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MANAGEMENT NETWORK GROUP INC FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Material Modification to Rights of Security Holders, Regulation FD Disclosure, Other Events, Financial Statements and Exhibits

February 26, 2014

Item 1.01 Entry into a Definitive Material Agreement

Investment Agreement



On February 25, 2014, The Management Network Group, Inc. (the "Company") entered into an Investment Agreement with Elutions, Inc. ("Elutions"), a provider of operational business intelligence solutions. Under the Investment Agreement, the Company will issue and sell and Elutions will acquire shares of the Company's Common Stock ("Common Stock"), the Company will issue stock purchase warrants to Elutions, and a subsidiary of Elutions will loan funds to a subsidiary of the Company.

The Investment Agreement is part of a proposed strategic relationship between the parties, pursuant to which the parties intend to work together to market, sell and implement certain products, solutions and services developed by Elutions. As part of the strategic relationship, the parties intend to implement the relationship through client agreements, bilateral agreements and commercial framework documents entered into or taking effect at closing and from time to time thereafter in the ordinary course of business outlining the terms of the parties' commercial relationship with respect to business development and providing products, solutions and services to clients. In the strategic relationship, the Company will work with Elutions with respect to the marketing, sale, installation and implementation of Elutions' "Maestro" products, solutions and services currently developed or developed in the future, including, smart building, data center infrastructure management, maestro asset management and other products, solutions or services which enable the monitoring, analysis and control automation of assets and systems with the purpose of reducing energy consumption and other operational expenses.

Pursuant to the Investment Agreement, at the closing of the transactions (the "Closing"), (a) the Company will issue and sell 609,756 shares of Common Stock to Elutions at a price of $3.28 per share, for an aggregate purchase price of $2,000,000, (b) the Company's subsidiary, Cartesian Limited, will issue a non-convertible promissory note (the "Note") payable to a subsidiary of Elutions ("Elutions - Europe") in an aggregate original principal amount of US$3,268,664, payable in equivalent Great Britain Pounds Sterling, and the Company will issue to Elutions a Common Stock Purchase Warrant (Tracking) related to the Note to purchase 996,544 shares of Common Stock of the Company for $3.28 per share (the "Tracking Warrant"), and (c) the Company will issue to Elutions a Common Stock Purchase Warrant (Commercial Incentive) pursuant to which Elutions can earn the right to purchase up to 3,400,000 shares of Common Stock of the Company at prices ranging from $3.85 per share to $4.85 per share based on the Company's financial results related to certain customer contracts obtained jointly by the Company and Elutions ("Incentive Warrant"). The Incentive Warrant and the Tracking Warrant are referred to collectively below as the "Warrants".

The following provisions of the Investment Agreement and exhibits are subject to the Company obtaining stockholder approval of these provisions in accordance with the rules of the Nasdaq Stock Market, LLC ("Nasdaq"), to the extent required by Nasdaq rules: (i) exercise of the Incentive Warrant, (ii) the effectiveness of the economic anti-dilution provisions in the Warrants and (iii) the right of Elutions to purchase additional securities of the Company, in connection with future issuances by the Company, pursuant to purchase rights in the Warrants and the preemptive rights granted to Elutions in the Investment Agreement. The Company has agreed in the Investment Agreement to present a proposal for the approval of these provisions to the stockholders at the Company's 2014 annual meeting of stockholders, currently scheduled for June 2014.

The Investment Agreement contains a number of agreements and covenants, including (i) certain affirmative and negative covenants relating to the Note applicable to the Company and its subsidiaries, (ii) an agreement of the Company . . .

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

See the disclosures in Item 1.01 of this report, which are incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.



Pursuant to the Investment Agreement, at the Closing, (a) the Company will issue and sell 609,756 shares of Common Stock to Elutions at a price of $3.28 per share, for an aggregate purchase price of $2,000,000, (b) the Company's subsidiary, Cartesian Limited, will issue the Note to Elutions - Europe in an aggregate original principal amount of US$3,268,664, payable in equivalent Great Britain Pounds Sterling, and the Company will issue to Elutions the Tracking Warrant to purchase 996,544 shares of Common Stock of the Company for $3.28 per share, and (c) the Company will issue to Elutions the Incentive Warrant pursuant to which Elutions can earn the right to purchase up to 3,400,000 shares of Common Stock of the Company at prices ranging from $3.85 per share to $4.85 per share based on the Company's financial results related to customer contracts obtained jointly by the Company and Elutions.

