such applications, whether directly or indirectly (such transaction or transactions, the “Divestiture Transaction”).

 

On August 11, 2024, as an inducement for Newtek to enter into the Merger Agreement, Mr. Katz entered into a voting and support agreement with the Issuer and Newtek (the “Katz Voting Agreement”), whereby Mr. Katz, in his capacity as a beneficial owner of Common Stock and not in his capacity as a director or officer of the Issuer, agreed to, among other things, vote or cause to be voted all Common Stock beneficially owned by Mr. Katz in favor of the Parent Stock Issuance and the Divestiture Transaction and against alternative transactions.

 

Pursuant to the Katz Voting Agreement, Mr. Katz is restricted from selling or transferring Common Stock, subject to certain customary exceptions, until the earlier of (i) stockholder approval of the Parent Stock Issuance and the Divestiture Transaction being obtained and (ii) the termination of the Merger Agreement pursuant to and in compliance with the terms thereof.

 

The foregoing summary of the Katz Voting Agreement does not purport to be complete and is qualified in its entirety by reference to full text of the Katz Voting Agreement, a copy of which is filed as Exhibit 99.6 hereto and is incorporated herein by reference.”

 

Item 5. Interest in Securities of the Issuer.

 

Items 5(a) through 5(b) of the Schedule 13D are hereby amended and restated as follows:

 

“(a)

The aggregate number and percentage of the class of securities identified pursuant to Item 1 beneficially owned by the Reporting Persons are stated in Items 11 and 13 on the cover pages hereto.

 

(b)

Number of shares as to which each Reporting Person has:

 

(i)

sole power to vote or to direct the vote:

 

See Item 7 on the cover page hereto.

 

(ii)

shared power to vote or to direct the vote:

 

See Item 8 on the cover page hereto.

 

(iii)

sole power to dispose or to direct the disposition of:

 

See Item 9 on the cover page hereto.

 

(iv)

shared power to dispose or to direct the disposition of:

 

See Item 10 on the cover page hereto.”

 

 

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

Item 6 of the Schedule 13D is hereby amended and supplemented as follows:

 

“All of the information set forth in Item 4 is hereby incorporated herein by reference to this Item 6.”

 

Item 7. Material to be Filed as Exhibits.

 

Item 7 of the Schedule 13D is hereby amended and restated as follows:

 

“The following exhibits are filed as exhibits hereto:

 

Exhibit		Description of Exhibit
99.1		Joint Filing Agreement, dated June 7, 2017, by and between the Reporting Persons (incorporated by reference to Exhibit 99.1 to Amendment No. 1 to the Schedule 13D filed by the Reporting Persons with the SEC on June 7, 2017).
99.2		Agreement and Plan of Merger, dated as of September 13, 2016, by and between the Issuer, AVM, SAVM Acquisition Corporation, and Jason Katz, as representative of the stockholders of AVM (incorporated by reference to Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed on September 14, 2016).
99.3		Form of Lock-Up Agreement (incorporated by reference to Exhibit 99.3 to the Schedule 13D filed by the Reporting Persons on October 17, 2016).
99.4		Nonqualified Stock Option Agreement, dated as of April 13, 2017, by and between Snap Interactive, Inc. and Jason Katz (incorporated by reference to Exhibit 99.4 to Amendment No. 1 to the Schedule 13D filed by the Reporting Persons with the SEC on June 7, 2017).
99.5		Form of Lock-Up Agreement (incorporated by reference to Exhibit 99.5 to Amendment No. 3 to the Schedule 13D filed by the Reporting Persons with the SEC on October 19, 2021).
99.6		Voting and Support Agreement, dated as of August 11, 2024, by and among Paltalk, Inc., NewtekOne, Inc. and Jason Katz.”

