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): AUGUST 13, 2008
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| | (Exact name of registrant as specified in its charter) | |
| Delaware | | 000-51995 | | 77-0622733 |
| (State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| 11201 SE 8th Street, Suite 200, Bellevue, Washington | 98004 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (858) 362-2250
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| 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: |
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| r | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| r | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| r | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| r | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01 Entry Into a Material Definitive Agreement.
On August 13, 2008, Telanetix, Inc., a Delaware corporation ("we," "us," "our" or the "Company"), entered into a debenture and warrant purchase agreement with an institutional investor pursuant to which we issued a senior secured convertible debentures in the aggregate principal amount of $2.0 million, along with a warrant to purchase 608,000 shares of our common stock with an exercise price of $1.00 per share.
The following summarizes the terms of the debenture we issued:
| Term: | The debenture is due and payable on June 30, 2014. |
| Interest: | Interest accrues at the rate of 12.0% per annum and is payable monthly, commencing on September 1, 2008. |
| Principal Payment: | The principal amount of the debenture, if not paid earlier, is due and payable on June 30, 2014. |
| Interest Payments: | We have the right to make interest payments in cash, or upon notice to the holders and compliance with certain equity conditions, we can pay all or a portion of any such payment in common stock valued at a price equal to the lesser of the then effective conversion price (initially $1.25) or 85% of the average of the volume weighted average price, or VWAP, per share for our common stock for the 10 consecutive trading days immediately prior to the applicable payment date. |
| Early Redemption: | We have the right to redeem the debenture before maturity by payment in cash of 120% of the then outstanding principal amount plus (i) accrued but unpaid interest, (ii) an amount equal to all interest that would have accrued if the principal amount subject to such redemption had remained outstanding through the maturity date and (iv) all liquidated damages and other amounts due in respect of the debenture. To redeem the debentures we must meet certain equity conditions. The payment of the debenture would occur on the 10th day following the date we gave the holders notice of our intent to redeem the debenture. We agreed to honor any notices of conversion that we receive from a holder before the date we pay off the debenture. |
| Voluntary Conversion: | The debenture is convertible at anytime at the discretion of the holder at a conversion price per share of $1.25, subject to adjustment including full-ratchet, anti-dilution protection. |
| Forced Conversion: | Subject to compliance with certain equity conditions, we also have the right to force conversion if the VWAP for our common stock exceeds 200% of the then effective conversion price for 20 trading days out of a consecutive 30 trading day period. Any forced conversion is subject our meeting certain equity conditions and is subject to a 4.99% cap on the beneficial ownership of our shares of common stock by the holder and its affiliates following such conversion. |
| Covenants: | The debenture imposes certain covenants on us, including restrictions against incurring additional indebtedness, creating any liens on our property, amending our certificate of incorporation or bylaws, redeeming or paying dividends on shares of our outstanding common stock, and entering into certain related party transactions. The debenture defines certain events of default, including without limitation failure to make a payment obligation, failure to observe other covenants of the debenture or related agreements (subject to applicable cure periods), breach of representation or warranty, bankruptcy, default under another significant contract or credit obligation, delisting of our common stock, a change in control, failure to secure and maintain an effective registration statement covering the resale of the common stock underlying the debentures and the warrants, or failure to deliver share certificates in a timely manner. In the event of default, the holders of the debenture has the right to accelerate all amounts outstanding under the debenture and demand payment of a mandatory default amount equal to 130% of the amount outstanding plus accrued interest and expenses. |
| Security: | The debenture is secured by all of our assets under the terms of the amended and restated security agreement we and our subsidiaries entered into with the investor on June 30, 2008. |
A copy of the press release announcing the financing transaction described above is attached as Exhibit 99.1 to this report and is incorporated herein by this reference. The summary of the financing transaction described above, and the summary of the terms of the securities and agreements related to such transaction, are qualified in their entirety by reference to the debenture and warrant purchase agreement, the form of debenture and the form of warrant, each of which is filed as an exhibit to this report and incorporated herein by this reference.
| ITEM 2.02. | Results of Operations and Financial Condition |
On August 14, 2008, we issued a press release reporting our financial results for the quarter ended June 30, 2008. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information contained in this Item 2.02 and in Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities and Exchange Act of 1934 or incorporated by reference in any filing under the Securities and Exchange Act of 1934 or the Securities Act of 1933 (the "Securities Act"), except as shall be expressly set forth by specific reference in such filing.
| ITEM 2.03 | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant |
The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 2.03.
ITEM 3.02 Unregistered Sales of Equity Securities
The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 3.02. The investors met the accredited investor definition of Rule 501 of the Securities Act. The debentures were issued in a private placement under Section 4(2) of the Securities Act and/or Rule 506 of Regulation D under the Securities Act. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the investor in connection with the offering.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
SIGNATURE
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.
| | TELANETIX, INC. |
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| Dated: August 14, 2008 | By: | /s/ J. Paul Quinn |
| | | J. Paul Quinn Chief Financial Officer |
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