FISCALNOTE HOLDINGS, INC. : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

Purchase Agreement

On January 27, 2023, FiscalNote Holdings, Inc., a Delaware corporation (the "Company"), entered into a Sale and Purchase Agreement (the "Purchase Agreement") with the persons and entities listed on Schedule 1 to the Purchase Agreement (the "Sellers"). Pursuant to the Purchase Agreement, on January 27, 2023 (the "Closing Date"), the Company purchased from the Sellers all of the issued and outstanding share capital of Dragonfly Eye Limited, a company incorporated in England ("Dragonfly"), for an aggregate purchase price of up to £26.5 million pounds sterling in value (the "Transaction").

The aggregate purchase price consists of (i) £4.5 million pounds sterling in cash, (ii) £9.5 million pounds sterling in shares of the Company's Class A Common Stock, par value $0.0001 per share ("Common Stock"), with an agreed upon value of £5.00 pounds sterling per share, and (iii) £9.0 million pounds sterling in aggregate principal amount of subordinated convertible promissory notes ("Convertible Notes"). The purchase price is subject to customary adjustment based on working capital adjustments and the amount of Dragonfly's transaction expenses and net indebtedness that remain unpaid as of the Closing Date, and indemnification obligations for certain claims made following the Closing Date. All of such shares of Common Stock and Convertible Notes were issued only to eligible Sellers (the "Eligible Sellers") in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on the exemptions provided by Regulation S and Regulation D promulgated under the Securities Act.

Additionally, the Sellers are eligible to receive an additional payment from the Company of up to £3.5 million pounds sterling (the "Earnout") based on the achievement by Dragonfly of U.S. GAAP revenue targets for 2023. In the event any part of the Earnout becomes payable, the Company may satisfy its payment obligations to the Sellers with cash or Common Stock having a deemed per share value equal to the volume weighted average price per share ("VWAP") of Common Stock on a national securities exchange during the 30 consecutive trading day period ending December 30, 2023 or, if the Common Stock is not traded on a national securities exchange at such time, the per share value of the Common Stock will be determined by an independent appraiser.

The Purchase Agreement contains customary warranties and covenants of the Company, on one hand, and the Sellers, on the other hand, including, among others, restrictive covenants applicable to selected Sellers involved in Dragonfly's business. The Sellers' liability to the Company for breaches of their warranties and covenants in the Purchase Agreement are subject to certain specified limitations, including, among other things, limitations on the period during which the Company may make claims against the Sellers and limitations on the amounts for which the Sellers may be liable.

The warranties and covenants set forth in the Purchase Agreement were made solely between the parties to the Purchase Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating its terms, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Purchase Agreement. Moreover, the warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to investors or securityholders, or may have been used for the purpose of allocating risk between the parties to the Purchase Agreement rather than establishing matters as facts. Information concerning the subject matter of the warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. -------------------------------------------------------------------------------- For the foregoing reasons, no person should rely on the warranties as statements of factual information at the time they were made or otherwise.

Subordinated Convertible Promissory Notes

On the Closing Date, the Company issued approximately £9.0 million pounds in aggregate principal amount of Convertible Notes to Eligible Sellers in the Transaction. On the Closing Date, the Company also entered into a Subordination Agreement (the "Subordination Agreement") with Runway Growth Finance Corp., certain of the Company's subsidiaries (the "Borrowers") and the representative of the Eligible Sellers. Pursuant to the Subordination Agreement, the Convertible Notes will be subordinated to the Company's and the Borrowers' respective obligations under that certain Second Amended and Restated Credit and Guaranty Agreement dated as of July 29, 2022 (as the same may be further amended, supplemented or otherwise modified from time to time) and related senior loan documents (the "Senior Loans").

The Convertible Notes bear interest at a rate of 8.0% per annum payable in kind in arrears. During the term of each Convertible Note, the principal amount thereof and accrued interest thereon will be convertible into Common Stock in the following scenarios:

•

beginning on the 18-month anniversary of the date of issuance (the "Issuance
Date"), a holder may convert, at its option, at the initial conversion price of
$10.00 per share of Common Stock (the "Conversion Price");
•
beginning on the 18-month anniversary of the Issuance Date, the holders of at
least a majority of the aggregate outstanding principal amount of the
Convertible Notes may elect to convert the aggregate principal amount of all
Convertible Notes, and accrued interest thereon, into Common Stock at the
Conversion Price;
•
. . .

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

(a) The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On January 27, 2023, the Company issued a press release announcing the entry into the Purchase Agreement and completion of the transactions contemplated thereby. This press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall any of it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are furnished with this report:

99.1           Press release dated January 27, 2023, concerning the acquisition of
             Dragonfly Eye Limited

104          Cover Page Interactive Data File (formatted as Inline XBRL).

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