 

 

SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: August 13, 2024

 

 

	JASON KATZ
	/s/ Jason Katz
	JUDY KATZ
	/s/ Judy Katz

 

 

7

Exhibit 99.6

 

VOTING AND SUPPORT AGREEMENT

 

This VOTING AND SUPPORT AGREEMENT, dated as of August 11, 2024 (this “Agreement”), is entered into by and among Paltalk, Inc., a Delaware corporation (the “Parent”), NewtekOne, Inc., a Maryland corporation (“Newtek”), and Jason Katz (the “Holder”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Merger Agreement (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, the Parent, Newtek, Newtek Technology Solutions, Inc., a New York corporation and wholly owned subsidiary of Newtek (“NTS”), PALT Merger Sub 1, Inc., a New York corporation and direct, wholly owned subsidiary of the Parent (“Merger Sub I”), PALT Merger Sub 2, LLC, a Delaware limited liability company and direct, wholly owned subsidiary of the Parent (“Merger Sub II”, and together with Merger Sub I, the “Merger Subs”) are expected to enter into that certain Agreement and Plan of Merger (as amended from time to time in accordance with the terms thereof, the “Merger Agreement”) pursuant to which (and subject to the terms and conditions set forth therein): (a) NTS will merge with and into Merger Sub I, with NTS continuing as the surviving entity (the “Interim Surviving Entity”) (such merger being referred to herein as the “First Step Merger”), and (b) immediately following the consummation of the First Step Merger, the Interim Surviving Entity will merge with and into Merger Sub II, with Merger Sub II continuing as the surviving entity (the “Second Step Merger” and, together with the First Step Merger, the “Mergers”);

 

WHEREAS, as partial consideration for the Mergers, the Parent will agree to issue Newtek (i) 4,000,000 shares of Series A Non-Voting Common Equivalent Stock, par value $0.001 per share (the “Parent Preferred Stock”), having the designation, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions as specified in the form of the Certificate of Designation attached to the Merger Agreement, which Parent Preferred Stock will be convertible into shares (the “Conversion Shares”) of common stock of the Parent, par value $0.001 per share (the “Common Stock”), in accordance with the terms set forth in the Certificate of Designation and on the terms and subject to the conditions set forth in the Merger Agreement (the “Stock Consideration”), and (ii) a number of shares of Parent Preferred Stock pursuant to Section 3.6 of the Merger Agreement based on certain financial metrics of the Parent for the 2025 and 2026 fiscal years (the “Earn-Out Stock Consideration Amount”) (the issuance of the Stock Consideration, the Earn-Out Stock Consideration Amount and the Conversion Shares issuable upon conversion of the Parent Preferred Stock, collectively, the “Parent Stock Issuance”);

 

WHEREAS, as a condition to closing the Mergers, the Parent must effectuate the sale of “Paltalk”, “Camfrog”, and “Tinychat” applications and all assets and liabilities related to such applications to a third-party that is not a Related Person (or third-parties, none of which is a Related Person) in one or more transactions, such that upon the completion of such transaction or transactions, the Parent and its Related Person no longer hold any right to operate or control such applications, whether directly or indirectly (such transaction or transactions, the “Divestiture Transaction”);

 

WHEREAS, the Holder is the Beneficial Owner (as defined below) of Common Stock (such shares of Common Stock, the “Shares”) as set forth under his, her or its name on the signature pages hereto;

 

WHEREAS, concurrently with the execution and delivery of the Merger Agreement, and as a condition and an inducement to Newtek entering into the Merger Agreement, the Holder is entering into this Agreement with respect to the Shares; and

 

WHEREAS, the Holder is willing, subject to the limitations herein, not to Transfer (as defined below) any of its Shares, and to vote its Shares in a manner so as to facilitate the consummation of the transactions contemplated by the Merger Agreement (including the Divestiture Transaction).

 

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I

GENERAL

 

1.1 Definitions. This Agreement is one of the “Voting Agreements” as defined in the Merger Agreement. For purposes of this Agreement, the Parent shall not be deemed an Affiliate of the Holder, and the Parent and its Representatives are not Representatives of the Holder.

 

(a) “Beneficially Own” or “Beneficial Ownership” has the meaning assigned to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule (in each case, irrespective of whether or not such Rule is actually applicable in such circumstance). For the avoidance of doubt, Beneficially Own and Beneficial Ownership shall also include record ownership of securities.

 

(b) “Beneficial Owners” shall mean Persons who Beneficially Own the referenced securities.

