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Item
1.01
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Entry
into a Material Definitive Agreement.
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On July 21, 2016, Inventergy Global, Inc.
(“
Company
”) entered into a securities purchase agreement (the “
Purchase Agreement
”) with
certain institutional accredited investors (the “
Investors
”). Pursuant to the Purchase Agreement, the Company
sold to the Investors in a private placement 3,000 shares of Series E Convertible Preferred Stock (the
“
Series
E Preferred Stock
”), each having a stated value of $1,000, for aggregate gross proceeds of $3.0 million. The Company
intends to use $2.5 million of the net proceeds from the sale of the Series E Preferred Stock to redeem approximately 70% of the
outstanding shares of the Company’s Series C Convertible Preferred Stock (the “
Series C Preferred Stock
”)
and will use the remainder of the net proceeds for working capital.
Holders of the Series E Preferred Stock
will be entitled to a quarterly dividend at a rate of 5% per annum. The Series E Preferred Stock is immediately convertible into
1,496,262 shares of the Company’s common stock, subject to certain beneficial ownership limitations, at an initial conversion
price equal to $2.005 per share, subject to adjustment. After January 25, 2017, the conversion price will be equal to the lesser
of (a) the conversion price then in effect or (b) 65% of the volume weighted average price of the Company’s common stock
for ten consecutive days prior to the applicable conversion date. The Series E Preferred Stock contains provisions providing for
an adjustment in the conversion price upon the occurrence of certain events, including stock splits, stock dividends, and fundamental
transactions. However, in no event may the conversion price be lower than $0.25 per share. The Company may redeem some or all of
the Series E Preferred Stock for cash as follows: (i) on or prior to September 25, 2016, in an amount equal to 126% of the aggregate
stated value then outstanding, (ii) after September 25, 2016 and on or prior to January 25, 2017, in an amount equal to 144% of
the aggregate stated value then outstanding and (iii) after January 25, 2017, in an amount equal to 150% of the aggregate stated
value then outstanding.
Each Investor also
received a common stock purchase warrant (the “
Warrants
”) to purchase up to a number of shares of common stock
equal to 85% of such Investor’s subscription amount divided by $2.005. The Warrants are exercisable for a term of five years
commencing six months after the closing of the transaction at a cash exercise price of $2.005 per share. In the event that the
shares underlying the Warrants are not subject to a registration statement at the time of exercise, the Warrants may be exercised
on a cashless basis after six months from the issuance date. The Warrants also contain provisions providing for an adjustment in
the exercise price upon the occurrence of certain events, including stock splits, stock dividends, and fundamental transactions.
The Purchase Agreement
requires, if necessary, that the Company hold a special meeting of stockholders to seek the approval of the holders of its common
stock for the issuance of the number of shares of common stock issuable upon the conversion of the Series E Preferred Stock in
excess of 19.99% of the outstanding common stock (the “
Shareholder
Approval
”). Until the Company
obtains the Shareholder Approval, the conversion of the Series E Preferred Stock is limited to 19.99% of the currently outstanding
common stock. Additionally, until the Series E Preferred Stock is no longer outstanding, the Investors may participate in future
offerings for up to 50% of the amount of such offerings.
The Purchase Agreement
contains customary representations, warranties, and covenants, including covenants relating to public reporting, Shareholder Approval
and the use of proceeds. The Purchase Agreement also provides that, upon redemption of the Series C Preferred Stock, the
Investors (each of whom is also a holder of the Series C Preferred Stock) will be entitled to receive an additional premium such
that the aggregate redemption amount is 162% of the stated value of the Series C Preferred Stock for the first 60 days after the
date of the Purchase Agreement and 180% thereafter.
The closing of
the transaction is anticipated to occur on or about July 25, 2016, subject to customary closing conditions.
Chardan Capital Markets,
LLC (the “
Placement Agent
”) is acting as the sole placement agent for the offering. The Placement Agent will
receive a commission equal to 5% of the gross proceeds of the offering for an aggregate commission of $150,000. The Company will
pay for the Investors’ legal expenses in an amount up to $25,000.
The securities offered
have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. This Current Report on Form 8-K shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such
state.
The foregoing summaries
of each of the Purchase Agreement and the Warrants are qualified in their entirety by reference to the full text of each such document.
Copies of the Purchase Agreement and the Warrants are attached hereto as Exhibits 10.1 and 4.1, respectively, and they are incorporated
herein by reference.