Item 1.01. Entry into a Material Definitive Agreement.
On August 6, 2018, Inseego Corp. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with two accredited investors (collectively, the “Investors”) pursuant to which, among other things, the Company issued and sold to the Investors, in a private placement transaction (the “Private Placement”), an aggregate of 12,062,000 immediately separable units (the “Units”), with each Unit consisting of (i) one share (each, a “Share” and, collectively, the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and (ii) a warrant (each a “Warrant” and, collectively, the “Warrants”) to acquire 0.35 of a share of Common Stock (subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions) (each, a “Warrant Share” and, collectively, the “Warrant Shares”), for a purchase price of $1.63 per Unit, resulting in aggregate gross proceeds to the Company of approximately $19.7 million, comprised of approximately $14.8 million from Investor Golden Harbor Ltd., an affiliate of Tavistock Group, and approximately $4.9 million from Investor North Sound Trading, L.P.
Each Warrant has an exercise price of $2.52 per share of Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, will be exercisable at any time on or after February 6, 2019, and will expire on August 6, 2023. Each Warrant will be exercisable on a cash basis unless, at the time of such exercise, the Warrant Shares underlying such Warrant cannot be immediately resold pursuant to an effective registration statement or Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) without volume or manner of sale restrictions, in which case such Warrant shall also be exercisable on a cashless exercise basis.
Pursuant to the terms of the Purchase Agreement, each Investor will be entitled to designate one member of the Company’s board of directors (the “Board”). In addition, if at any time subsequent to the Closing Date, Golden Harbor Ltd. notifies the Company that it beneficially owns an aggregate of at least 20% of the then-issued and outstanding Common Stock and wishes to designate an additional member of the Board, then: (i) the Board shall increase the number of seats on the Board to equal seven, and (ii) (A) if the Board is then comprised of 6 members, the Board shall fill the newly created vacancy by appointing the additional designee selected by Golden Harbor, Ltd.; and (B) if the Board is then comprised of 5 members, the Board shall (1) fill one newly created vacancy by appointing the additional designee selected by Golden Harbor Ltd.; and (2) fill the remaining vacancy by appointing an independent director candidate selected by the Board. If, at any time, either Investor ceases to hold at least 5% of the then-outstanding Common Stock of the Company, such Investor shall no longer be entitled to designate any members of the Board.
The Purchase Agreement contains customary representations and warranties of the Company and the Investors. In addition, the Warrants contain covenants that are customary for transactions of this type.
In connection with the Private Placement, the Company and the Investors entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company agreed to prepare and file a registration statement with the Securities and Exchange Commission (the “SEC”) for the purpose of registering all of the registrable securities covered thereby for resale by no later than November 2, 2018.
In connection with the Private Placement, on August 6, 2018, the Company entered into an amendment (the “Rights Plan Amendment”) to that certain Rights Agreement, dated January 22, 2018, between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Plan”), for the purpose of modifying the definition of “Grandfathered Stockholder” under the Rights Plan to include each of the Investors, thereby excluding them from the definition of “Acquiring Person” under the Rights Plan for so long as they do not acquire, after the date of the Rights Plan Amendment, beneficial ownership of Company securities (other than as a result of any adjustment provision or the accrual of interest under any outstanding convertible notes) equal to more than 0.50% of the then-outstanding Common Stock.
Also on August 6, 2018, the Company entered into an amendment (the “IRA Amendment”) to that certain Investors’ Rights Agreement, dated September 8, 2014, between HC2 Holdings 2, Inc. (“HC2”) and the Company (the “IRA”). As a condition to the Investors’ willingness to enter into the Purchase Agreement and consummate the Private Placement, HC2 agreed to amend the IRA to eliminate its board observation and nomination rights.
The foregoing summaries of the Purchase Agreement, the Warrants, the Registration Rights Agreement, the Rights Plan Amendment and the IRA Amendment do not purport to be complete and are qualified in their entirety by reference to the copies of the Purchase Agreement, the Warrants, the Registration Rights Agreement, the Rights Plan Amendment and the IRA Amendment that are filed as exhibits to this Current Report on Form8-K.