 

(c) “Transfer” means (i) any direct or indirect offer, sale, lease, assignment, encumbrance, loan, pledge, grant of a security interest, hypothecation, disposition or other similar transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any offer, sale, lease, assignment, encumbrance, loan, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), of any Shares Beneficially Owned by any Holder, including in each case through the Transfer of any Person or any interest in any Person or (ii) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series of transactions that results in an amount of Shares subject to Article III that is less than the amount of Shares subject to Article III as of the date of this Agreement.

 

ARTICLE II

AGREEMENT TO RETAIN SHARES

 

2.1 Transfer and Encumbrance of Shares.

 

(a) From the date of this Agreement until the earlier of (i) Parent Stockholder Approval being obtained and (ii) the termination of the Merger Agreement pursuant to and in compliance with the terms thereof (such earlier date, the “Termination Date”), the Holder shall not, with respect to any Shares Beneficially Owned by such Holder, (x) Transfer any such Shares or (y) deposit any such Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares or grant any proxy (except as otherwise provided herein) or power of attorney with respect thereto.

 

(b) Notwithstanding Section 2.1(a), the Holder may: (A) Transfer any Shares to any Person that as a condition to such Transfer, agrees in a writing, reasonably satisfactory in form and substance to Newtek, to be bound by this Agreement (or an agreement with substantially similar terms as this Agreement), and delivers a copy of such executed written agreement to Newtek and the Parent prior to the consummation of such Transfer and/or (B) Transfer any Shares with the prior written consent of Newtek and the Parent. Any Shares that are Transferred pursuant to clause (B) in the immediately preceding sentence shall not be subject to the terms and conditions of this Agreement following such Transfer, and upon such Transfer, the proxy granted by the Holder in Article III with respect to such Shares shall be automatically revoked.

 

(c) Nothing in this Agreement shall restrict (i) direct or indirect Transfers of equity or other interests in any Holder (it being understood that such Holder shall remain bound by this Agreement) or (ii) Transfers of any Shares by any Holder to an Affiliate of such Holder; provided, that a Transfer described in clause (ii) of this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to Newtek, to be bound by all of the terms of this Agreement.

 

2.2 Additional Purchases; Adjustments. The Holder agrees that any shares of Common Stock that such Holder purchases or otherwise acquires or with respect to which such Holder otherwise acquires Beneficial Ownership after the execution of this Agreement and prior to the Termination Date shall be subject to the terms and conditions of this Agreement to the same extent as if they constituted the Shares as of the date of this Agreement, and the Holder shall promptly notify the Parent of the existence of any such after acquired Shares. In the event of any stock split, stock dividend, merger, reorganization, recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Parent affecting the Shares, the terms of this Agreement shall apply to the resulting securities.

 

 

2.3 Unpermitted Transfers; Involuntary Transfers. Any Transfer or attempted Transfer of any Shares in violation of this Article II shall, to the fullest extent permitted by applicable Law, be null and void ab initio. In furtherance of the foregoing, the Holder hereby authorizes the Parent to instruct its transfer agent to enter a stop transfer order with respect to all of the Shares; provided that such stop transfer order shall be removed with respect to any Transfer permitted under this Agreement. If any involuntary Transfer of the Holder’s Shares shall occur, the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement.

 

ARTICLE III

AGREEMENT TO VOTE

 

3.1 Agreement to Vote. Prior to the Termination Date, the Holder irrevocably and unconditionally agrees that it shall, at any meeting of the stockholders of the Parent (whether annual or special and whether or not an adjourned or postponed meeting), however called, appear at such meeting or otherwise cause the Shares to be counted as present at such meeting for purposes of establishing a quorum and vote, and cause to be voted at such meeting, all Shares it owns:

 

(a) in favor of the Parent Stock Issuance;

 

(b) in favor of the Divestiture Transaction;

 

(c) in favor of any proposal to adjourn or postpone such meeting of the holders of the Common Stock to a later date if there are not sufficient votes to approve the Parent Stock Issuance, the Divestiture Transaction or any other matter that is reasonably necessary to be approved by the holders of the Common Stock to facilitate the consummation of the transactions contemplated by the Merger Agreement;

 

(d) in favor of any other matter that is reasonably necessary to be approved by the holders of the Common Stock to facilitate the consummation of the transactions contemplated by the Merger Agreement (clauses (a)-(d) being the “Parent Proposals”); and

