As filed with the
Securities and Exchange Commission on April 24,
2017
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
CardConnect Corp.
(Exact name of
registrant as specified in its charter)
|
|
|
(State or other
jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
1000 Continental Drive, Suite 300
King of Prussia, PA 19406
(484) 581-2200
(Address, including zip code, and telephone
number, including area code, of registrant’s principal
executive offices)
_____________
Jeffrey Shanahan
Chief Executive Officer and President
CardConnect Corp.
100 Continental Drive, Suite 300
King of Prussia, PA 19406
(484) 581-2200
(Name, address, including zip code,
and telephone number, including area code, of agent for
service)
_____________
with copies to:
Mark
Rosenstein
Ledgewood PC
Two Commerce Square
2001 Market Street, Suite 3400
Philadelphia, Pennsylvania 19103
(215) 731- 9450
|
|
Robert M.
Hayward, P.C.
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
(312) 862-2000
|
_____________
Approximate date of commencement of
proposed sale to the public: From time to time on or after the
effective date of this registration statement.
If the only securities being
registered on this form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box.
¨
If any of the securities being
registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following
box.
x
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering.
¨
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
¨
If this form
is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the
Securities Act, check the following box.
¨
If this form is a post-effective
amendment to a registration statement filed pursuant to General
Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box.
¨
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act:
Large accelerated
filer
|
|
¨
|
|
Accelerated
filer
|
|
x
|
Non-accelerated
filer
|
|
¨
|
|
Smaller reporting
company
|
|
¨
|
(Do not check if a
smaller reporting company)
|
|
Emerging growth
company
|
|
x
|
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the
extended transaction period for complying with any new or revised
financial accounting standards provided pursuant to Section
7(a)(2)(B) of the Securities Act.
¨
CALCULATION OF
REGISTRATION FEE
Title
of securities to be registered
|
|
Amount to be
Registered
(1)(2)
|
|
Proposed
maximum
offering price
per share
(1)(2)
|
|
Proposed
maximum
aggregate
offering
price
(1)(2)
|
|
Amount of
Registration
Fee
|
Primary Offering:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, par value $0.001 per
share
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Preferred Stock, par value $0.001 per
share
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Debt Securities
(3)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants
(4)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Units
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total Primary Offering
|
|
$
|
100,000,000
|
|
|
—
|
|
|
$
|
100,000,000
|
|
|
$
|
11,590
|
|
Secondary Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, par value $0.001 per
share
|
|
|
15,569,526 shares
|
|
$
|
13.89
|
(5)
|
|
$
|
216,260,716
|
(5)
|
|
$
|
25,065
|
(6)
|
Total
|
|
|
|
|
|
|
|
|
$
|
316,260,716
|
|
|
$
|
36,655
|
|
The registrant hereby
amends this registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this
registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act or until this
registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
The information in this prospectus is
not complete and may be changed. Neither we nor the selling
stockholders may sell or offer these securities until the
registration statement filed with the Securities and Exchange
Commission is declared effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is not
permitted.
Subject to completion, dated April 24,
2017
PRELIMINARY
PROSPECTUS
CardConnect Corp.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
and
15,569,526 Shares of Common Stock
Offered
by the Selling Stockholders
We may offer and sell from time to
time any combination of common stock, preferred stock, debt
securities, warrants or units in one or more offerings with an
aggregate initial offering price of up to $100,000,000. In
addition, the selling stockholders identified in this prospectus
may from time to time offer and sell up to 15,569,526 shares of
our common stock. See “Selling Stockholders.” We will
not receive any of the proceeds from the sale of our common stock
by the selling stockholders.
This prospectus describes some of
the general terms that may apply to these securities and the
general manner in which they may be offered. We will provide the
specific terms of the securities to be offered in one or more
supplements to this prospectus. You should carefully read this
prospectus, the applicable prospectus supplement and any related
free writing prospectus, as well as any documents incorporated by
reference, before you invest in our securities. The prospectus
supplements may also add, update or change information contained in
this prospectus.
This prospectus may not be used to
offer and sell our securities unless accompanied by a prospectus
supplement describing the method and terms of the offering of those
offered securities. These securities may be sold directly or to or
through underwriters or dealers and also to other purchasers or
through agents. The names of any underwriters or agents that are
included in a sale of securities to you, and any applicable
commissions or discounts, will be stated in an accompanying
prospectus supplement.
Our
common stock is traded on The NASDAQ Capital Market under the symbol “CCN.” On April 24, 2017, the last reported
sale price of our common stock was $13.90 per share. Common stock purchase warrants are traded on the OTCQX U.S. market under
the symbol CCNWW. On April 21, 2017, the last reported sale price of our warrants was $3.80 per warrant. We have not yet determined
whether the other securities that may be offered by this prospectus will be listed on an exchange, interdealer quotation system
or over-the-counter market. If we decide to seek the listing of any such securities upon issuance, the prospectus supplement relating
to those securities will disclose the exchange, quotation system or market on which those securities will be listed.
We are an “emerging growth
company” as the term is used in the Jumpstart Our Business
Startups Act of 2012 and, as such, have elected to comply with
certain reduced public company reporting requirements.
Investing in our securities involves risks.
