FINJAN HOLDINGS, INC. (NASDAQ:FNJN) Files An 8-K Entry into a Material Definitive Agreement

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FINJAN HOLDINGS, INC. (NASDAQ:FNJN) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement.

On June 15, 2017, Finjan Holdings, Inc. (Finjan or the Company)
entered into a Series A-1 Preferred Stock Purchase Agreement (the
Purchase Agreement) between the Company and Soryn HLDR Vehicle II
LLC, a Delaware limited liability company (Soryn HLDR). Soryn
HLDR was set up by Halcyon Long Duration Recoveries Management LP
and its affiliates in partnership with Soryn Capital, LLC, an
affiliate of Soryn IP Group, LLC. to the Purchase Agreement, the
Company agreed to issue to Soryn HLDR in a private placement (the
Private Placement) an aggregate of 153,000 shares of the Companys
Series A-1 Preferred Stock (the Shares) at a purchase price of
$100.00 per share, for aggregate proceeds of $15.3 million. The
Company also agreed to issue to Soryn HLDR a common stock warrant
(the Warrant), to purchase 2,000,000 shares of common stock,
$0.0001 par value per share, of the Company (the Common Stock) at
an exercise price of $3.18 per share, which Warrant has a term of
three years. The closing occurred on June 19, 2017. The Company
retained B. Riley Company, LLC (B. Riley) as placement agent for
the Private Placement and agreed to pay B. Riley a fee equal to
the lesser of (i) $500,000 or (ii) 5.0% of the aggregate gross
proceeds from the Private Placement, plus reimbursement of
certain expenses.
The Company plans to use the proceeds from the Private Placement
for general corporate purposes, including operations and working
capital purposes. A portion of the proceeds may also be used to
acquire or invest in intellectual property. Finally, Finjan is
evaluating using up to $5 million of proceeds from the Private
Placement in the implementation of a stock repurchase program,
which if implemented by the Companys Board of Directors, would
seek to repurchase shares of the Companys common stock from time
to time in compliance with the rules and regulations of the
Securities and Exchange Commission.
As set forth in the Certificate of Designation of Series A-1
Preferred Stock (the Certificate of Designation) filed with the
Secretary of State of the State of Delaware in connection with
the Private Placement, the Shares contain certain rights and
preferences, optional and mandatory redemptive provisions and
carry participation rights in certain of the Companys revenue
streams until the Shares are retired. Capitalized terms
referenced below and not otherwise defined in this Current Report
on Form 8-K shall have the meanings given them in the Certificate
of Designation.>>>
At any time, the Company can, at its option, redeem all or any
portion of the Shares at the Liquidation Value then in effect.
Liquidation Value means, with respect to any Share (as adjusted
for any stock splits, stock dividends, recapitalizations or
similar transaction with respect to the Series A-1 Preferred
Stock), an amount equal to the lesser of:
(a) 2.8 times the Original Purchase Price; or
(b) the following: (i) from the Date of Issuance to December 16,
2017, 1.2375 times the Original Purchase Price; (ii) from
December 16, 2017 to March 16, 2018, 1.3 times the Original
Purchase Price; (iii) from March 16, 2018 to June 14, 2018, 1.34
times the Original Purchase Price; (iv) from June 14, 2018 to
June 9, 2019, 1.575 times the Original Purchase Price; and (iv)
thereafter, 1.575 times the Original Purchase Price plus 0.125
times the Original Purchase Price for every ninety day (90)
period following June 9, 2019.
The holder of the Shares can require the Company to redeem Shares
following the Companys receipt of proceeds from litigation or
licensing equal to the following: (i) for litigation proceeds (A)
from the Date of Issuance until June 19, 2018, fifty percent
(50%); (B) from June 19, 2018 until June 19, 2019, seventy
percent (70%); and (C) on and after June 19, 2019, eighty percent
(80%); and (ii) for licensing proceeds (A) from the Date of
Issuance until June 19, 2018, twenty percent (20%); (B) from June
19, 2018 until June 19, 2019, thirty percent (30%); and (C) on
and after June 19, 2019, forty percent (40%).
Additionally, following the occurrence of a Negative Litigation
Event or a Negative Treasury Event, any holder of Shares shall
have the right to have all of their shares redeemed by the
Company. Such redemption rights are in
addition to redemption and other rights that the holder of the
Shares may exercise should the Company materially breach its
