PARETEUM CORPORATION (NASDAQ:TEUM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement. |
On December 27, 2016 (the Amendment Closing
Date), Elephant Talk Europe Holding B.V., an
entityorganized under the laws of the Netherlands (ET
Europe or the Borrower),a
wholly owned subsidiary of Pareteum Corporation (the
Company), as borrower, the Company, Pareteum
North America Corp., a Delaware corporation (Pareteum
North America), Elephant Talk Group International B.V.,
an entity organized under the laws of the Netherlands, Corbin
Mezzanine Fund I, L.P., (Lender) and Atalaya
Administrative LLC, a New York limited liability company
(ATALAYA), as administrative agent and
collateral agent for the Lender, entered into an Amended and
Restated Credit Agreement (the Amendment)
amending certain terms of the Credit Agreement among the parties
dated November 17, 2014, as have been amended from time to time
(as so amended, the Original Credit Agreement).
to the Amendment, the Borrower is indebted to ATALAYA and Lender
in the amount of $5,562,778, and has agreed to add the following
amounts to the indebtedness: (i) the Additional Prepayment
Premium (as defined in the Original Credit Agreement) of
$4,149,893; (ii) the Prepayment Premium (as defined in the
Original Credit Agreement) of $69,165 and (iii) the Exit Fee (as
defined in the Original Credit Agreement) of $300,000, totaling
$10,081,836 (the Amended Term Loan Facility).
The Amendment removes certain terms regarding the liquidation
preference and the prepayment fee. In addition, the Amendment
provides that the interest rate is 13% per annum. However, upon
receipt by the Company of Net Equity Proceeds (as defined in the
Amendment) of $3,000,000 and applying such amount to certain
obligations, the interest rate shall be reduced to 12% per annum.
to the Amendment, the initial maturity date of the loan is June
30, 2017, which shall be automatically extended to December 31,
2017 (the First Extended Maturity Date) upon a
repayment of principal of at least $1,500,000 million by March
31, 2017 and another $1,500,000 by June 30, 2017, and no default
then exits. The First Extended Maturity Date shall be
automatically extended to February 28, 2018 (the Second
Extended Maturity Date) if the financial statements
required by the Amendment for the month ending November 30, 2017
have been delivered to ATALAYA and the Lender, and as of December
31, 2017, the total leverage ratio of the Company and its
subsidiaries is less than or equal to 2.50 to 1.00, and no
default then exits. The Second Extended maturity Date shall be
automatically extended to December 31, 2018 (the Third
Extended Maturity Date) if the financial statements for
the fiscal quarter ending December 31, 2017 have been delivered
to ATALAYA and the Lender, and as of December 31, 2017, the total
leverage ratio of the Company and its subsidiaries is less than
or equal to 2.50 to 1.00, and no default then exits.
In addition, to the Amendment, the Borrower agrees to
respectively repay $250,000 by the end of each fiscal quarter of
2017 and $500,000 by the end of each fiscal quarter of 2018. The
Amendment also provides that the Borrower shall pay to ATALAYA a
quarterly installment of $15,000 as the administration fee, which
is $60,000 in total. Also, the Amendment updated the financial
covenants.
Also on December 27, 2016, a Reaffirmation Agreement (the
Reaffirmation Agreement) was entered by and
among ET Europe, the Company, Pareteum North America and ATALAYA,
to which, among other things, the Borrower reaffirmed its
obligations to Lender under each of the Credit Agreement ( as
defined in the Reaffirmation Agreement), the Security Agreement
(as defined in the Reaffirmation Agreement) and the Pledge
Agreement ( as defined in the Reaffirmation Agreement) and Deed
of Pledge over Shares (as defined in the Reaffirmation
Agreement).