Please read carefully the section entitled “Risk
Factors” beginning on page 8 of this prospectus and the risk
factors included in our periodic reports and other information that
we file with the Securities and Exchange Commission incorporated by
reference in this prospectus and the applicable prospectus
supplement and carefully consider that information before buying
our securities.
Neither the United States Securities and
Exchange Commission, nor any state securities commission, has
approved or disapproved of the securities that may be offered under
this prospectus, nor have any of these regulatory authorities
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal
offense.
The date of this prospectus is ,
2017
TABLE OF
CONTENTS
|
|
|
ABOUT THIS PROSPECTUS
|
|
1
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
|
|
2
|
OUR COMPANY
|
|
4
|
RISK FACTORS
|
|
8
|
USE OF PROCEEDS
|
|
8
|
RATIO OF EARNINGS TO FIXED CHARGES
|
|
9
|
SELLING STOCKHOLDERS
|
|
10
|
DESCRIPTION OF CAPITAL STOCK
|
|
15
|
DESCRIPTION OF DEBT SECURITIES
|
|
19
|
DESCRIPTION OF WARRANTS
|
|
33
|
DESCRIPTION OF UNITS
|
|
36
|
PLAN OF DISTRIBUTION
|
|
37
|
LEGAL MATTERS
|
|
40
|
EXPERTS
|
|
40
|
WHERE YOU CAN FIND MORE INFORMATION
|
|
40
|
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
|
|
41
|
i
ABOUT THIS
PROSPECTUS
This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission, or the
“SEC,” using a “shelf” registration
process. Under this shelf process, we may from time to time sell
any combination of shares of our common stock, preferred stock,
debt securities, various series of warrants to purchase common
stock, preferred stock or debt securities, either individually or
in units, in one or more offerings up to an aggregate initial
offering price of $100,000,000. In addition, under this shelf
process, the selling stockholders named in this prospectus may
sell, from time to time, up to 15,569,526 shares of our common
stock.
This prospectus provides you with a general description of the
securities we and the selling stockholders may offer. Each time we
or the selling stockholders sell securities, we will provide a
prospectus supplement that will contain specific information about
the terms of that offering. For a more complete understanding of
the offering of the securities, you should refer to the
registration statement, including its exhibits. The prospectus
supplement may also add, update or change information contained in
this prospectus. If the information varies between this prospectus
and the accompanying prospectus supplement, you should rely on the
information in the accompanying prospectus supplement. You should
read both this prospectus and any prospectus supplement together
with additional information under the heading “Where You Can
Find More Information” and “Incorporation of Certain
Documents By Reference.”
No person has been authorized to provide you with different
information from the information contained or incorporated by
reference in this prospectus and in any prospectus supplement or in
any free writing prospectus that we may provide you. You should not
assume that the information contained in this prospectus, any
prospectus supplement or in any free writing prospectus or any
document incorporated by reference herein or therein is accurate as
of any date, other than the date mentioned on the cover page of
these documents even though this prospectus and any accompanying
prospectus supplement is delivered or securities are sold on a
later date. Neither we nor the selling stockholders are making
offers to sell the securities in any jurisdiction in which an offer
or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone
to whom it is unlawful to make an offer or solicitation.
On July 29, 2016, we consummated the acquisition of FTS Holding
Corporation by the merger of FTS Holding Corporation with and into
FinTech Merger Sub, Inc., our wholly owned subsidiary, which we
refer to in this prospectus as the “Merger.”
In connection with the closing of the Merger, we changed our name
from FinTech Acquisition Corp. to CardConnect Corp., and FinTech
Merger Sub, Inc. changed its name to FTS Holding Corporation.
Unless the context otherwise requires, “we,”
“us,” “our,” the “Company” and
“CardConnect” refer to CardConnect Corp. and its
subsidiaries following the closing of the Merger.
“FinTech” refers to the blank check company prior to
the consummation of the Merger, and “FTS” refers to FTS
Holding Corporation and its predecessors (including Financial
Transaction Services, LLC) prior to the Merger.
1
CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the
documents incorporated by reference herein and therein may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Such forward-looking
statements include, but are not limited to, statements regarding
our or our management’s expectations, hopes, beliefs,
intentions or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. The words
“anticipate,” “believe,”
“continue,” “could,”
“estimate,” “expect,” “future,”
“goal,” “intend,” “likely,”
“may,” “might,” “plan,”
“possible,” “potential,”
“predict,” “project,” “seek,”
“should,” “would,” “will,”
“approximately,” “shall” and similar
expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements in this prospectus may
include, for example, statements about the future financial
performance of the Company.
