Item 1.01 Entry into a Material Definitive Agreement
On August 9, 2021, Paymentus Holdings, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Paymentus Group, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Paymentus Group”), Peacock Merger Sub, LLC, a Delaware limited liability company and indirect wholly owned subsidiary of the Company (“Merger Sub”), Payveris, LLC, a Delaware limited liability company (“Payveris”), and Shareholder Representative Services LLC, a Colorado limited liability company (in its capacity as the Equityholders’ Representative named in the Merger Agreement). Upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Payveris, with Payveris surviving as a wholly owned subsidiary of Paymentus Group (such transaction, the “Merger”).
Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, including customary purchase price adjustments, the aggregate consideration Paymentus Group will pay and issue upon the Closing in exchange for all of the outstanding equity interests of Payveris is approximately $152.2 million, with approximately $85.7 million payable in cash (the “Cash Consideration”), subject to adjustments, and the remainder issuable in shares of the Company’s Class A common stock (“Shares”) (the “Share Consideration” and, together with the Cash Consideration, the “Merger Consideration”). The Share Consideration will be calculated based on the 30-day volume weighted average over the 30 trading days prior to second day prior to the Closing.
At the effective time of the Merger, all outstanding equity interests of Payveris will be cancelled and converted into the right to receive a pro rata portion of the Merger Consideration. All options to acquire equity interests in Payveris (“Payveris Options”) outstanding as of immediately prior to the effective time of the Merger will be treated as follows: (i) all vested Payveris Options will be cancelled and the holder thereof will be entitled to receive a pro rata portion of the Merger Consideration equal to the value of such option and (ii) all unvested Payveris Options will be cancelled for no consideration. Any equity interests of Payveris or Payveris Options held by unaccredited investors, holders who will receive less than a specified amount of proceeds or as otherwise determined by the Company and Paymentus Group, as applicable, will receive cash in lieu of the Share Consideration.
The Merger Agreement contains customary representations, warranties and covenants by Payveris, the Company and Paymentus Group as well as customary indemnification obligations of the parties.
The parties’ obligations to consummate the Merger are subject to approval of the Merger by the requisite equityholders of Payveris and other customary closing conditions, including, among other things, (i) the accuracy of certain representations and warranties made by the respective parties in the Merger Agreement and (ii) material compliance with the respective parties’ covenants set forth in the Merger Agreement. The Company’s and Paymentus Group’s obligations to consummate the Merger are also subject to (i) the execution of support agreements and letters of transmittal by at least 90% of Payveris’ units on an as-converted basis, (ii) the execution of option cancellation agreements by unitholders holding at least 90% of the Payveris Options and (iii) no material adverse effect having occurred with respect to Payveris.
All recipients of the Share Consideration will also be required to enter into lock-up agreements in substantially the same form as the lock-up agreements entered into by the Company’s officers, directors and equityholders in connection with the Company’s initial public offering. Pursuant to the lock-up agreements, these recipients have agreed not to offer, sell or transfer any Shares received upon the Closing without the prior written consent of at least two of the representatives of the underwriters of the Company’s initial public offering (including at least one of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC) before November 22, 2021, subject to customary exceptions. Certain recipients of the Share Consideration will also enter into joinder agreements providing for customary piggyback registration rights under the Company’s existing registration rights agreement dated as of May 24, 2021.
The Merger Agreement may be terminated (i) by mutual written consent of Paymentus Group and Payveris, (ii) by either Paymentus Group or Payveris, if the other party (a) breaches its representations, warranties or covenants in the Merger Agreement, (b) has not cured such breach within 15 days of written notice of such breach and (c) such breach would result in the failure of certain condition of the closing to be satisfied, or (iii) by Buyer or Payveris, if the closing has not occurred by November 9, 2021.
The Company intends to issue the Shares in reliance upon the exemptions from registration afforded by Section 4(a)(2) and Rule 506 promulgated under the Securities Act of 1933, as amended.
The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2021.
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