 

(e) against (i) any agreement, transaction or proposal that relates to an Acquisition Proposal or any other transaction, proposal, agreement or action made in opposition to any Parent Proposal or the other matters contemplated by the Merger Agreement or any agreement relating to the Divestiture Transaction; (ii) any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Parent or any of its Subsidiaries contained in the Merger Agreement or any agreement relating to the Divestiture Transaction; (iii) any action or agreement that would result in (x) any condition to the consummation of the Transactions set forth in Article VIII of the Merger Agreement not being fulfilled or (y) any change to the voting rights of any class of shares of capital stock of the Parent (including any amendments to the Parent’s Organizational Documents); and (iv) any other action that would reasonably be expected to materially impede, interfere with, delay, discourage, postpone or adversely affect any of the transactions contemplated by the Merger Agreement or any agreement relating to the Divestiture Transaction, including the Transactions or this Agreement. Any attempt by a Holder to vote, consent or express dissent with respect to (or otherwise to utilize the voting power of), the Shares in contravention of this Section 3.1 shall be null and void ab initio. If any Holder is the Beneficial Owner, but not the holder of record, of any Shares, such Holder agrees to take all actions necessary to cause the holder of record and any nominees to vote (or exercise a consent with respect to) all of such Shares in accordance with this Section 3.1.

 

Notwithstanding anything herein to the contrary in this Agreement, this Section 3.1 shall not require any Holder to be present (in person or by proxy) or vote (or cause to be voted), any of the Shares to amend, modify or waive any provision of the Merger Agreement in a manner that increases the amount, changes the form of, imposes any material restrictions on or additional material conditions on the payment of the Stock Consideration and the Earn-Out Stock Consideration Amount, extends the Effective Time or otherwise adversely affects such Holder (in its capacity as such) in any material respect, unless any of the foregoing matters are consistent with the Parent Board Recommendation, in which case this sentence shall not apply. Notwithstanding anything to the contrary in this Agreement, the Holder shall remain free to vote (or execute consents or proxies with respect to) the Shares with respect to any matter other than as set forth in Section 3.1(a), Section 3.1(b), Section 3.1(c) and Section 3.1(d) in any manner such Holder deems appropriate, including in connection with the election of directors of the Parent.

 

 

3.2 Proxy. The Holder hereby irrevocably appoints as its proxy and attorney-in-fact, Jason Katz, Kara Jenny and any person designated in writing by the foregoing, each of them individually, with full power of substitution and resubstitution, to consent to or vote the Shares as indicated in Section 3.1 above. The Holder intends this proxy to be irrevocable and unconditional during the term of this Agreement and coupled with an interest and will take such further action or execute such other instruments as may be reasonably necessary to effect the intent of this proxy, and hereby revokes any proxy previously granted by such Holder with respect to the Shares (and the Holder hereby represents that any such proxy is revocable). The proxy granted by any Holder shall be automatically revoked upon the occurrence of the Termination Date, and each of Jason Katz and Kara Jenny may further terminate this proxy at any time at his or her sole election by written notice provided to the Holder.

 

ARTICLE IV

ADDITIONAL AGREEMENTS

 

4.1 Waiver of Litigation. The Holder agrees not to commence, join in, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Newtek or the Parent or any of their respective affiliates and each of their successors or directors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the consummation of the transactions contemplated hereby or thereby, including any claim (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking to enjoin or delay the Closing) or (b) alleging a breach of any fiduciary duty of the Parent’s board of directors in connection with the negotiation and entry into this Agreement, the Merger Agreement or the transactions contemplated hereby or thereby, and hereby irrevocably waives any claim or rights whatsoever with respect to any of the foregoing.

 

4.2 Further Assurances. The Holder agrees that from and after the date of this Agreement and until the Termination Date, the Holder shall take no action that would reasonably be likely to adversely affect or delay the ability to perform its covenants and agreements under this Agreement.