The forward-looking statements contained in or incorporated by
reference into this prospectus are based on our current
expectations and beliefs concerning future developments and their
potential effects on us. You should not place undue reliance on
these forward-looking statements in deciding whether to invest in
our securities. We cannot assure you that future developments
affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control) or other assumptions,
including the risk factors incorporated by reference from our
Annual Report on Form 10-K for the year ended December 31, 2016,
and any future quarterly or annual reports incorporated by
reference herein, that may cause our actual results or performance
to be materially different from those expressed or implied by these
forward-looking statements. Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those
projected in these forward-looking statements. Some factors that
could cause actual results to differ include, but are not limited
to:
•
our future financial performance;
•
changes in the market for our products and our ability to adapt to
changes in the electronic payments industry;
•
our ability to integrate our acquisitions;
•
the ability to obtain or maintain the listing of our common stock
on The NASDAQ Capital Market;
•
the competitive nature of the payment processing industry;
•
our dependence on distribution partners and the potential that they
refer merchants to other merchant acquirers;
•
impacts of security breaches, including unauthorized disclosure of
merchant and cardholder data;
•
the ability to comply with the rules established by payment
networks or standards established by third-party processors;
•
the acceptance and usage of by end users of prepaid, debit and
credit cards, which we refer to as “Electronic
Payments”;
•
the ability to successfully update our products and services as
well as develop new products and services;
•
the ability to maintain bank sponsor relationships;
•
the ability to recognize the anticipated benefits of the Merger,
which may be affected by, among other things, competition, and our
ability to grow and to manage such growth profitably;
•
changes in applicable laws or regulations, including as a result of
the new administration in Washington, D.C.;
2
•
the possibility that we may be adversely affected by other
economic, business and/or competitive factors;
•
other risks and uncertainties, including those described under the
heading “Risk Factors”; and
•
other statements preceded by, followed by or that include the words
“estimate,” “plan,” “project,”
“forecast,” “intend,” “expect,”
“anticipate,” “believe,”
“seek,” “target” or similar
expressions.
We have based the forward-looking statements contained in this
prospectus primarily on our current expectations and projections
about future events and trends that we believe may affect our
business, financial condition, results of operations, prospects,
business strategy and financial needs. The outcome of the events
described in these forward-looking statements is subject to risks,
uncertainties, assumptions and other factors described in the
section captioned “Risk Factors” and elsewhere in this
prospectus. These risks are not exhaustive. Other sections of this
prospectus include additional factors that could adversely impact
our business and financial performance. Moreover, we operate in a
very competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this prospectus. We
cannot assure you that the results, events and circumstances
reflected in the forward-looking statements will be achieved or
occur, and actual results, events or circumstances could differ
materially from those described in the forward-looking
statements.
In addition, statements that “we believe” and similar
statements reflect our beliefs and opinions on the relevant
subject. These statements are based upon information available to
us as of the date of this prospectus, and while we believe such
information forms a reasonable basis for such statements, such
information may be limited or incomplete, and our statements should
not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain and
investors are cautioned not to unduly rely upon these
statements.
You should read this prospectus and the documents that we reference
in this prospectus and have filed as exhibits to the registration
statement of which this prospectus forms a part with the
understanding that our actual future results, levels of activity,
performance and achievements may be materially different from what
we expect. We qualify all of our forward-looking statements by
these cautionary statements.
Forward-looking statements speak only as of the date they were
made. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
3
OUR COMPANY
Overview
We are a provider of payment processing solutions to merchants
throughout the United States. Our secure, proprietary platform
allows us to provide payment solutions, superior customer support
and first-rate tools for our distribution partners and merchants.
Our solutions and services enable distribution partners to
effectively manage their business and for merchants to securely
accept electronic payments.
We sell our solutions through a diverse distribution network
comprised of our (i) indirect sales channel, which includes our
relationships with independent sales organizations
(“ISOs”), (ii) direct sales channel, which includes a
national salesforce that targets small and medium-sized business
(“SMB”) merchants, enterprise clients, and financial
institutions, and (iii) integrated software vendors
(“ISVs”). Our independent sales agents operate in a
self-sufficient manner and utilize our products and sales
automation tools to secure merchant relationships. Our direct sales
staff is segmented and either targets SMB merchants or enterprise
clients. In addition, our ISVs are software companies that partner
with us to provide payment services to their customer base. We have
built our diverse network of over 1,000 distribution partners by
offering industry-leading tools and exceptional partner support
since we were founded in 2006. Our distribution partners serve as a
consistent and predictable source of merchant accounts. We believe
our solutions have created loyal distribution partners and
increased partner retention.
We combine our secure platform, solutions and distribution strategy
to provide our payment solution services to SMB merchants and
enterprise clients. We served over 67,000 SMB merchants and
processed over $22 billion in bankcard transaction volume in 2016.
We generate revenues from the fees charged to merchants for
card-based processing services and other services. We also generate
revenues by selling our technology solutions. Our revenues are
recurring in nature because they are generated from our
merchants’ sales, our merchants are under multi-year
contracts, and we are integrated with our clients’ necessary
ERP systems. Our efficient distribution strategy and proprietary
platform drive scale and allow us to generate strong profit
margins. Our revenue for the years ended December 31, 2016, 2015
and 2014 was $589.3 million, $458.6 million and $390.0 million,
respectively, representing a 22.9% compound annual growth rate over
the period.
Our Competitive
Strengths
We believe CardConnect has many competitive advantages that
position us favorably in the merchant acquiring industry and will
help us drive growth in the future. CardConnect is a scalable,
technology-focused merchant acquirer, and we believe our SMB and
enterprise solutions are differentiated in the marketplace. Our key
competitive strengths include:
Proprietary
Technology Platform
We have developed an omni-channel, fully-integrated proprietary
technology platform that provides differentiated payment solutions
for our SMB merchants and enterprise clients, and cutting-edge
portfolio management tools for our distribution partners. Our
CardPointe payment processing solution includes a feature-rich
gateway, real-time, full lifecycle transaction management portal,
and patented security technology. We developed this technology
platform internally, which we believe enables us to ensure our
platform’s stability, security, and scalability, with
substantial capacity to onboard sizable merchants and innovate
quickly without the need for material new investment. In addition
to CardPointe, we developed CoPilot, a centralized customer
management system, to help our distribution partners automate
merchant enrollment and manage their business. CoPilot illustrates
our expertise in partner-centric distribution because it enables
our partners to quickly onboard merchants, activate products,
provide account maintenance, monitor risk, and manage commission
payments. We believe our ability to provide a complete view of our
distribution partners’ merchant portfolio via our robust
centralized CoPilot solution is a key benefit and
differentiator.
