| Item 1.01. | Entry into a Material Definitive Agreement. |
New Warrant
In order to provide additional funding for the Company’s operations, two existing stockholders of Inseego Corp., a Delaware corporation (the “Company”), Golden Harbor Ltd., an affiliate of Tavistock Group (“Golden Harbor”), and North Sound Trading, L.P. (“North Sound” and, together with Golden Harbor, the “Investors”), agreed to exercise Common Stock Purchase Warrants issued by the Company to the Investors on August 6, 2018 (the “Existing Warrants”). Upon exercise of the Existing Warrants, Golden Harbor purchased 3,166,275 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and North Sound purchased 1,055,425 shares of the Common Stock, each at an exercise price of $2.52 per share, for aggregate cash proceeds to the Company of approximately $10.6 million. In connection with the Investors exercising the Existing Warrants, on March 28, 2019, the Company issued to Golden Harbor a new warrant to purchase 1,875,000 shares of Common Stock and issued to North Sound a new warrant to purchase 625,000 shares of Common Stock (each a “New Warrant” and, collectively, the “New Warrants”).
Each New Warrant has an exercise price of $7.00 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 September 28, 2019, and will expire on June 30, 2022. Each New Warrant will be exercisable on a cash basis unless, at the time of such exercise, the shares of Common Stock issuable upon exercise of the New Warrants 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 New Warrant shall also be exercisable on a cashless exercise basis.
Except as expressly set forth therein, the New Warrants do not confer upon their holders any voting or other rights as a stockholder of the Company.
Amendment to Rights Agreement
In connection with the issuance of the New Warrants, on March 28, 2019, the Company entered into an Amendment No. 3 (the “Third Amendment to Rights Agreement”) to that certain Rights Agreement, dated January 22, 2018, as amended by that certain Amendment No. 1 to Rights Agreement, dated August 6, 2018, and as amended by that certain Amendment No. 2 to Rights Agreement, dated December 4, 2018, between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Agreement”), for the purpose of modifying the definition of “Acquiring Person” under the Rights Agreement to permit each of the Investors to remain a Grandfathered Stockholder (as defined in the Rights Agreement) and not be deemed an “Acquiring Person” under the Rights Agreement in connection with the Investors’ purchase of the New Warrants.
The Investors will remain Grandfathered Stockholders as long as they do not acquire, after the date of the Third Amendment to Rights Agreement, 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.
The foregoing descriptions of the New Warrants and the Third Amendment to Rights Agreement do not purport to be complete and are qualified in their entirety by reference to copies of the New Warrants and Third Amendment to Rights Agreement that are filed as exhibits to this Current Report on Form8-K and incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The New Warrants were issued in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act. The issuance did not involve any underwriters, underwriting discounts or commissions, or any public offering. The Company made no solicitation in connection with the issuance other than communications with the Investors. The Investors are each an “accredited investor,” as such term is defined in the Securities Act, and the Investors have access to adequate information about the Company in order to make an informed investment decision.