 

4.3 Fiduciary Duties. The Holder is entering into this Agreement solely in its capacity as the record or Beneficial Owner of the Shares, and nothing herein is intended to or shall limit or affect any actions taken by such Holder serving in his or her capacity as a director of the Parent (or a Subsidiary of the Parent). The taking of any actions (or failures to act) by such Holder’s designees serving as a director of the Parent (in such capacity as a director) shall not be deemed to constitute a breach of this Agreement.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE HOLDER

 

5.1 Representations and Warranties. The Holder hereby represents and warrants as follows:

 

(a) Ownership. Such Holder has, with respect to the Shares, and at all times during the term of this Agreement will continue to have, Beneficial Ownership of, good and valid title to and full and exclusive power to vote, issue instructions with respect to the matters set forth in Article III, agree to all of the matters set forth in this Agreement and to Transfer the Shares. The Shares constitute all of the shares of Common Stock owned of record or beneficially by such Holder as of the date of this Agreement. Other than this Agreement, (i) there are no agreements or arrangements of any kind, contingent or otherwise, to which such Holder is a party obligating such Holder to Transfer or cause to be Transferred to any person any of the Shares in violation of this Agreement, and (ii) no Person has any contractual or other right or obligation to purchase or otherwise acquire any of the Shares.

 

(b) Organization; Authority. If the Holder is an entity, such Holder is duly organized, validly existing and in good standing under the Laws of its jurisdiction of formation. The Holder has full power and authority and is duly authorized to make, enter into and carry out the terms of this Agreement and to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by such Holder and (assuming due authorization, execution and delivery by the other parties hereto) constitutes a valid and binding agreement of such Holder, enforceable against such Holder in accordance with its terms (except in all cases as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles), and no other action is necessary to authorize the execution and delivery by such Holder or the performance of such Holder’s obligations hereunder.

 

 

(c) No Violation. The execution, delivery and performance by such Holder of this Agreement will not (i) violate any provision of any Law applicable to such Holder; (ii) violate any order, judgment or decree applicable to such Holder or any of its Affiliates; or (iii) conflict with, or result in a breach or default under, any agreement or instrument to which such Holder or any of its Affiliates is a party or any term or condition of its Organizational Documents (if any), except where such conflict, breach or default would not reasonably be expected to, individually or in the aggregate, have an adverse effect on such Holder’s ability to satisfy its obligations hereunder.

 

(d) Consents and Approvals. The execution and delivery by such Holder of this Agreement does not, and the performance of such Holder’s obligations hereunder do not, require such Holder or any of its Affiliates to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any person or Governmental Body, except such filings and authorizations as may be required under the Exchange Act.

 

(e) Absence of Litigation. To the knowledge of such Holder, as of the date of this Agreement, there is no action pending against, or threatened in writing against such Holder that would prevent the performance by such Holder of its obligations under this Agreement or to consummate the transactions contemplated hereby or by the Merger Agreement, including the Transactions, on a timely basis.

 

(f) Absence of Other Voting Agreements. Other than pursuant to Permitted Liens, none of the Shares is subject to any voting trust, proxy or other agreement, arrangement or restriction with respect to voting, in each case, that is inconsistent with this Agreement, except as disclosed in the Parent SEC Reports and as contemplated by this Agreement. None of the Shares is subject to any pledge agreement pursuant to which such Holder does not retain sole and exclusive voting rights with respect to the Shares subject to such pledge agreement at least until the occurrence of an event of default under the related debt instrument.

 

ARTICLE VI

MISCELLANEOUS

 

6.1 No Solicitation. The Holder agrees that it will not, and will cause its Affiliates not to, and will use commercially reasonable efforts to cause its and their Representatives not to, directly or indirectly, take any of the actions listed in clauses (i)—(vi) of Section 7.8(a) of the Merger Agreement (without giving effect to any amendment or modification of such clauses after the date of this Agreement). The Holder shall, and shall cause its Affiliates to, and shall use its commercially reasonable efforts to cause its and their Representatives to, immediately cease, and cause to be terminated, any discussions or negotiations conducted before the date of this Agreement with any Person other than Newtek with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal. In addition, the Holder agrees to be subject to Section 7.8(b) of the Merger Agreement (without giving effect to any amendment or modification of such clauses after the date of this Agreement) as if such Holder were the “Parent” thereunder. Notwithstanding the foregoing, the Holder and/or any of its Representatives may engage in discussions or negotiations with such Person to the extent that the Parent can act under the terms of Merger Agreement.