Omni-Channel Commerce
Solutions
We provide SMBs and enterprise clients with omni-channel commerce
solutions. Historically, merchants relied on multiple vendors to
securely support card-present and card-not-present transactions.
Our merchants increasingly demand omni-channel solutions that
enable them to sell their goods and services at brick-and-mortar
locations, on the Internet, or remotely via mobile devices, such as
smart phones and tablets, on a single integrated platform
4
provided by a single vendor. We believe we are one of a small group
of payment solution providers that has an omni-channel platform and
devices that can meet these demands. Our CardConnect Gateway is a
secure payment gateway that facilitates payment acceptance in both
card-present and card-not-present environments. In addition,
CardPointe includes a mobile app, a virtual terminal solution,
retail terminals, and software-integrated device applications via
custom SDKs or standard APIs. We also offer a variety of eCommerce
solutions, including shopping cart integrations, accounting
software integrations, and proprietary hosted payment pages that
cover an extensive array of eCommerce needs.
Industry-Leading
Security Solutions
We provide proprietary, industry-leading tokenization and
PCI-validated point-to-point encryption (“P2PE”)
solutions for card-present and card-not-present transactions. We
are part of a select group that has earned these designations, and
we continue to invest heavily in maintaining and enhancing our PCI
compliance. Our SMB merchants and enterprise clients continue to
face security challenges as the electronic payments industry
continues to evolve and grow in size and complexity. We believe we
have demonstrated the technical expertise and partnerships to
deploy innovative security solutions and provide our merchants with
advanced data breach protection. Our CardSecure solution delivers
instant PCI- and EMV-compliance to merchants, reduces our
integrated partners’ PCI scope, and interfaces seamlessly
with our P2PE validated hardware. We dramatically limit the scope
and burden of annual security compliance for our merchants and
distribution partners by reducing the number of physical and
logistical locations where credit card data is stored and by
replacing it with a token. Merchants that are leveraging our P2PE
solution benefit from our compliance status, thereby significantly
reducing their audit and reporting requirements. For our enterprise
clients, our ERP middleware encrypts sensitive payment data at rest
and while traveling externally, tokenizes all payment-related data,
and automates the ERP reconciliation process. As a single-source
vendor, we believe our security solutions create a compelling value
proposition because we can provide both plug-and-play and
customized solutions. Our solutions have become increasingly
important in the marketplace, and we have invested heavily in
dedicated development, integration, and support teams focused on
security innovation.
Advanced Integration
Technology and Support
Our SMB merchants and enterprise clients can easily integrate and
interact with our proprietary technology platform, which
facilitates our ability to deliver our solutions. Our
developer-friendly APIs support the use of our payment solutions,
including CardPointe, CardSecure, and Bolt. Bolt is our cloud-based
integration service that leverages our standard APIs for device
integrations and expedites the integration of our PCI-validated
P2PE devices into any software environment. Bolt enables us to
quickly add thousands of integrated merchants without a large
increase in infrastructure and personnel. We also built a
feature-rich payment gateway that offers omni-channel integrations
that is certified with numerous third-party processors to ensure
compatibility with our merchants’ existing software. Our
flexible architecture enables us to quickly add new connections and
capabilities and is supported by a specialized, cross-trained
development and integration team. For our enterprise clients, our
integrations are executed with knowledge of secure payment
processing in certain ERP systems, and we ensure that our
implementations do not disrupt our enterprise clients’
existing ERP environments. Our experience with a wide range of
integration scenarios creates meaningful value for our merchants
and enterprise clients, who rely on our technical and payment
solution expertise to handle what is typically their most sensitive
outsourced relationship. It also enables us to provide a highly
differentiated support experience for our merchants and enterprise
clients.
Diverse Distribution
Network
Our diverse distribution network is comprised of our indirect sales
channel, which includes our relationships with ISOs, and our direct
sales channel, which includes a national salesforce that targets
SMB merchants, enterprise clients, financial institutions, and
ISVs. We have deployed a partner-centric strategy by building a
diverse network of over 1,000 distribution partners that can easily
integrate with our platform and offer our broad set of solutions to
our merchants. Our integrated technology and distribution partners
are enabled by our proprietary customer management system, CoPilot,
which provides them with the mission-critical tools necessary to
efficiently and effectively manage their customers. CoPilot and our
boarding API enable our partners to quickly board merchants and
process transactions faster than our competition. We have developed
loyal, long-standing relationships by consistently meeting the
needs of our distribution partners and by delivering
industry-leading products and solutions. We believe
5
our expertise in understanding partner-centric distribution is
differentiated and is supported by a passionate client support
team. Our proprietary technology platform, portfolio of innovative
solutions, and first-rate operational support have led to loyal
distribution partners, increased partner retention, and lower
partner concentration.
