UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

   

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

  

Date of Report (Date of earliest event reported): December 23, 2020

 

Pareteum Corporation

(Exact name of Registrant as Specified in Charter)

 

Delaware   001-35360   95-4557538

(State or Other Jurisdiction of

Incorporation)

  (Commission File Number)   (IRS. Employer Identification No.)

 

1185 Avenue of the Americas, 2nd Floor

New York, NY 10036

 (Address of principal executive offices) (Zip Code)

 

(646) 975-0400

(Registrant's telephone number, including area code)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock TEUM NASDAQ

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 23, 2020, Pareteum Corporation (the “Company”) entered into (i) a letter agreement (the “Forbearance Letter Agreement”) with High Trail Investments SA LLC (“HT”), the holder of that certain Senior Secured Convertible Note due 2025 (the “Note”) issued by the Company on June 8, 2020 and that certain Warrant to Purchase Common Stock, dated June 8, 2020 (the “Warrant”), issued by the Company and (ii) a letter agreement (the “Control Account Letter Agreement”) with HT. HT and the Company are also party to that certain Securities Purchase Agreement, dated June 8, 2020 (the “SPA”), under which the Note and the Warrant were originally sold, that certain Deposit Account Control Agreement, dated as of June 8, 2020 (the “Deposit Account Control Agreement”), related to certain liquidity obligations of the Company under the Note, and that certain Forbearance Agreement, dated as of December 1, 2020 (the “Forbearance Agreement”), under which the Company acknowledged certain defaults under the Note and the SPA and HT agreed not pursue certain remedies against the Company.

 

Under the terms of the Forbearance Letter Agreement, HT and the Company agreed that HT would not exercise any right or remedy under the Note, the SPA, the Warrant or the related security documents, including HT’s right to accelerate the aggregate amount outstanding under the Note, until the earlier of (i) January 31, 2021, (ii) the date of any new event of default or (iii) the initiation of any action by the Company to invalidate any of the representations and warranties made in the Forbearance Agreement. This represents an extension of the term of HT’s agreement to forbear from December 31, 2020.

 

Under the terms of the Control Account Letter Agreement, HT and the Company agreed that of the remaining $7 million of the original purchase price for the Note that was maintained in a blocked account subject to the Deposit Account Control Agreement, $1 million would be released to the Company for its use.

 

The foregoing descriptions are qualified in their entirety by the terms of the Forbearance Letter Agreement and the Control Account Letter Agreement, which are incorporated herein by reference and are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)       Exhibits

 

Exhibit
Number 		Description
10.1 Letter agreement, dated as of December 23, 2020, between Pareteum Corporation and High Trail Investments SA LLC
10.2 Letter agreement, dated as of December 23, 2020, between Pareteum Corporation and High Trail Investments SA LLC

 

 

 

 

SIGNATURES

 

  

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  PARETEUM CORPORATION  
     
     
Dated: December 23, 2020 By: /s/ Laura W. Thomas  
    Name: Laura W. Thomas  
    Title: Interim Chief Financial Officer  

 

 

 

 

Exhibit 10.1

 

HT Investments SA LLC

221 River Street, 9th Floor

Hoboken, NJ 07030

 

December 23, 2020

 

Pareteum Corporation

1185 Avenue of the Americas, 2nd Floor

New York, NY 10036

Attention: Laura W. Thomas

 

Re: Pareteum Corporation Forbearance Agreement

 

Dear Laura:

 

Reference is made to that certain Forbearance Agreement (the “Forbearance Agreement”) entered into as of November 30, 2020 between Pareteum Corporation, a Delaware corporation (the “Company”) and High Trail Investments SA LLC (“HT”). All capitalized terms used in this letter agreement, but not defined herein, have the meanings ascribed to such terms in the Forbearance Agreement.

 

In accordance with Section 2.03 of the Forbearance Agreement, the Forbearance Termination Date shall be the earlier to occur of: (a) December 31, 2020 (or any later date agreed to in writing by HT); (b) the occurrence of any Event of Default (other than an Existing Event of Default); and (c) the initiation of any action by the Company or any other Person to invalidate or limit the enforceability of any of the acknowledgments set forth in Article 3 of the Forbearance Agreement.

 

HT hereby agrees that, effective as of the date hereof, the Forbearance Termination Date shall be the earlier to occur of: (a) January 31, 2021(or any later date agreed to in writing by HT); (b) the occurrence of any Event of Default (other than an Existing Event of Default); and (c) the initiation of any action by the Company or any other Person to invalidate or limit the enforceability of any of the acknowledgments set forth in Article 3 of the Forbearance Agreement.

 

The Company hereby acknowledges, confirms, and agrees that following the disclosure of the subject matter hereof in a Current Report on Form 8-K filed with the Securities and Exchange Commission (which the Company agrees to file no later than 5:00 p.m. Eastern Time on December 23, 2020), all material non-public information regarding the Company or any of its subsidiaries previously disclosed to High Trail has been publicly disclosed.

 

If the foregoing correctly sets forth the understanding between the Company and HT, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and HT.