 

6.2 Termination. This Agreement shall terminate on the Termination Date. Neither the provisions of this Section 6.2 nor the termination of this Agreement shall relieve (x) any party hereto from any liability of such party to any other party incurred prior to such termination, or (y) any party hereto from any liability to any other party arising out of or in connection with a breach of this Agreement. Nothing in the Merger Agreement shall relieve any Holder from any liability arising out of or in connection with a breach of this Agreement.

 

 

6.3 Notices. All notices, requests and other communications to any party under, or otherwise in connection with, this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered in person; (b) if transmitted by email (but only if confirmation of receipt of such e-mail is requested and received; provided, that each notice party shall use reasonable best efforts to confirm receipt of any such email correspondence promptly upon receipt of such request); or (c) if transmitted by national overnight courier, in each case as addressed as follows:

 

if to Newtek, to:

 

NewtekOne, Inc.

1981 Marcus Avenue, Suite 130

Lake Success, NY 11042

Attention: Chief Executive Officer and Chief Legal Officer

Email: bsloane@newtekone.com; mschwartz@newtekone.com

 

With copies (which shall not constitute notice) to:

 

Sullivan & Cromwell LLP

125 Broad St.

New York, New York 10004

Attention: Jared M. Fishman

Email: fishmanj@sullcrom.com

 

if to the Parent to:

 

Paltalk, Inc.

30 Jericho Executive Plaza, Suite 400E

Jericho, NY 11735

Attention: Chief Executive Officer

Email: jkatz@paltalk.com

 

With a copy (which shall not constitute notice) to:

 

Haynes and Boone, LLP

2801 N. Harwood Street, Suite 2300

Dallas, TX 75201

Attention: Gregory R. Samuel

Email: greg.samuel@haynesboone.com

 

If to the Holder, to: the address set forth under the Holder’s name on the signature page hereto, with copies (which will not constitute notice) to, if not the party sending the notice, each of the Parent, NTS and Newtek (and each of their copies for notices hereunder).

 

6.4 Amendment; Waiver.

 

(a) This Agreement shall not be amended or modified except by written instrument duly executed by each of the parties.

 

(b) No waiver of any term or provision of this Agreement shall be effective unless in writing, signed by the party against whom enforcement of the same is sought. The grant of a waiver in one instance does not constitute a continuing waiver in any other instances. No failure by any party to exercise, and no delay by any party in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof.

 

6.5 Counterparts; Signatures. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Each party acknowledges that it and the other parties may execute this Agreement by facsimile or “pdf.” signature. Each party expressly adopts and confirms each such facsimile or “pdf.” signature made in its respective name as if it were a manual signature, agrees that it will not assert that any such signature is not adequate to bind such party to the same extent as if it were signed manually, and agrees that at the reasonable request of the other parties at any time it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).

 

 

6.6 Assignment and Binding Effect. Except in connection with a permitted Transfer pursuant to Article II, no party may assign, delegate or otherwise transfer this Agreement or any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other parties, and any such attempted assignment, delegation or transfer shall be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors, permitted transferees and permitted assigns; provided, however, that the Parent is an express third-party beneficiary of this Agreement and shall be entitled to enforce any matters applicable to the Parent. Except as expressly set forth in the prior sentence, (a) none of the provisions of this Agreement shall be for the benefit of or enforceable by any third party, including any creditor of any party hereto or any of their Affiliates and (b) no such third party shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any claim in respect of any liability (or otherwise) against any other party hereto.

 

6.7 Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all previous agreements, negotiations, discussions, understandings, writings, commitments and conversations between the parties with respect to such subject matter. No agreements or understandings with respect to the subject matter hereof exist among the parties other than those set forth or referred to herein or therein.

 

6.8 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties. In the event the parties are not able to agree, such provision shall be construed by limiting and reducing it so that such provision is valid, legal, and fully enforceable while preserving to the greatest extent permissible the original intent of the parties; the remaining terms and conditions of this Agreement shall not be affected by such alteration.

 

6.9 No Partnership, Agency or Joint Venture. This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture, any like relationship between the parties hereto or a presumption that the parties are in any way acting in concert or as a group with respect to the obligations or the transactions contemplated by this Agreement.