Experienced
Management Team with Strong Track Record of Execution
Our management team has significant experience in the merchant
acquiring industry with over 90 years of combined experience and a
proven track record of execution. Since our founding in 2006, we
have been driven by a results-oriented culture, successfully
transforming our company from an independent reseller to a leading,
technology-focused payments platform. We seek and have hired talent
with extensive experience in operations management, technology
consulting, integrated payments, and software development. We also
continue to enhance our distribution channels to align with market
opportunities and to expand our direct sales force to target SMBs,
enterprise clients, financial institutions, and ISVs directly. Our
team has successfully executed on these initiatives while
delivering strong revenue growth and attractive profitability.
Our Growth
Strategies
Increase Penetration
of our Existing Distribution Partners’ Merchant
Base
We will continue to aggressively pursue the existing SMB merchant
base of our distribution partners. A significant number of
merchants from our distribution partner network are not currently
using our platform because we have not yet proactively approached
them to upgrade their technology and services with our products and
solutions. We will continue to address this significant penetration
opportunity by coordinating our business development and marketing
efforts with our distribution partners and by leveraging our
proprietary CardPointe solution. As merchants upgrade their legacy
POS hardware to integrated POS solutions, we have the direct
opportunity to sell our CardPointe solution. Furthermore, we plan
to leverage our ERP integration relationships with SAP, Oracle, and
JD Edwards and strategic service providers to continue expanding
our base of enterprise clients.
Increase Cross-sell
Efforts to our Existing SMB Merchants and Enterprise
Clients
We will continue to grow with our existing SMB merchants and
enterprise clients by cross-selling our omni-channel and
value-added solutions to meet their expanding needs. For example,
we believe we can further penetrate our SMB merchant base with our
payment gateway services that support developer-friendly APIs for
omni-channel integrations. Historically, merchants relied on
multiple vendors to securely support card-present and
card-not-present solutions; we provide both solutions on one
platform. We estimate approximately 50% of our 67,000 SMB merchants
have used more than one of our payment solutions. By offering a
comprehensive suite of solutions, we believe we enable our SMB
merchants to increase sales volumes, grow their business, and
eliminate the need to work with multiple vendors, which in turn,
generates higher processing volumes and revenues and improves
client retention. In addition, we have the opportunity to sell
merchant acquiring services into our existing enterprise client
base. We estimate approximately 18% of our enterprise clients
currently use our merchant acquiring services. We intend to
continue to promote our payment capabilities to increase adoption
throughout our SMB merchant and enterprise client base.
Broaden and Enhance
our Distribution Network
We intend to maintain our leadership position in the industry by
continuing to provide new and more advanced payments solutions to
our distribution partners, SMB merchants, and enterprise clients.
We have a strong track record of introducing new solutions, such as
CardPointe, which supports multiple software applications and
provides a simple, convenient, and an easy-to-use environment for
merchants to accept payments and manage their business. Over the
past few years, we have successfully introduced six value-added
solutions, such as our CardSecure solution, which provides
PCI-validated, point-to-point encryption to help enterprise clients
improve data and payment security, as well as our Bolt solution,
which provides a simple and secure way to integrate POS systems and
other devices into any software environment. We plan to continue to
leverage our proprietary technology platform and service
capabilities to expand our solutions to meet the evolving needs of
our distribution partners and SMB merchant and enterprise
clients.
6
Selectively Pursue
Strategic Acquisitions
Given the large size and attractive growth trends of our current
addressable market, the core focus of our strategy is to grow
organically. We may, however, selectively pursue strategic
acquisitions that meet our internal requirements for return on
investment and allow for efficient deployment of capital. We have
demonstrated the ability to execute and integrate acquisitions that
have expanded our distribution channels and increased our solution
set. We will work to extend our successful track record and
diligently evaluate opportunities as they arise.
Company
History
We were formed in November 2013 as a special purpose acquisition
company for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination. On July 29, 2016, we acquired FTS
pursuant to the Merger and changed our name to CardConnect Corp. in
connection with the Merger.
FTS was founded in 2006 as Financial Transaction Services, LLC and
in September 2010, merged into FTS Holding Corp. in connection with
the sale of a controlling interest in the company.
The Merger was accounted for as a reverse merger. FTS is considered
the “acquirer” and FinTech is treated as the
“acquired” company for financial reporting
purposes.
Corporate
Information
The mailing address of our principal executive office is 1000
Continental Drive, Suite 300, King of Prussia, Pennsylvania 19406,
and our telephone number is (484) 581-2200. Our website address is
www.cardconnect.com
.
The information found on our website is not part of this
prospectus.
7
RISK FACTORS
Our business is subject to
uncertainties, and an investment in our securities involves risks.
