Introductory Note
As previously disclosed, ADT Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of July 31, 2020, with Google LLC (the “Investor”). On September 17, 2020 (the “Closing Date”), upon the terms and subject to the conditions set forth in the Securities Purchase Agreement, the Company issued and sold in a private placement to the Investor 54,744,525 shares of Class B common stock, par value $0.01 per share, of the Company (“Class B Common Stock”) for an aggregate purchase price of $450.0 million (the “Private Placement”). As of the Closing Date, the Investor holds approximately 6.6% of the issued and outstanding common stock of the Company on an as-converted basis. The Investor has elected not to exercise its unilateral right to purchase, for the same price per share, additional shares of Class B Common Stock prior to the closing (the “Option”). The Company expects to use the net proceeds from the Private Placement for further growth initiatives and to reduce debt over time. The Securities Purchase Agreement was filed as Exhibit 10.1 to the Current Report on Form 8-K filed August 3, 2020 (the “August Form 8-K Filing”).
| Item 1.01. | Entry into a Material Definitive Agreement. |
On the Closing Date, the Company and the Investor entered into an Investor Rights Agreement (the “Investor Rights Agreement”), pursuant to which the Investor agreed to be bound by customary transfer restrictions and drag-along rights, and to be afforded customary registration rights with respect to shares of Class B Common Stock held directly by the Investor. Under the terms of the Investor Rights Agreement, the Investor is prohibited, subject to certain exceptions, from transferring any shares of Class B Common Stock or any shares of common stock issuable upon conversion of the Class B Common Stock beneficially owned by the Investor until the earlier of (i) the three-year anniversary of the Closing, (ii) the date on which the Master Supply, Distribution and Marketing Agreement (the “Commercial Agreement”), entered into between the Investor and ADT LLC, an indirect wholly owned subsidiary of the Company, the terms of which were described in the August Form 8-K Filing, has been terminated under certain specified circumstances and (iii) June 30, 2022 if ADT LLC breaches certain of its obligations under the Commercial Agreement.
The foregoing description of the Investor Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Investor Rights Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information set forth under the Introductory Note of this Current Report on Form 8-K relating to the issuance and sale of Class B Common Stock to the Investor is incorporated herein by reference. The issuance of the shares of Class B Common Stock to the Investor was exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act. The Investor represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the shares of Class B Common Stock, and shares of common stock issuable upon conversion of such shares of Class B Common Stock, are being acquired solely for investment and with no intention to distribute, and appropriate legends were affixed to any certificates or book entry statements evidencing shares of the Class B Common Stock and will be affixed to any certificates or book entry statements evidencing shares of common stock issued in connection with any future conversion of the Class B Common Stock.
| Item 3.03. | Material Modification to Rights of Security Holders. |
The information set forth under the Introductory Note, Item 1.01 and Item 5.03 of this Current Report on Form 8-K relating to the issuance and sale of Class B Common Stock to the Investor, the entry into the Investor Rights Agreement and the amendment of the Company’s certificate of incorporation in connection with the transactions contemplated by the Securities Purchase Agreement is incorporated herein by reference.
