Item 1.01 Entry into a Material Definitive
Agreement.
On April 25, 2022, Pareteum Corporation (the “Company”)
entered into a series of related transactions whereby it (i) agreed to the transfer of its previously issued senior secured convertible
notes due 2025 (the “First Lien Notes”) from High Trail Investments SA LLC (“High Trail”) and Channel
Ventures Group, LLC (“Channel Ventures Group”) to a new holder, Circles MVNE Pte. Ltd., an Asian digital
telecommunications and consumer company based in Singapore (“Circles”) and (ii) issued and sold a new series of senior
secured bridge notes due 2022 (the “Bridge Notes”) to Circles.
Notes Transfer
As previously disclosed, the Company had
previously issued and sold $22.5 million initial principal amount of First Lien Notes pursuant to its previously disclosed
Securities Purchase Agreement, dated as of June 8, 2020 (as amended to date, the “First Lien Purchase Agreement,”
and collectively with certain other agreements, instruments, certificates and documents entered into, contemplated by or delivered
in connection with each of the foregoing, as amended the “First Lien Transaction Documents), among the Company, High
Trail and Channel Ventures Group. As of April 25, 2022, an aggregate of $21,469,123.59 of principal and accrued interest was
outstanding under the First Lien Notes. In connection with the sale of the First Lien Notes by High Trail and Channel Ventures Group
to Circles, High Trail, Channel Ventures Group, Circles and the Company entered into that certain Note Sale Contract, dated as of
April 25, 2022 (the “Note Sale Contract”). Under the Note Sale Contract, the Company reaffirmed its secured
obligations under the First Lien Transaction Documents, agreed to take all such actions reasonably requested to replace High Trail
and Channel Ventures Group as collateral and administrative agents and appoint Circles as the successor collateral and
administrative agent under the First Lien Transaction Document and to agree to amendments to certain arrangements among the various
creditors of the Company. Also, in connection with the sale of First Lien Notes under the Note Sale Contract, the Company (i) agreed
to amendments to the First Lien Notes to reflect that the holder thereof, and therefore payee of the First Lien Notes, is now
Circles, (ii) agreed that all conversion features of the First Lien Notes had expired and would no longer have any force or effect
and (iii) entered into that Second Omnibus Agreement, dated as of April 25, 2022, among the Company, certain subsidiaries of the
Company, Circles and High Trail (the “Second Omnibus Agreement”). Under the Second Omnibus Agreement, the parties
thereto provided for the appointment of Circles, and the removal of High Trail, as administrative and collateral agent under the
First Lien Transaction Documents, and made certain other changes to the First Lien Transaction Documents. The Company did not
receive any proceeds from the sale of the First Lien Notes under the Note Sale Contract, and the First Lien Notes remain
outstanding.
Bridge Financing
On April 25, 2022, the Company entered into
the Securities Purchase Agreement, dated as of April 25, 2022 (the “Bridge Notes SPA”), with Circles under which
it agreed to issue and sell $6.00 million of Bridge Notes to Circles for an aggregate purchase price of $6.00 million. The closing
of the sale of the Bridge Notes occurred on April 25, 2022. The Bridge Notes SPA contains several affirmative and negative
covenants, including covenants requiring it to: (i) timely make all filings and reports relating to the sale of the Bridge Notes
under appliable state and federal securities laws, (ii) pay the legal fees and expenses incurred by Circles in connection with the
issue and sale of the Bridge Notes , (iii) refrain from issuing any other convertible indebtedness, warrants or other series of
bridge notes and (iv) maintain its corporate existence.
The Bridge Notes are senior, secured
obligations of the Company, and interest is payable, in cash, on the maturity date at a rate of 8% per annum or, if an Event of
Default has occurred and is continuing under the Bridge Notes, at a rate of 18% per annum. The outstanding principal is due and
payable in full on the maturity date. Events of Default have occurred and are continuing under the First Lien Notes, and as a
result, Circles has the right to accelerate the maturity of the Bridge Notes under the cross-default provision of the Bridge Notes.
The Bridge 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, the assets of Pareteum Europe BV, a subsidiary organized in the Netherlands, and the assets of Artilium
Group Limited, a subsidiary organized in England, and rank senior to the First Lien Notes and certain other indebtedness of the
Company. The maturity date of the Bridge Notes is October 31, 2022.The holder of the Bridge Notes or the Company may also elect for
the Company to redeem the Bridge Notes for cash at a price equal to 120% of the then-outstanding principal, plus accrued and unpaid
interest, if the Company undergoes a fundamental change. The Bridge Notes rank senior to the First Lien Notes and to all other
indebtedness of the Company.
The Bridge Notes impose certain customary affirmative
and negative covenants upon the Company, as well as covenants requiring that (i) payments under the Bridge Notes rank senior to all other
indebtedness of the Company, (ii) restrict the Company and its subsidiaries from incurring any additional indebtedness or suffering any
liens, subject to specified exceptions, and (iii) restrict the declaration of any dividends or other distributions. The Bridge Notes contain
customary events of default, including certain cross-default provisions.
Consistent with covenants contained in the Bridge
Notes SPA, the Company intends to use the net proceeds from the offering of the Bridge Notes to facilitate the Company’s undertaking
of one or more strategic alternatives in accordance with a budget agreed upon with Circles.
***
There is no material relationship between
the Company or its affiliates, on the one hand, and Circles, on the other hand, except that Circles currently holds all of the
Bridge Notes and the First Lien Notes. 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 and Channel Ventures held the First Lien Notes previously
issued under the First Lien Transaction Documents and each of High Trail and Channel Ventures Group is party to other previously
disclosed agreements with the Company. The foregoing description is qualified in its entirety by the terms of the Second Omnibus
Agreement, the Allonges to the First Lien Notes, the Bridge Notes SPA and the Bridge Notes, which are attached hereto as Exhibits
10.1 through and 10.11 and incorporated herein by reference.