Before making an investment decision, you should carefully consider
the risks incorporated by reference from our most recent Annual
Report on Form 10-K, the risk factors described under the caption
“Risk Factors” in any applicable prospectus supplement
and any risk factors set forth in our other filings with the SEC,
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
before making an investment decision. See “Where You Can Find
More Information; Incorporation of Certain Documents by
Reference.” Our business, prospects, financial condition or
operating results could be materially harmed by any of these risks,
as well as other risks not currently known to us or that we
currently consider immaterial. The trading price of our securities
could decline due to any of these risks, and, as a result, you may
lose all or part of your investment. The risks and uncertainties
are not limited to those set forth in the risk factors described in
these documents. Additional risks and uncertainties not presently
known to us or that we currently believe to be less significant
than the risk factors incorporated by reference herein may also
adversely affect our business. When we or any selling stockholders
offer and sell any securities pursuant to a prospectus supplement,
we may include additional risk factors relevant to such securities
in the applicable prospectus supplement. In addition, past
financial performance may not be a reliable indicator of future
performance and historical trends should not be used to anticipate
results or trends in future periods.
USE OF
PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net
proceeds from the sale of the securities offered by us in this
prospectus will be used for general corporate purposes, including
working capital, repayment of indebtedness, acquisitions and
capital expenditures.
We will not receive any proceeds from the sale of securities
offered by any of the selling stockholders. We will be responsible
for certain of the expenses incurred in connection with the
offering of the selling stockholders’ securities.
8
RATIO OF EARNINGS TO
FIXED CHARGES
The following table sets forth our ratio of earnings to fixed
charges and preferred stock dividends for the periods indicated.
This information should be read in conjunction with the
consolidated financial statements and the accompanying notes
incorporated by reference in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges
(1)
|
|
(3)
|
|
2.34
|
|
(5)
|
|
(6)
|
|
(7)
|
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(1)(2)
|
|
(4)
|
|
2.34
|
|
(2)
|
|
(2)
|
|
(2)
|
9
SELLING
STOCKHOLDERS
The selling stockholders indicated below may resell from time to
time up to 15,569,526 shares of our common stock (plus an
indeterminate number of shares of our common stock that may be
issued upon stock splits, stock dividends or similar transactions
in accordance with Rule 416 under the Securities Act). Unless the
context otherwise requires, as used in this prospectus,
“selling stockholders” includes the selling
stockholders named in the table below and donees, pledgees,
transferees or other successors-in-interest selling shares received
from the selling stockholders as a gift, pledge, partnership
distribution or other transfer after the date of this prospectus,
and any such persons will be named in the applicable prospectus
supplement.
The following table, based upon information currently known by us,
sets forth: (i) the number of shares of our common stock held of
record or beneficially by the selling stockholders as of such date
and (ii) the number of shares of our common stock that may be
offered under this prospectus by the selling stockholders. The
beneficial ownership of the securities set forth in the following
table is determined in accordance with Rule 13d-3 under the
Exchange Act, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Percentage of
beneficial ownership is based on 31,153,397 shares of our common
stock issued and outstanding as of April 19, 2017. Shares of our
common stock issuable pursuant to currently exercisable warrants or
options are deemed to be outstanding for purposes of computing the
percentage of the person holding such warrants or options, but are
not deemed to be outstanding for purposes of computing the
percentage of any other person.
Except as indicated in footnotes to this table, we believe that the
selling stockholders named in this table have sole voting and
investment power with respect to all shares of common stock shown
to be beneficially owned by them, based on information provided to
us by such selling stockholder.
|
|
Beneficial Ownership of Common Stock Prior to
the Offering
(1)
|
|
Common Stock Saleable Pursuant
|
|
Beneficial Ownership of Common Stock After the
Offering
(1)(2)
|
Name
of Selling Stockholder
|
|
|
|
|
|
|
|
|
|
|
FTVentures III, L.P.
(3)
|
|
9,756,030
|
|
31.3
|
%
|
|
9,756,030
|
|
—
|
|
|
*
|
FTVentures III-N, L.P.
(3)
|
|
528,983
|
|
1.7
|
%
|
|
528,983
|
|
—
|
|
|
*
|
FTVentures III-T, L.P.
(3)
|
|
317,390
|
|
1.0
|
%
|
|
317,390
|
|
—
|
|
|
*
|
AG MM, L.P.
(4)
|
|
1,500
|
|
|
*
|
|
1,500
|
|
—
|
|
|
*
|
AG Mortgage Value Partners Master Fund,
L.P.
(5)
|
|
50,000
|
|
|
*
|
|
50,000
|
|
—
|
|
|
*
|
AG Super Fund, L.P.
(4)
|
|
38,000
|
|
|
*
|
|
38,000
|
|
—
|
|
|
*
|
AG Super Fund International Partners,
L.P.
(4)
|
|
8,500
|
|
|
*
|
|
8,500
|
|
—
|
|
|
*
|
Blackwell Partners LLC Series A
(6)
(7)
|
|
254,196
|
|
|
*
|
|
78,224
|
|
175,972
|
|
|
*
|
Walter Beach
(8)
|
|
310,899
|
|
|
*
|
|
260,899
|
|
50,000
|
|
|
*
|
Lester Brafman
|
|
30,000
|
|
|
*
|
|
30,000
|
|
—
|
|
|
*
|
Cantor Fitzgerald & Co.