Copies of the Amendment and the Reaffirmation Agreement are filed
as Exhibit 10.1 and 10.2 to this Current Report on Form 8-K and
are incorporated herein by reference. The description of the
material terms of the Amendment and the Reaffirmation Agreement
is qualified in their entirety by reference to Exhibit 10.1 and
10.2.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
As of December 27, 2016, the Amended Term Loan Facility
constitutes a direct financial obligation of the Company, the
material terms of which are described above under Item1.01 and
are incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
On December 27, 2016, to the terms of the Amendment, the Company
issued two warrants to the Lender (the Corbin
Warrant) and ACM Carry-I LLC (the ACM
Warrant). The Corbin Warrant entitles the Lender to
purchase from the Company up to a total of 27,051,627 shares of
common stock, $0.00001 par value per share (the Common
Stock) of the Company at an exercise price per share
equal to $0.13 per share at any time and from time to time on or
after December 27, 2016 through December 27, 2019. The ACM
Warrant entitles ACM Carry-I LLC to purchase up to a total of
4,773,817 shares of Common Stock on the same terms as discussed
above (all such shares underlying these two warrants, the
Warrant Shares). For so long as the debt under
the Amended Term Loan Facility remains outstanding, if at any
time the aggregate amount of Warrant Shares into which the
warrants may be exercised is less than the number of 7.5% of the
shares of outstanding Common stock minus the aggregate number of
shares of Common Stock previously issued from time to time as a
result of any exercise of the warrants (the Minimum
Percentage Amount), the Warrant Shares shall be adjusted
to equal to the Minimum Percentage Amount.
The securities underlying both Warrants have not been registered
under the Securities Act of 1933, as amended (the
Securities Act), or any state securities laws,
and were offered and sold to an accredited investor (as defined
in Rule501(a) of the Securities Act) to an exemption from
registration under Section 4(a)(2) of the Securities Act and
Regulation D promulgated thereto.
The descriptions of the Corbin Warrant and ACM Warrant are
qualified in their entirety by the terms and conditions of the
Corbin Warrants, forms of which are filed as Exhibits 4.1 and
4.2, to this Current Report and are incorporated by reference
herein.
| Item 7.01 | Regulation FD Disclosure |
On December 29, 2016, the Company issued a press release
announcing the transaction described under Item 1.01 above. A
copy of the press release referred to above is attached hereto as
Exhibit 99.1.
The information contained in this Item 7.01 of this Current
Report on Form 8-K shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or incorporated by reference in any filing
under the Securities Act of 1933, as amended (the Securities Act)
or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing. The furnishing of the
information in this Item 7.01 of this Current Report on Form 8-K
is not intended to, and does not, constitute a representation
that such furnishing is required by Regulation FD or that the
information contained in this Current Report on Form 8-K
constitutes material investor information that is not otherwise
publicly available.
This Current Report on Form 8-K and exhibits may contain these
types of statements, which are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, and which involve risks, uncertainties and reflect the
Registrants judgment as of the date of this Current Report on
Form 8-K. Forward-looking statements may relate to, among other
things, operating results and are indicated by words or phrases
such as expects, should, will, and similar words or phrases.
These statements are subject to inherent uncertainties and risks
that could cause actual results to differ materially from those
anticipated at the date of this Current Report on Form 8-K. The
Company disclaims any obligation to, and will not, update any
forward-looking statements to reflect events or circumstances
after the date hereof. Investors are cautioned not to rely unduly
on forward-looking statements when evaluating the information
presented within.
| Item 8.01 | Other events |
As previously disclosed, on September 19, 2016, a claim was
commenced in the United Stated District Court for the Southern
District of New York against the Company by PI Saffel N.V. for
repayment of a $350,000 unsecured promissory note (the
Note).
On December 22, 2016, the Company and the holder of the Note (the
Holder) mutually agreed to extend the maturity
date of the Note to March 31, 2017. The Company agreed to pay to
the Holder additional fee of $35,000 no later than January 17,
2017 and the Holder agreed to withdraw its legal action.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 4.1 |
Corbin Warrant, dated December 27, 2016 issued to Corbin Mezzanine Fund I, L.P to purchase 27,051,627 shares of Common Stock. |
| 4.2 |
ACM Warrant, dated December 27, 2016 issued to ACM Carry-I LLC. to purchase 4,773,817 shares of Common Stock. |
| 10.1 |
Amended and Restated Credit Agreement, dated as of December 27, 2016, by and among Elephant Talk Europe Holding B.V., as the Borrower, Pareteum Corporation, as the Parent and Guarantor, the other Subsidiaries of the Parent, from time to time party hereto as Guarantors, the Lenders from time to time party hereto and Atalaya Administrative LLC, as Administrative Agent and Collateral Agent. |
| 10.2 |
Reaffirmation Agreement, dated as of December 27, 2016, by and among Elephant Talk Europe Holding B.V., as the Borrower, Pareteum Corporation, as the Parent and Guarantor Pareteum North America Corp., from time to time party hereto as Guarantors and Atalaya Administrative LLC, as Administrative Agent and Collateral Agent. |
| 99.1 | Press Release dated December 29, 2016. |