 

[Remainder of Page Left Blank; Signature Page Follows]

 

 

 

 

  Very truly yours,
     
   
    HIGH TRAIL INVESTMENTS SA LLC
  By: /s/ Eric Helenek
  Name: Eric Helenek
  Title: Authorized Signatory

 

 

AGREED AND ACCEPTED:

 

PARETEUM CORPORATION  
     
By: /s/ Alexander Korff  
Name: Alexander Korff  
Title: Corporate Secretary  

 

 

 

 

Exhibit 10.2

 

  

1185 Avenue of the Americas, 2nd Floor, New York, NY 10036

 

December 23, 2020

 

High Trail Investments SA LLC

221 River Street, 9th Floor

Hoboken, NJ 07030

Attention: Eric Helenek

 

Re: Pareteum Corporation Financing

 

Ladies and Gentlemen:

 

Reference is made to the Deposit Account Control Agreement dated June 8, 2020 entered into by and among Pareteum Corporation, a Delaware corporation (the “Company”), High Trail Investments SA LLC, a Delaware limited liability company, as collateral agent (“High Trail”), and Capital One, National Association (“Capital One”) regarding the Company’s account with Capital One numbered *********** (the “Controlled Account”) and that certain Senior Secured Convertible Note due 2025, dated as of June 8, 2020 (as amended by that certain Amendment to Senior Secured Convertible Note Due 2025, dated as of July 18, 2020, the “Note”). All capitalized terms used but not defined herein, have the meanings ascribed to such terms in that certain Forbearance Agreement, dated as of November 30, 2020 (the “Forbearance Agreement”) entered into by the Company and High Trail. In connection with the release of the sum of One Million Dollars ($1,000,000) from the Controlled Account and the agreement of High Trail that each reference to the amount “seven million dollars ($7,000,000)” in Section 9(J) of the Note is hereby replaced with the amount “six million dollars ($6,000,000)”, the Company hereby acknowledges, stipulates, warrants and agrees as follows:

 

1.                   Acknowledgment of Indebtedness. The Company hereby acknowledges, confirms, and agrees that as of the date hereof, the Company is indebted to High Trail in the principal amount of $17,500,000, in addition to interest, expenses, fees and other Event of Default Acceleration Amount and that as of December 31, 2020 the amount of interest for which the Company will be indebted to High Trail will be in the amount of $262,500. The Company hereby acknowledges, confirms, and agrees that (i) all Event of Default Acceleration Amount, including interest accrued and accruing thereon, and all fees, costs, expenses, and other charges now or hereafter payable to High Trail, in each case in accordance with the terms of the Note, are unconditionally owing by the Company, and (ii) that the Company has entered an Event of Default Conversion Period as a result of the existence of the Existing Events of Default, in each case without offset, defense, or counterclaim of any kind, nature, or description whatsoever. The Company further acknowledges, confirms, and agrees that, as of the date hereof, the Conversion Rate (as defined in the Note), is 2,702.702 and that, if High Trail does not elect to receive the Fourteen Million Dollar ($14,000,000) Optional Redemption Payment (as defined in the Note) which High Trail would have been entitled to receive from the Company on January 1, 2021, then High Trail shall be entitled to elect to receive an Optional Redemption Payment from the Company in the amount of Seventeen Million Five Hundred Thousand Dollars ($17,500,000) on February 1, 2021, and that if High Trail makes such election, such payment shall then be due and payable.

 

2.                   Acknowledgement of Warrants Outstanding. The Company hereby acknowledges, confirms, and agrees that (i) the March Warrant is outstanding and is exercisable for 2,000,000 shares of the Company’s Common Stock at an Exercise Price (as defined therein) of $0.37 per share and (ii) the June Warrant is outstanding and is exercisable for 15,000,000 shares of the Company’s Common Stock at an Exercise Price (as defined therein) of $0.37 per share.

 

 

 

 

3.                   Ratification; Reaffirmation. The Company hereby reaffirms and ratifies the Transaction Documents, each as amended, restated, modified, and/or supplemented. The Company hereby ratifies, affirms, reaffirms, acknowledges, confirms and agrees that (a) all of the Company’s obligations owing to High Trail under the Transaction Documents are hereby reaffirmed; and (b) the Transaction Documents are the legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally.

 

4.                   Additional Events of Default. Except for the Existing Events of Default, no other Default or Event of Default has occurred and is continuing and the Company hereby acknowledges and agrees that as of the date hereof, it is not aware of any prospective Event of Default other than the Existing Events of Default.

 

5.                   Material Nonpublic Information. The Company hereby acknowledges, confirms, and agrees that following the disclosure of the subject matter hereof in a Current Report on Form 8-K filed with the Securities and Exchange Commission (which the Company agrees to file no later than 5:00 p.m. Eastern Time on December 23, 2020), all material non-public information regarding the Company or any of its subsidiaries previously disclosed to High Trail has been publicly disclosed .

 

6.                   Fees and Expenses. The effectiveness of this Agreement shall be contingent upon the Company paying for legal fees and disbursements of Latham & Watkins LLP, counsel to High Trail, in an amount of $4,000.

 

  Very truly yours,
     
  PARETEUM CORPORATION
     
  By: /s/ Alexander Korff
  Name: Alexander Korff
  Title: Corporate Secretary

 

AGREED AND ACCEPTED:

 

HIGH TRAIL INVESTMENTS SA LLC

 

 

By: /s/ Eric Helenek  
Name:   Eric Helenek  
Title: Authorized Signatory