(9)(10)
|
|
200,000
|
|
|
*
|
|
100,000
|
|
100,000
|
|
|
*
|
John J. Caufield
|
|
319,213
|
|
1.0
|
%
|
|
319,213
|
|
—
|
|
—
|
|
John Alex Chapman
|
|
49,803
|
|
|
*
|
|
49,803
|
|
—
|
|
—
|
|
John Chrystal
(11)
|
|
62,180
|
|
|
*
|
|
52,180
|
|
10,000
|
|
|
*
|
Betsy Cohen
(12)
|
|
943,543
|
|
3.0
|
%
|
|
319,300
|
|
624,243
|
|
1.0
|
%
|
Cohen Sponsor Interests, LLC
(10)(13)
|
|
427,000
|
|
1.3
|
%
|
|
367,398
|
|
60,000
|
|
|
*
|
Leon Cooperman
|
|
100,000
|
|
|
*
|
|
100,000
|
|
—
|
|
|
*
|
DGC Family FinTech Trust
(10)(14)
|
|
506,419
|
|
1.6
|
%
|
|
506,419
|
|
—
|
|
|
*
|
Alan Joseph Ferraro
|
|
10,000
|
|
|
*
|
|
10,000
|
|
—
|
|
|
*
|
Kevin Gainer
(15)
|
|
196,047
|
|
|
*
|
|
144,315
|
|
51,732
|
|
|
*
|
Ryan Gildersleeve
|
|
20,748
|
|
|
*
|
|
20,000
|
|
748
|
|
|
*
|
Ashley Hutteger
|
|
152,397
|
|
|
*
|
|
152,397
|
|
—
|
|
—
|
|
Timothy Hutteger
|
|
152,397
|
|
|
*
|
|
152,397
|
|
—
|
|
—
|
|
John Katoula
|
|
45,443
|
|
|
*
|
|
45,443
|
|
—
|
|
—
|
|
Hersh Kozlov
(11)
|
|
66,943
|
|
|
*
|
|
52,180
|
|
14,763
|
|
|
*
|
10
|
|
Beneficial Ownership of Common Stock Prior to
the Offering
(1)
|
|
Common Stock Saleable Pursuant
|
|
Beneficial Ownership of Common Stock After the
Offering
(1)(2)
|
Name
of Selling Stockholder
|
|
|
|
|
|
|
|
|
|
|
William Lamb
(16)
|
|
62,180
|
|
|
*
|
|
52,180
|
|
10,000
|
|
|
*
|
Main Street Global, LLC
(17)
|
|
416,158
|
|
1.3
|
%
|
|
416,158
|
|
—
|
|
|
*
|
Frank Mastrangelo
|
|
103,794
|
|
|
*
|
|
103,794
|
|
—
|
|
|
*
|
James J. McEntee, III
(10)(18)
|
|
187,825
|
|
|
*
|
|
177,825
|
|
10,000
|
|
|
*
|
Kevin McGuire
|
|
26,041
|
|
|
*
|
|
6,000
|
|
20,041
|
|
|
*
|
MKY
Investments LLC
(19)
|
|
638,030
|
|
2.0
|
%
|
|
548,207
|
|
89,823
|
|
|
*
|
Adam Moss
(20)
|
|
63,697
|
|
|
*
|
|
30,241
|
|
33,456
|
|
|
*
|
Nantahala Capital Partners Limited
Partnership
(6)(21)
|
|
111,829
|
|
|
*
|
|
40,672
|
|
71,157
|
|
|
*
|
Nantahala Capital Partners II Limited
Partnership
(6)(22)
|
|
232,253
|
|
|
*
|
|
142,640
|
|
89,613
|
|
|
*
|
Nutmeg Partners, L.P.
(4)
|
|
2,000
|
|
|
*
|
|
2,000
|
|
—
|
|
|
*
|
Palestra Capital Master Fund LP
(23)
|
|
1,920,000
|
|
6.2
|
%
|
|
320,000
|
|
1,600,000
|
|
5.1
|
%
|
Shami Patel
|
|
80,000
|
|
|
*
|
|
80,000
|
|
—
|
|
|
*
|
Jeff Shavitz
|
|
150,774
|
|
|
*
|
|
150,774
|
|
—
|
|
—
|
|
Silver Creek CS SAV, L.L.C.
(6)(24)
|
|
127,648
|
|
|
*
|
|
38,464
|
|
89,184
|
|
|
*
|
11
Material Relationships
with Selling Stockholders
The Merger
On July 29, 2016, we consummated the Merger. The aggregate
consideration paid to the FTS stockholders, including the FTV
Entities (as defined below), in the Merger consisted of (i)
15,162,470 shares of our common stock, which were registered
pursuant to a registration statement on Form S-4 (Registration No.
333-211139) and 3,463,950 options to purchase shares of our common
stock, which were registered pursuant to a registration statement
on Form S-4 (Registration No. 333-211139), and (ii) $179.1 million
in cash.
Registration Rights
Agreements
In connection with the Merger, FinTech entered into a registration
rights agreement (the “Registration Rights Agreement”)
with certain FTS stockholders, including the FTV Entities and
certain of the other selling stockholders, which provides
registration rights with respect to the shares of our common stock
that were issued to such stockholders as partial consideration
under the Merger Agreement and other shares acquired prior to the
Follow On Offering (as defined below). The Registration Rights
Agreement requires that we consummate a secondary offering, which
will be a registered underwritten public offering of shares of our
common stock held by certain FTS stockholders that elect to
participate in such offering (the “Follow On
Offering”), and that we file a shelf registration statement
to register any shares of our common stock held by FTVentures III,
L.P., FTVentures III-N, L.P. and FTVentures III-T, L.P (together,
the “FTV Entities”). If such shelf registration
statement becomes unavailable at any time, the FTV Entities will
have certain demand and piggyback registration rights, subject to
customary underwriter cutbacks and issuer blackout periods. We are
required to pay customary fees and expenses relating to
registrations under the Registration Rights Agreement.
