Item 1.01
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Entry into a Material Definitive Agreement.
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On October 3, 2019, Avaya Holdings Corp. (collectively with Avaya Inc., Avaya or the Company)
announced that the Company will enter into a strategic partnership with RingCentral, Inc. (NYSE: RNG) (RingCentral). In connection with the strategic partnership, Avaya and RingCentral entered into (i) an Investment Agreement
(the Investment Agreement), whereby RingCentral will purchase $125 million aggregate principal amount of 3% convertible and redeemable preferred stock, with an initial conversion price of $16.00 per share, which represents an
approximately 6% position in Avaya on an as-converted basis, and (ii) a Framework Agreement (the Framework Agreement), whereby Avaya and RingCentral will introduce a new solution, Avaya
Cloud Office by RingCentral (ACO).
Investment Agreement
On October 3, 2019, Avaya entered into the Investment Agreement, pursuant to which the Company agreed to sell to RingCentral, in a private
placement under the Securities Act of 1933, as amended, (the Securities Act), 125,000 shares of the Companys Series A Convertible Preferred Stock, par value $0.01 per share (the Series A Preferred Stock),
for an aggregate purchase price of $125 million. The Series A Preferred Stock issued to RingCentral pursuant to the Investment Agreement will be convertible into shares of the Companys common stock, par value $0.01 per share (the
Common Stock), at an initial conversion price of $16.00 per share. The Company expects to complete the purchase and sale of the Series A Preferred Stock (the Closing) in the fourth calendar quarter of 2019,
after the expiration of the waiting period under the Hart-Scott-Rodino Act.
The Investment Agreement can be terminated any time prior to
the Closing (i) by either party if the Closing shall not have occurred by July 3, 2020 (the Outside Date), (ii) by either party in the event any governmental authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated thereby, (iii) by the mutual written consent of the parties, (iv) by either party upon written notice if the other party has been in
breach of any representation, warranty, covenant or agreement in the Investment Agreement such that the closing conditions set forth in the Investment Agreement would not be satisfied and such breach is not cured by the earlier of (x) the date
that is 30 days following the written notice of such breach and (y) the Outside Date or (v) by RingCentral if the Company enters into an agreement for, or consummates a change of control transaction.
The Investment Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
into this Item 1.01 by reference, and the foregoing summary of the Investment Agreement is qualified in its entirety by reference to Exhibit 10.1.
Framework Agreement
On October 3,
2019, Avaya Inc. and RingCentral entered into the Framework Agreement governing the terms of the commercial arrangement between the parties. Under the Framework Agreement, the parties will enter into a Super Master Agent Agreement, pursuant to which
Avaya will act as an agent to Avayas channel partners with respect to the sale of ACO and make direct sales of ACO. RingCentral will pay a commission to Avaya, including for the benefit of its channel partners, for each such sale. In addition,
for each qualified unit of ACO sold during the term of the Framework Agreement, RingCentral will pay Avaya certain commissions. Among other things, the Framework Agreement requires Avaya to (subject to certain exceptions) market and sell ACO as its
exclusive UCaaS solution (as defined by Subject Functionality in the Framework Agreement). Further, RingCentral will pay Avaya an advance of $375 million, predominantly for future commissions, as well as for certain licensing rights (the
Consideration Advance). The Consideration Advance will be paid primarily in stock. The Framework Agreement has a multiyear term and can be earlier terminated by either party in the event (i) the other party fails to cure a
material breach or (ii) the other party undergoes a change in control. Avaya Holdings Corp. and RingCentral have also entered into a Holdings Agreement in connection with the Framework Agreement, whereby Avaya has agreed to issue Series A
Preferred Stock or Common Stock, as applicable, to RingCentral in satisfaction of certain of Avayas obligations under the Framework Agreement.