See the disclosures in Item 1.01 of this report, which are incorporated herein by reference. The terms of exercise and conversion of the instruments and securities to be issued by the Company are described in Item 1.01 of this report.

The issuance of shares of Common Stock and other securities will not be registered under the Securities Act of 1933, as amended ("Securities Act"), in reliance upon Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder, as a transaction by an issuer not involving a public offering. The securities will be issued to two accredited investors in a private transaction in which the investors have agreed to customary restrictions on resale. Under the Registration Rights Agreement attached as Exhibit C to the Investment Agreement, the Company has obligations to register for resale the shares of Common Stock issued under the Investment Agreement and the Warrants.

Item 3.03 Material Modification to Rights of Security Holders.



See the disclosures in Item 1.01 of this report, which are incorporated herein by reference.

Item 7.01 Regulation FD



On February 25, 2014, the Company issued a press release announcing its entry into the Investment Agreement and the proposed transaction with Elutions, Inc. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

The information in this Item 7.01 and Exhibit 99.1 is being furnished and 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 in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth in such filing.

Item 8.01 Other Information



Cautionary Statement Regarding Forward Looking Statements

This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, any statements that do not relate to historical or current facts constitute forward-looking statements, including any statements contained herein that concern the Company or its management's intentions, expectations, or predictions of future performance. Forward-looking statements are subject to known and unknown risks, uncertainties, and contingencies, many of which are beyond the Company's control, which may cause actual results, performance, or achievements to differ materially from those projected or implied in such forward-looking statements. Factors that might affect actual results, performance, or achievements include, among other things, the Company's ability to successfully complete and implement the proposed strategic relationship; the Company's ability to close the transactions contemplated by the Investment Agreement; the conditions in the telecommunications industry, overall economic and business conditions, the demand for the Company's services (including the slowing of client decisions on proposals and project opportunities along with scope reduction of existing projects), the level of cash and non-cash expenditures incurred by the Company, technological advances and competitive factors in the markets in which the Company competes, and the factors described in this Form 8-K and in the Company's filings with the Securities and Exchange Commission ("SEC"), including the risks described in its periodic reports filed with the SEC, including, but not limited to, "Cautionary Statement Regarding Forward Looking Information" under Part I of its Annual Report on Form 10-K for the fiscal year ended December 29, 2012 and subsequent periodic reports containing updated disclosures of such risks. These filings are available at the SEC's web site at www.sec.gov. Any forward-looking statements made in this Form 8-K speak only as of the date of this Form 8-K. The Company does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances.

Where to Find Additional Information

The Company plans to file with the SEC a proxy statement for its 2014 annual meeting of stockholders that will include a proposal relating to the proposed transaction with Elutions, Inc. ("Annual Meeting Proxy Statement"). The Annual Meeting Proxy Statement will contain important information about the Company, the proposed transaction with Elutions, Inc. and related matters. Investors and stockholders are urged to read the Annual Meeting Proxy Statement carefully when it is available. The Annual Meeting Proxy Statement and any other relevant documents (when they become available) may be obtained free of charge at the SEC's web site at www.sec.gov and at the Company's web site at www.tmng.com or by directing a written request to: The Management Network Group, Inc., 7300 College Boulevard, Suite 302, Overland Park, Kansas 66210, attention Corporate Secretary.

Participants in the Solicitation

The Company and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in connection with the proposed approval of certain agreements and transactions with Elutions, Inc. Information about the executive officers and directors of the Company and their ownership of the Company's common stock is set forth in the Company's proxy statement for its 2013 annual meeting of stockholders, which was filed with the SEC on April 29, 2013, and in the Company's periodic and current reports and in statements of changes in beneficial ownership subsequently filed with the SEC, which are available free of charge as described in the preceding paragraph. The Company will provide more information about these potential participants in the Annual Meeting Proxy Statement and other relevant documents which may be filed with the SEC.

Item 9.01 Financial Statements and Exhibits. (d) Exhibits.



Pursuant to the rules and regulations of the SEC, the Company has filed the documents referenced below as exhibits to this Form 8-K. The documents include agreements to which the Company is a party or has a beneficial interest. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules that may not be included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.

Exhibit No. Description 4.1 Amendment No. 1, dated February 25, 2014, to the Amended and Restated Rights Agreement, dated as of July 19, 2010, by and between the Company and Computershare Trust Company, N.A. 10.1 Investment Agreement dated February 25, 2014 between The Management Network Group, Inc. and Elutions, Inc. 99.1 Press Release dated February 25, 2014.


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Source: Edgar Glimpses


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