Item 1.01 Entry into a Material Definitive Agreement.
Sixth Loan Modification Agreement
On January 27, 2022, CareCloud, Inc. and its wholly owned subsidiaries CareCloud
Acquisition, Corp., CareCloud Health, Inc., CareCloud Practice Management,
Corp., MTBC Acquisition, Corp., Meridian Medical Management, Inc. and medSR,
Inc. (collectively, the "Company") entered into a Sixth Loan Modification
Agreement (the "Agreement") with Silicon Valley Bank ("SVB") whereby SVB
consented to (i) the payment of cash dividends by the Company on its future
Series B Cumulative Redeemable Perpetual Preferred Stock, which is now the
Company's 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock, par
value $0.001 per share (the "Series B Preferred Stock"); (ii) the use of a
portion of net proceeds of its public offering of shares of Series B Preferred
Stock to redeem a portion of issued and outstanding shares of its 11% Series A
Cumulative Redeemable Perpetual Preferred Stock (the "Series A Preferred
Stock"); and (iii) the potential exchange of shares of Series A Preferred Stock
by holders of such preferred stock with shares of Series B Preferred Stock under
certain circumstances after the redemption of Series A Preferred Stock.
The foregoing description of the Agreement does not purport to be complete and
is qualified in its entirety by reference to the Agreement, a copy of which will
be filed as an exhibit by the Company in its Quarterly Report on Form 10-Q for
the period ending March 31, 2022 to be filed with the SEC.
Underwriting Agreement
On January 28, 2022, CareCloud, Inc. (the "Company") entered into an
Underwriting Agreement (the "Underwriting Agreement") with B. Riley Securities,
Inc., as representative of several underwriters named therein (the
"Underwriters"). Pursuant to the Underwriting Agreement, the Company agreed to
issue and sell an aggregate of 1,000,000 shares of its Series B Preferred Stock
in an underwritten public offering, at a price to the public of $25.00 per
share, pursuant to a registration statement on Form S-3 (Registration No.
333-255094) and the accompanying prospectus filed with the Securities and
Exchange Commission. Pursuant to the Underwriting Agreement, the Company also
granted the Underwriters a 30-day option to purchase up to an additional 150,000
shares of the Series B Preferred Stock ("Option").
In the Underwriting Agreement, the Company made certain customary
representations, warranties and covenants and agreed to indemnify the
Underwriters against certain liabilities. The issuance and sale of the Series B
Preferred Stock is expected to close on or about February 2, 2022, subject to
satisfaction of customary closing conditions. After deducting underwriting fees
and other offering expenses payable by the Company, the net proceeds to the
Company are anticipated to be approximately $23.1 million prior to the exercise
of the Option.
The foregoing description of the Underwriting Agreement is qualified in its
entirety by reference to the Underwriting Agreement, a copy of which is included
as Exhibit 1.1 to this Current Report on Form 8-K and incorporated by reference
herein.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Seventh Amendment to Certificate of Designations of Series A Preferred Stock
On January 27, 2022, the Company filed a Seventh Amendment (the "Amendment") to
Amended and Restated Certificate of Designations, Preferences and Rights (the
"Series A Certificate of Designations") of 11% Series A Cumulative Redeemable
Perpetual Preferred Stock with the Secretary of State of the State of Delaware
which was effective upon filing. The Amendment decreased the number of
authorized shares of Series A Preferred Stock from 6,750,000 shares to 5,350,000
shares. No other changes were made to the Series A Certificate of Designations.
The foregoing description of the Amendment does not purport to be complete and
is qualified in its entirety by reference to the Amendment, a copy of which is
included as Exhibit 3.1 to this Current Report on Form 8-K and incorporated by
reference herein.
Certificate of Designations of Series B Preferred Stock
On January 28, 2022, the Company filed a Certificate of Designations,
Preferences and Rights (the "Series B Certificate of Designations") of 8.75%
Series B Cumulative Redeemable Perpetual Preferred Stock with the Secretary of
State of the State of Delaware which was effective upon filing. Pursuant to the
Series B Certificate of Designations, the Company is authorized to issue up to
1,640,000 shares of Series B Preferred Stock.
Holders of shares of Series B Preferred Stock are entitled to receive cumulative
cash dividends at a rate of 8.75% on $25.00 per share of Series B Preferred
Stock per year (equivalent to $2.1875 per annum per share). Dividends will be
payable monthly on the 15th day of each month (each, a "dividend payment date"),
provided that if any dividend payment date is not a business day, then the
dividend that would otherwise have been payable on that dividend payment date
may be paid on the next succeeding business day without adjustment in the amount
of the dividend. Dividends will be payable to holders of record as they appear
on the Company's stock records for the Series B Preferred Stock at the close of
business on the corresponding record date, which shall be the last day of the
calendar month, whether or not a business day, immediately preceding the month
in which the applicable dividend payment date falls (each, a "dividend record
date"). As a result, holders of shares of Series B Preferred Stock will not be
entitled to receive dividends on a dividend payment date if such shares were not
issued and outstanding on the applicable dividend record date. Any dividend
payable on the Series B Preferred Stock, including dividends payable for any
partial dividend period, will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Commencing on February 15, 2024 and prior to February 15, 2025, the Company may
redeem, at its option, the Series B Preferred Stock, in whole or in part, at a
cash redemption price of $25.75 per share, plus all accrued and unpaid dividends
to, but not including, the redemption date. On or after February 15, 2025 and
prior to February 15, 2026, the Company may redeem, at its option, the Series B
Preferred Stock, in whole or in part, at a cash redemption price of $25.50 per
share, plus all accrued and unpaid dividends to, but not including, the
redemption date. On or after February 15, 2026 and prior to February 15, 2027,
the Company may redeem, at its option, the Series B Preferred Stock, in whole or
in part, at a cash redemption price of $25.25 per share, plus all accrued and
unpaid dividends to, but not including, the redemption date. On or after
February 15, 2027, the Company may redeem, at its option, the Series B Preferred
Stock, in whole or in part, at a cash redemption price of $25.00 per share, plus
all accrued and unpaid dividends to, but not including, the redemption date.
