Item 1.01 Entry into a Material Definitive Agreement.
On December 16, 2019, Pivotal Acquisition Corp., a Delaware corporation (“Pivotal”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Ontario Teachers’ Pension Plan, another large global financial institution and affiliates of MGG Investment Group, LP, an affiliate of Kevin Griffin, a director of Pivotal (the “Purchasers”). Pursuant to the Purchase Agreement, on the closing of the transactions contemplated by the Merger Agreement (as defined below), the Company will sell to the Purchasers an aggregate of $200 million of convertible debentures (the “Debentures”). The Debentures will have a term of 5 years and will be repayable at any time prior to maturity without any prepayment penalty. However, in the event the Company elects topre-pay the Debentures, the holders will have a right to purchase common stock from the Company in an amount commensurate in value to thepre-payment at a price of $18 per share, subject to adjustment (the “conversion price”). Additionally, the holders will have the option to convert the Debentures into shares of the Company at the conversion price at any time. The Debentures will pay interest in cash at a rate of 4% and in kind at a rate of 7%. The principal amount andpaid-in-kind interest will be due at maturity of the Debentures. In connection with the issuance of the Debentures, certain of the Purchasers will also purchase from the Company on the closing of the transactions contemplated by the Merger Agreement an aggregate of 2,097,974 shares of common stock of the Company and 1,764,719 warrants to purchase shares for the aggregate price of approximately $1.77 million.
Also on December 16, 2019, Pivotal entered into an amendment (“Amendment No 2”) to the previously disclosed Agreement and Plan of Reorganization, dated as of May 20, 2019, as amended by the Amendment to Agreement and Plan of Reorganization, dated as of October 30, 2019 (the “Merger Agreement”), by and among Pivotal, Pivotal Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of Pivotal (“Merger Sub”), LD Topco, Inc. (“LD” or the “Company”) and Carlyle Equity Opportunity GP, L.P. (solely as representative of the stockholders of LD). As previously disclosed, under the Merger Agreement, Merger Sub will merge with and into LD, with LD surviving the merger. As a result of the transactions, LD will become a wholly-owned subsidiary of Pivotal, with the stockholders of LD becoming securityholders of Pivotal (such transactions being referred to herein as the “Business Combination”). The Merger Agreement originally provided that in connection with the Business Combination, Pivotal Acquisition Holdings LLC, a Delaware limited liability company and an affiliate of certain of Pivotal’s officers and directors (the “Founder”), would agree that an aggregate of 1,100,000 shares of Pivotal held by the Founder would be subject to additional transfer restrictions until the last sales price of Pivotal common stock equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any30-trading day period. If the last reported sale price of Pivotal common stock does not equal or exceed $15.00 within five years from the consummation of the Business Combination, such shares would be forfeited to Pivotal for no consideration. Amendment No. 2 reduces the number of shares of Pivotal common stock subject to this agreement from 1,100,000 shares to 550,000 shares.
As part of the transactions referred to above, the Founder has agreed that an aggregate of (i) 479,392 shares of Pivotal common stock and (ii) 1,764,719 warrants to purchase shares of Pivotal common stock will be forfeited and cancelled by Pivotal upon consummation of the transactions contemplated by the Merger Agreement.
The foregoing descriptions of the Purchase Agreement, the Debentures and Amendment No. 2 are qualified in their entirety by reference to the text of the Purchase Agreement, the form of Debenture and Amendment No. 2, copies of which are attached as exhibits to this Current Report on Form8-K and are incorporated herein by reference.