 

6.10 Governing Law; Venue; Waiver of Jury Trial.

 

(a) THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF RELATE TO THIS AGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

(b) EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, RELATING TO OR RESULTING FROM THIS AGREEMENT, OR THE CONTEMPLATED TRANSACTIONS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.10.

 

 

(c) THE PARTIES HEREBY AGREE THAT ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER RELATING TO, ARISING OUT OF OR RESULTING FROM OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR IF SUCH COURT DOES NOT HAVE JURISDICTION, IN ANY FEDERAL COURT WITHIN THE STATE OF DELAWARE ONLY, AND THAT ANY CAUSE OF ACTION RELATING TO, ARISING OUT OF OR RESULTING FROM THIS AGREEMENT SHALL BE DEEMED TO HAVE ARISEN FROM A TRANSACTION OF BUSINESS IN THE STATE OF DELAWARE. EACH OF THE PARTIES HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF THE APPROPRIATE APPELLATE COURTS THEREFROM) IN ANY SUCH SUIT, ACTION OR PROCEEDING AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT ANY SUCH SUIT, ACTION OR PROCEEDING THAT IS BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT A JUDGMENT IN ANY SUCH ACTION MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

(d) Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof in accordance with the provisions of Section 6.1 or in such other manner as may be permitted by law.

 

6.11 Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Transactions are consummated.

 

6.12 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated by this Agreement may only be brought against, the persons or entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement and not otherwise), no past, present or future director, manager, officer, employee, incorporator, member, partner, equity holder, Affiliate, agent, attorney, advisor, consultant or Representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more party under this Agreement (whether for indemnification or otherwise) or of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated by this Agreement.

 

6.13 Injunctive Relief. The parties agree that irreparable damage, for which monetary damages would not be an adequate remedy, would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached by the parties. Prior to the termination of this Agreement pursuant to Section 6.2, it is accordingly agreed that the parties shall be entitled to an injunction or injunctions, or any other appropriate form of specific performance or equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in each case in accordance with this Section 6.13, this being in addition to any other remedy to which they are entitled under the terms of this Agreement under applicable Law or in equity. Each party accordingly agrees that (a) the non-breaching party will be entitled to injunctive and other equitable relief, without proof of actual damages; and (b) the alleged breaching party will not raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such party under this Agreement and will not plead in defense thereto that there are adequate remedies under applicable Law, all in accordance with the terms of this Section 6.13. Each party further agrees that no other party or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 6.13, and each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

6.14 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Newtek any direct or indirect ownership or incidence of ownership with respect to, or the ability to vote, the Shares. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to the Holder, and Newtek shall not have any authority to manage, direct, restrict, regulate, govern or administer any of the policies or operations of the Parent or exercise any power or authority to direct the Holder in the voting or disposition of any Shares, except as otherwise expressly provided herein.

 

 

6.15 Disclosure. The Holder consents to and authorizes the publication and disclosure by the Parent and Newtek of such Holder’s identity and holding of Shares, and the terms of this Agreement (including, for avoidance of doubt, the disclosure of this Agreement), in any press release, proxy statement, and any other disclosure document required in connection with the Merger Agreement, and the transactions contemplated thereby (including the Divestiture Transaction).

 

6.16 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles or Sections, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” As used in this Agreement, the “knowledge” of the Holder means the actual knowledge of the Holder or any officer of the Holder (if any) after due inquiry.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed or caused this Agreement to be executed in counterparts, all as of the date first above written.

 

	PALTALK, INC.
	By:	/s/ Jason Katz
	Name:	Jason Katz
	Title:	Chief Executive Officer

 

	NEWTEKONE, INC.
	By:	/s/ Barry Sloane
	Name:	Barry Sloane
	Title:	Chief Executive Officer

 

Signature Page to

Voting and Support Agreement

 

 

HOLDER:

 

By:	/s/ Jason Katz
Name:	JASON KATZ

 

Number and Type of Securities:

 

Paltalk, Inc. Common Stock:	827,177
Options or other convertible securities:	75,000

 

Address for Notice:
Address:	[*****]
Telephone No.:	[*****]
Email:	[*****]

 

Holder Signature Page to

Voting and Support Agreement

 

 

 

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