Item 1.01
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Entry into a Material Definitive Agreement.
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On December 29, 2017
(the “
Closing Date
”), Inventergy Global, Inc. (the “
Company
”) entered into a Securities Purchase
Agreement (the “
Agreement
”) with TCA Global Credit Master Fund, LP (“
TCA
”). Pursuant to the
Agreement, the Company issued $2.4 million in senior secured convertible redeemable debentures (the “
Debentures
”)
to TCA. The Agreement also contemplates the sale of up to an additional $1.6 million principal amount of Debentures by the Company
to TCA, based upon the performance of the Company. The unpaid principal amount of the Debentures bears cash interest equal to 17%
per annum, with such interest payable monthly beginning on January 29, 2018. Upon and during the continuance of an Event of Default
(as defined in the Debentures), the cash interest rate will increase by an additional 7% per annum, subject to the maximum interest
rate permitted by applicable law.
Principal repayment
of the Debentures will be made in 18 monthly payments beginning on July 28, 2018 (11 monthly payments of $100,000 and 7 monthly
payments that increase up to $250,000). The Company may prepay the Debentures in whole or in part without penalty or premium. TCA
may purchase up to additional $4,000,000 of Debentures, subject to the mutual agreement of the parties.
In addition, the Company
issued to TCA a Fee Debenture (as defined in the Agreement) in the amount of $3,500,000. The Fee Debenture will bear interest at
8% per annum, with interest payable in cash on a monthly basis beginning on January 29, 2018. The principal amount of the Fee Debenture
is to be repaid in 30 monthly installments beginning on July 28, 2018 (such principal installment amounts starting at $105,776
per month and increasing to $128,254 per month).
Upon the occurrence
of an Event of Default, TCA may convert all or any portion of the outstanding amounts
(the “
Conversion Amount
”) of the Debentures, the Fee Debenture or any other transaction documents, into the
Company’s common stock (the “
Conversion Shares
”) in an amount of shares equal to: (i) the Conversion Amount
(the numerator); divided by (ii) eighty-five percent (85%) of the lowest volume weighted average price of the Company’s common
stock during the five trading days immediately prior to the conversion date (the denominator), subject to a 4.99% beneficial ownership
limitation.
The Company also agreed
to pay TCA a Profit Sharing Advisory Fee (as defined in the Agreement) of $3,500,000. This fee is payable from future revenues
to be received by the Company from INVT SPE LLC, which was established in April 2017 following the Company’s debt restructuring
and the transfer of its patents to this special purpose entity, provided that the Profit Sharing Advisory Fee is due and payable
in full 42 months following the Closing Date.
The Agreement contains
customary events of default provisions, pursuant to which TCA may accelerate payment of the outstanding Debentures and the Fee
Debenture.
As part of the transaction,
the Company and TCA entered into a Security Agreement pursuant to which the Company granted TCA a first priority security interest
in all of the assets of the Company and its subsidiaries, including a security interest in the Company’s interests in INVT
SPE LLC. The Company also entered into Pledge Agreements covering its ownership interest in its subsidiaries and Guarantee Agreements
whereby certain subsidiaries of the Company guaranteed the performance and payment under the transaction documents.
After payment of all
fees and expenses relating to the transaction, the Company received net proceeds of approximately $2.2 million, of which approximately
$1.1 million was received by the Company on the Closing Date and of which an additional approximately $1.15 million has been deposited
in escrow pending TCA’s receipt of certain additional information from the Company set forth in the Side Letter. The Company
intends to use the net proceeds of the transaction to repay its existing obligations, redeem up to 9% of its outstanding Series
E preferred stock and for general working capital purposes.
The foregoing descriptions of the
Agreement, the Debentures, the Fee Debenture, the Security Agreements, the Pledge Agreements, the Guarantee Agreement and the Side
Letter are qualified in their entirety by reference to such document, which document or form thereof is filed hereto as Exhibits
10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8 and 10.9, respectively, and are incorporated herein by reference.