Item 1.01 Entry into a Material Definitive
Agreement.
On
December 10, 2021, Pareteum Corporation (the “Company”):
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entered into an Omnibus Amendment, dated as of November 26, 2021 (the “First Lien Omnibus
Amendment”), with High Trail Investments SA LLC (“High Trail”), as the holder of the Company’s outstanding
Senior Secured Convertible Note due 2025 (the “Convertible Note”) and in its capacity as collateral agent, and the
guarantors of the Convertible Note;
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entered into a First Lien Joinder (as defined below) with, and issued Incremental Notes (as defined below)
to, Channel Ventures Group, LLC, a Delaware limited liability company (“Channel Ventures”); and
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entered into a Third Omnibus Amendment, dated as of November 26, 2021 (the “Second Lien
Omnibus Amendment”) with the holders of its previously outstanding Senior Second Lien Secured Convertible Notes due 2025, dated
as of various dates, in the aggregate principal amount of up to $24,018,206, plus the accrued in-kind interest to be added to such principal
amount, issued by the Company to several investors (the “Second Lien Notes”), the guarantors of the Second Lien Notes,
Hoving & Partners S.A., as the existing collateral agent, and Channel Ventures, as the successor collateral agent.
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First Lien Omnibus Amendment
The First Lien Omnibus Amendment effected changes
to several agreements and instruments previously entered into or issued by the Company.
First Lien Securities Purchase
Agreement
The
First Lien Omnibus Amendment amended the previously disclosed Securities Purchase Agreement, dated as of June 8, 2020 (as amended,
the “First Lien Purchase Agreement”), between the Company and High Trail, as the holder of the Convertible Note
and the collateral agent, under which the Convertible Note and certain warrants to purchase Common Stock were issued. Among other changes,
the First Lien Omnibus Amendment:
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provides for the offer and sale of an additional series of 8.00% Senior Secured Convertible Notes (the “Incremental Notes”)
in the aggregate initial principal amount of up to $5,000,000 under the First Lien Purchase Agreement in one or more additional closings;
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establishes the form of Incremental Note and form of joinder agreement by which purchasers of Incremental Notes will become party
to the First Lien Purchase Agreement (the “First Lien Joinder”); and
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provides the manner in which the proceeds received upon the exercise of any remedies under the security agreement relating to the
purchase and sale of the Convertible Note will be apportioned among High Trail and the holders of any Incremental Notes sold.
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The
First Lien Omnibus Amendment also effected certain other conforming and immaterial changes to the other documents entered into in connection
with the original sale of the Convertible Note. In connection with the entry by the Company into the First Lien Omnibus Amendment
and the issuance of the Incremental Notes, the Company also entered into a First Lien Joinder with Channel Ventures. The First Lien Joinder
sets forth the purchase terms for the Incremental Notes and makes Channel Ventures party to the First Lien Purchase Agreement as a “Buyer,”
subject to all of the representations, warranties, covenants and agreements of the First Lien Purchase Agreement in such capacity.
Incremental
Notes
On December 10, 2021, in connection with
the Company’s entry into the First Lien Omnibus Amendment and the First Lien Joinder, the Company completed the issuance and sale
to Channel Ventures under the First Lien Purchase Agreement, as amended by the First Lien Omnibus Amendment and the First Lien Joinder,
of six Incremental Notes, dated as of various dates, in the aggregate principal amount of $4.0 million. The Incremental Notes were purchased
for an aggregate purchase price of $4.0 million in cash. The Incremental Notes are in the form of the note attached as an exhibit to the
First Lien Purchase Agreement, as amended by the First Lien Omnibus Amendment and the First Lien Joinder. Each Incremental Note is dated
the date that the Company received the purchase price for such Incremental Note, the last of which is dated November 26, 2021.
