| Item 1.01. |
Entry into a Material Definitive Agreement
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On October 5, 2020, the Company entered into a Membership Interest Purchase Agreement (“Purchase Agreement”) between the Company and Hoya ID Fund A, LLC (“Hoya”) that contemplates the purchase by the Company of all of the Class B Units of Telos ID (“Telos ID Units”) owned by Hoya (the “Telos ID Purchase”). Upon the closing of the Telos ID Purchase, Telos ID will become a wholly owned subsidiary of the Company. The successful consummation of the initial public offering of the Company’s common stock (the “IPO”) is a condition to the closing of the Telos ID Purchase. If the IPO is not consummated, the Telos ID Purchase will not occur.
As consideration for the Telos ID Units, the Company will pay a purchase price to Hoya or its members consisting of (a) the payment to Hoya of $30 million and (b) the issuance to Hoya or its members of that number of shares of the Company’s common stock equal to twelve percent (12%) of the total number of shares of common stock that are issued and outstanding following (i) the issuance of such shares of common stock to Hoya or its members and (ii) the closing of the IPO. As a condition to the Telos ID Purchase, Hoya or the members of Hoya will enter into lock-up agreements with the underwriters in the IPO to restrict the trading of the common stock issued to Hoya or its members for 180 days.
The foregoing summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is substantially in the form attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
On October 6, 2020, Telos Corporation (the “Company”) entered into a voting and support agreement (the “Voting Agreement”) with certain holders (the “Preferred Stockholders”) of approximately thirty-two percent (32%) of the Company’s outstanding 12% Cumulative Exchangeable Redeemable Preferred Stock (the “Public Preferred Stock”). Under the Voting Agreement, each of the Preferred Stockholders agreed, among other things, to consent to certain amendments to the Company’s Amended and Restated Articles of Incorporation (the “Charter”) with respect to the Public Preferred Stock. These amendments provide that, upon a qualified initial public offering of the Company’s common stock, each issued and outstanding share of Public Preferred Stock would be converted into the right to receive ninety percent (90%) of the liquidation value of the Public Preferred Stock as of such date, which shall be paid eighty-five percent (85%) in cash and fifteen percent (15%) in common stock of the Company (based upon the initial price to the public of the Company’s common stock on the date of the qualified initial public offering). The proposal to amend the Charter requires the consent of the holders of a majority of the outstanding shares of Public Preferred Stock.
The foregoing summary of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreement, which is substantially in the form attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein. |