obligations under the Purchase Agreement or the Certificate of
Designation.
The protective provisions of the Shares reflected in the
Certificate of Designation include, among other matters,
requiring the consent of a Majority in Interest (as defined in
the Certificate of Designation) in order for the Company to,
among other things (subject to certain exceptions):
declare dividends or redeem equity securities (other than for the
stock repurchase program contemplated above);
enter into a joint venture;
create senior equity securities;
incur indebtedness above an agreed upon level or allow certain
liens against the Companys assets;
enter into, terminate or modify employment contracts and related
matters with officers; and
acquire material assets or other entities.
The Purchase Agreement contains customary representations,
warranties and covenants by the Company and Soryn HLDR. >
The foregoing descriptions of each of the Purchase Agreement, the
Warrant and the Certificate of Designation do not purport to be
complete and are subject to, and are qualified in their entirety
by reference to, the full text of (i) the Purchase Agreement
which is filed as Exhibit 10.1 to this Current Report on Form 8-K
and incorporated herein by reference, (ii) the Form of Warrant,
which is filed as Exhibit 4.1 to this Current Report on Form 8-K
and incorporated herein by reference, and (iii) the form of
Certificate of Designation, which is filed as Exhibit 3.1 to this
Current Report on Form 8-K and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Reference is made to the disclosure set forth under Item 1.01 of
this Current Report on Form 8-K, which disclosure is incorporated
into this Item 2.03 by reference.
Item 3.02. Unregistered Sales of Equity Securities.
Reference is made to the disclosure set forth under Item 1.01 of
this Current Report on Form 8-K, which disclosure is incorporated
into this Item 3.02 by reference.
The issuance and sale of the shares of Series A-1 Preferred Stock
to Soryn HLDR under the Purchase Agreement are exempt from the
registration requirements of the Securities Act of 1933, as
amended (the Securities Act), to the exemption for transactions
by an issuer not involving any public offering under Section
4(a)(2) of the Securities Act and Rule 506 of Regulation D
promulgated under the Securities Act (Regulation D). The Company
made this determination based on the representations of Soryn
HLDR that Soryn HLDR is an accredited investor within the meaning
of Rule 501 of Regulation D and has access to information about
the Company and its investment in the Company.
This Current Report on Form 8-K is neither an offer to sell nor
the solicitation of an offer to buy any securities. The
securities referred to herein have not been registered under the
Securities Act and may not be offered or sold in the United
States absent registration or an exemption from registration
under the Securities Act.
Item 3.03. Material Modification to Rights of Security Holders.
Reference is made to the disclosure set forth under Item 1.01 of
this Current Report on Form 8-K, which disclosure is incorporated
into this Item 3.03 by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
On June 19, 2017, the Company filed the Certificate of
Designation with the Secretary of State of the State of Delaware
in connection with the Private Placement.
The description of the Certificate of Designation set forth under
Item 1.01 of this Current Report on Form 8-K is incorporated into
this Item 5.03 by reference and the full text of the form of the
Certificate of Designation is attached to this Current Report on
Form 8-K as Exhibit 3.1.
Item 8.01. Other Events.
On June 20, 2017, the Company issued a press release announcing
the entry into the Purchase Agreement and the closing of the sale
of the Series A-1 Preferred Stock. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
>>
Item 9.01. Financial Statements and Exhibits
(d)
Exhibits.
Exhibit No.
Description
3.1
Certificate of Designation of Series A-1 Preferred
Stock, filed with the Secretary of State of Delaware on
June 19, 2017.
4.1
Form of Warrant.
10.1
Series A-1 Preferred Stock Purchase Agreement, dated
June 15, 2017, between Finjan Holdings, Inc. and Soryn
HLDR Vehicle II LLC.
99.1
Press Release, dated June 20, 2017, entitled Finjan
Secures $15.3 Million Series A-1 Preferred Stock
Financing.



FINJAN HOLDINGS, INC. Exhibit
EX-3.1 2 exh31certificate.htm EXHIBIT 3.1 exh31certificate Exhibit 3.1 4351102.9 CERTIFICATE OF DESIGNATION OF SERIES A-1 PREFERRED STOCK OF FINJAN HOLDINGS,…
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