The Incremental Notes are senior, secured obligations of the Company,
and interest is payable monthly on each Incremental Note beginning with the first month after the date of its issuance at a rate of 8%
per annum or, if an Event of Default has occurred and is continuing under the Incremental Notes, at a rate of 18% per annum. Events of
Default have occurred and are continuing under the Incremental Notes. The Incremental Notes are secured by a first lien on substantially
all assets of the Company and substantially all assets of its material U.S.-organized subsidiaries and the assets of Pareteum Europe BV,
a subsidiary organized in the Netherlands. Interest may be paid, at the election of the Company, in cash, in shares of common stock of
the Company, provided that the Company may only pay in shares of its common stock upon the satisfaction of certain conditions, or in-kind
by the Company by adding such amounts to the outstanding principal amount thereof, rather than paying such amounts in cash or shares of
Common Stock. The number of shares issuable if the Company elects to pay interest in shares is determined by the application of a formula
in which the amount of the interest due is divided by 85% of the lowest volume-weighted average price of the Company’s common stock
on the market on which the Company’s common stock is then traded or for which prices are quoted over the 10 days preceding the date
of such payment.
At the Company’s option, with the prior written consent of the
holders of the Incremental Notes, the Company may redeem all or a portion of the Incremental Notes. The holder of the Incremental Notes
or the Company may also elect for the Company to redeem the Incremental Notes at a 20% premium if the Company undergoes a fundamental
change.
The Incremental Notes are convertible into shares of the Company’s
common stock, in part or in whole, from time to time, at the election of the holder of the Incremental Notes. The initial conversion rate
is 2,702.7027 shares of Company common stock for each $1,000 of principal amount of Incremental Notes. The conversion rate is subject
to anti-dilution adjustments.
The Incremental Notes impose certain customary affirmative and negative
covenants upon the Company, as well as covenants requiring that (i) payments under the Incremental Notes rank senior to all unsecured
indebtedness of the Company, (ii) restrict the Company and its subsidiaries from incurring any additional indebtedness or suffering
any liens, subject to specified exceptions, (iii) restrict the declaration of any dividends or other distributions and (iv) require
the Company and its subsidiaries to maintain certain minimum revenues. The Incremental Notes contain customary events of default, including
certain cross-default provisions.
The Company intends to use the net proceeds from the offering of the
Incremental Notes for general corporate purposes.
Second Lien Omnibus Amendment
The Second Lien Omnibus Amendment effected changes
to several agreements and instruments previously entered into or issued by the Company.
Second Lien Purchase Agreement
The
Second Lien Omnibus Amendment amended the previously disclosed Securities Purchase Agreement,
dated as of April 13, 2021 (as amended, the “Second Lien Purchase Agreement”), among the Company, the holders
of the Second Lien Notes and the collateral agent, under which the Second Lien Notes and certain warrants to purchase Common Stock were
issued. Among other changes, the Second Lien Omnibus Amendment provides for the appointment of Channel Ventures, and the removal
of Hoving & Partners S.A., a private, Europe-based investor, as administrative and
collateral agent under the Second Lien Note sale transaction documents, and makes certain other immaterial changes to the Second Lien
Purchase Agreement.
Outstanding Second Lien
Notes
The
Second Lien Omnibus Amendment amended certain terms and provisions of the outstanding Second Lien Notes and the form of any new
Senior Second Lien Secured Notes due 2025 issued to any future buyer under the Second Lien Purchase Agreement by revising the procedure
by which the holders of Second Lien Notes will reimburse the administrative and collateral agent.
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There is no material relationship between the
Company or its affiliates, on the one hand, and High Trail and Channel Ventures, on the other hand, except that High Trail holds the Convertible
Note and is party to other previously disclosed agreements with the Company. The foregoing description is qualified in its entirety by
the terms of the First Lien Omnibus Amendment, the Incremental Notes, the First Lien Joinder and the Second Lien Omnibus Amendment, which
are attached hereto as Exhibits 10.1 through 10.9 and incorporated herein by reference.