Upon the occurrence of a Change of Control (as defined in the Series B
Certificate of Designations), the Company may, at its option, redeem the Series
B Preferred Stock, in whole or in part, within 120 days after the first date on
which such Change of Control occurred, for cash at a redemption price of $25.00
per share, plus any accumulated and unpaid dividends thereon to, but not
including, the redemption date. If the Company does not elect to redeem shares
of Series B Preferred Stock upon a Change of Control, holders of Series B
Preferred Stock may, upon written notice to the Company, exchange some or all of
the shares of Series B Preferred Stock held by such holder into a number of
shares of the Company's common stock per share of Series B Preferred Stock equal
to the quotient obtained by dividing (1) the sum of the $25.00 per share
liquidation preference plus the amount of any accumulated and unpaid dividends
by (2) the Common Stock Price (as defined in the Series B Certificate of
Designations) for such Change of Control.
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The Series B Preferred Stock has no stated maturity, will not be subject to any
sinking fund or other mandatory redemption, and will not be convertible into any
of the Company's securities.
If the Company liquidates, dissolves or winds up, holders of the Series B
Preferred Stock will have the right to receive $25.00 per share, plus any
accumulated and unpaid dividends to, but not including, the date of payment,
before any payment is made to the holders of the Company's common stock.
The Series B Preferred Stock will rank, with respect to rights to the payment of
dividends and the distribution of assets upon liquidation, dissolution or
winding up, (1) senior to all classes or series of the Company's common stock
and to all other equity securities issued by the Company other than equity
securities referred to in clauses (2) and (3); (2) on a parity with the Series A
Preferred Stock and all equity securities issued by the Company with terms
specifically providing that those equity securities rank on a parity with the
Series B Preferred Stock with respect to rights to the payment of dividends and
the distribution of assets upon liquidation, dissolution or winding up; (3)
junior to all equity securities issued by the Company with terms specifically
providing that those equity securities rank senior to the Series B Preferred
Stock with respect to rights to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up; and (4) effectively junior
to all of the Company's existing and future indebtedness (including indebtedness
convertible into the Company's common stock or preferred stock) and to the
indebtedness and other liabilities of (as well as any preferred equity interests
held by others in) the Company's existing subsidiaries and any future
subsidiaries.
Holders of the Series B Preferred Stock will generally have no voting rights.
However, if the Company does not pay dividends on the Series B Preferred Stock
for eighteen or more monthly dividend periods (whether or not consecutive), then
the holders of the Series B Preferred Stock (voting separately as a class with
the holders of all other classes or series of the Company's preferred stock it
may issue upon which like voting rights have been conferred and are exercisable
and which are entitled to vote as a class with the Series B Preferred Stock in
the election referred to below) will be entitled to vote for the election of two
additional directors to serve on the Company's board of directors until the
Company pays, or declares and sets aside funds for the payment of, all dividends
that the Company owes on the Series B Preferred Stock, subject to certain
limitations. In addition, the affirmative vote of the holders of at least
two-thirds of the outstanding shares of the Series B Preferred Stock (voting
together as a class with all other series of parity preferred stock the Company
may issue upon which like voting rights have been conferred and are exercisable)
is required at any time for the Company to authorize or issue any class or
series of the Company's capital stock ranking senior to the Series B Preferred
Stock with respect to the payment of dividends or the distribution of assets on
liquidation, dissolution or winding up, to amend any provision of the Company's
certificate of incorporation so as to materially and adversely affect any rights
of Series B Preferred Stock or to take certain other actions.
The foregoing description of the Certificate of Designations does not purport to
be complete and is qualified in its entirety by reference to the Certificate of
Designations, a copy of which is included as Exhibit 3.2 to this Current Report
. . .
Item 7.01 Regulation FD Disclosure.
On January 28, 2022, the Company issued a press release, a copy of which is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to Item 7.01 of this Form 8-K shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference into any other
filing under the Securities Act of 1933, as amended or the Exchange Act, except
as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
1.1 Underwriting Agreement dated January 28, 2022 by and between the
Company and B. Riley Securities, Inc. as representative of several
underwriters named therein.
3.1 Seventh Amendment to Amended and Restated Certificate of
Designations, Preferences and Rights of 11% Series A Cumulative
Redeemable Perpetual Preferred Stock.
3.2 Certificate of Designations, Preferences and Rights of 8.75%
Series B Cumulative Redeemable Perpetual Preferred Stock.
99.1 Press Release dated January 28, 2022 by CareCloud, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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