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Item 1.01.
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Entry into a Definitive Material Agreement.
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Subscription Agreements
From February 21, 2020 through July 27,
2020, Pareteum Corporation (the “Company”) entered into a Subscription Agreement (the “Subscription
Agreement”) for the issue and sale of shares (the “Shares”) of its previously authorized 8% Series
C Redeemable Preferred Stock (the “Series C Preferred Stock”) with each of several investors for an aggregate
purchase price of $8,850,000, or an average of $83,617 per share of Series C Preferred Stock. The Company received net proceeds
from the sale of these Shares of $8,407,500 after payment of commissions equal to 5% of the gross proceeds to Hoving & Partners
SA, the Company’s placement agent for the transaction. The Subscription Agreement contains customary representations and
warranties, including representations from each purchaser regarding its status as a non-US Person under Regulation S under the
Securities Act of 1933, as amended (the “Securities Act”), and each investor’s investment purpose, and
representations from the Company regarding its organization, authorization to enter into the transaction and compliance with certain
laws, among other things. The Company also granted piggy-back registration rights to the purchasers under the Subscription Agreement
with respect to the purchasers’ securities such that if the Company files a registration statement on Form S-1 or Form S-3
registering the issuance and sale of any of its securities, then the resale by the purchasers of any of its shares must be included
as part of the offering registered under that registration statement, upon the election of such purchasers.
There is no material relationship between
the Company or its affiliates and the purchasers other than in respect of the Subscription Agreement, except that certain of the
purchasers had previously purchased shares of Series C Preferred Stock and continue to hold such securities.
The foregoing description is qualified in
its entirety by the terms of the Form of Subscription Agreement, which is incorporated herein by reference and attached hereto
as Exhibit 10.1.
The representations, warranties and covenants
contained in the Subscription Agreement were made solely for the benefit of the parties to Subscription Agreement and may be subject
to limitations agreed upon by the contracting parties. Accordingly, the Subscription Agreement is incorporated herein by reference
only to provide investors with information regarding the terms of the Subscription Agreement and not to provide investors with
any other factual information regarding the Company or its business.
Exchange Agreements
Simultaneous with its entry into
Subscription Agreements of the type described in Item 1.01 above, two investors also each entered into an Exchange Agreement,
dated as of July 17, 2020 and July 27, 2020, with the Company (each, an “Exchange Agreement”). Under each
Exchange Agreement, the Company and the investor party thereto agreed that such investor will exchange all of its shares of
Series C Preferred Stock for shares of the Company’s common stock (“Common Stock”), subject to the
satisfaction of certain conditions, including approval by the Company’s stockholders of the issuance of Common Stock,
if then required by the rules of the NASDAQ Stock Market, and the ability of the Company to issue shares of Common Stock not
subject to restrictions on resale.
The number of shares of Common Stock issuable
upon exchange of the Series C Preferred Stock is determined by the application of a formula in which (i) the stated value of the
shares of Series C Preferred Stock being converted plus the value of any accrued and unpaid dividends plus, with
respect to certain agreed upon shares of the Series C Preferred Stock, a premium of 12.5% on the stated value is divided
by (ii) the conversion price. The conversion price is the lower of (i) $0.58 and (ii) the greater of (x) the average daily volume-weighted
average price per share of Common Stock during the five trading days before the closing of the exchange and (y) $0.40. The exchange
will occur on the first business day following the satisfaction of all conditions to the exchange set forth in the Exchange Agreement,
including, if such exchange does not occur by December 31, 2020, an added condition that the average trading price of the Common
Stock be at least $0.58 per share.
There is no material relationship between
the Company or its affiliates and the purchasers other than in respect of the Exchange Agreements, except that each investor is
concurrently purchasing, and is currently a holder of, shares of Series C Preferred Stock.
The foregoing description is qualified
in its entirety by the terms of the Form of Subscription Agreement and the Form of Exchange Agreement, which is each
incorporated herein by reference and attached hereto as Exhibit 10.1 and 10.2.