In February 2015, in connection with FinTech’s initial public
offering, FinTech entered into a registration rights agreement (the
“IPO Registration Rights Agreement”) relating to shares
of our common stock and warrants to purchase our common stock
purchased in a private transaction exempt from registration under
the Securities Act
12
that was consummated concurrently with FinTech’s initial
public offering. The IPO Registration Rights Agreement provides for
customary demand and piggyback registration rights, subject to
customary underwriter cutbacks and issuer blackout periods. Each of
Lester Brafman, Leon Cooperman, John Chrystal, Hersh Kozlov, Main
Street Global, LLC, the Angelo Gordon Entities, Blackwell Partners
LLC Series A, Nantahala Capital Partners Limited Partnership,
Nantahala Capital Partners II Limited Partnership and Silver Creek
CS SAV, L.L.C. have registration rights under the IPO Registration
Rights Agreement and are registering shares pursuant to such
agreement in connection with this prospectus and are included in
the table above as selling stockholders. In addition, Walter Beach,
Betsy Cohen, DGC Family FinTech Trust, Alan Joseph Ferraro, William
Lamb, Frank Mastrangelo, James J. McEntee, III, Shami Patel,
Cantor Fitzgerald & Co., Cohen Sponsor Interests, LLC, and
Palestra Capital Master Fund LP, have registration rights under the IPO Registration Rights
Agreement and are included in the table above as selling
stockholders. All such persons with registration rights under the
IPO Registration Rights Agreement are referred to herein as the
“FinTech Holders.”
Initial Public Offering,
Private Placement and Sponsor Loans
On February 29, 2015, we consummated our initial public offering
(“IPO”) of 10,000,000 units at $10.00 per unit on
February 19, 2015, generating gross proceeds of $100,000,000. Each
unit consisted of one share of common stock and one warrant to
purchase one share of common stock at an exercise price of $12.00
per share. Cantor, Fitzgerald & Co. (“Cantor
Fitzgerald”) was the underwriter of our IPO.
Simultaneously with the closing of our IPO, we consummated the sale
of 300,000 units at a price of $10.00 per unit in a private
placement to FinTech Investor Holdings, LLC (the
“Sponsor”) (200,000 units) and Cantor Fitzgerald
(100,000 units), generating gross proceeds of $3,000,000.
Prior to our IPO, to finance organizational costs and other costs
relating to the IPO, the Sponsor committed to loan us funds as may
be required, to a maximum of $500,000. These loans were
non-interest bearing, unsecured and payable on the earlier of March
31, 2015 or the consummation of the initial public offering. We
repaid an aggregate of $139,211 loans to the Sponsor upon the
consummation of the IPO or shortly thereafter. Also, in order to
finance transaction costs in connection with an initial business
combination, the Sponsor committed to loan us funds as may be
required, up to a maximum of $750,000. The Sponsor advanced an
aggregate of $579,090 to us under this loan. We repaid all
outstanding amounts under the loan in connection with the Merger.
Daniel Cohen, the managing member of the Sponsor, or an affiliate
of Daniel Cohen, was solely obligated to fund the loans described
above. Daniel Cohen is the beneficial owner of shares held by Cohen
Sponsor Interest, LLC and DGC Family FinTech Trust, which are
included as selling stockholders in the table above.
Subsequent to the Merger, in August 2016, in connection with its
dissolution, the Sponsor distributed the shares and warrants held
by its members, certain of which are included as selling
stockholders in the table above, including, John Chrystal, Hersh
Kozlov, Main Street Global, LLC, the Angelo Gordon Entities,
Blackwell Partners LLC Series A, Nantahala Capital Partners Limited
Partnership, Nantahala Capital Partners II Limited Partnership,
Silver Creek CS SAV, L.L.C., Walter Beach, Betsy Cohen, DGC Family
FinTech Trust, William Lamb, Frank Mastrangelo, James J. McEntee,
III and Cohen Sponsor Interests, LLC.
For additional information regarding the placement units (including
the securities contained therein) see “Description of Capital
Stock — Authorized and Outstanding Stock — Founder
Shares and Placement Shares.”
Founder
Shares
Our “Founder Shares” refer to 3,433,333 shares of our
outstanding common stock that were issued to certain FinTech
Holders. On November 1, 2013, we issued an aggregate of 112 Founder
Shares to Daniel G. Cohen, Betsy Z. Cohen, DGC Family FinTech
Trust, Frank Mastrangelo and James J. McEntee, III for an aggregate
purchase price of $112; on July 2, 2014, we issued an aggregate of
3,916,555 Founder Shares to such persons and our Sponsor for an
aggregate purchase price of $24,888; and, on January 12, 2015, we
issued 16,666 founder shares to our Sponsor for an aggregate
purchase price of $250. On March 29, 2015, the underwriter’s
overallotment option for our IPO expired without being exercised
and these holders of Founder Shares, pursuant to a written
agreement us, forfeited an aggregate of 500,000 Founder Shares.
For additional information regarding the Founder Shares, see
“Description of Capital Stock — Authorized and
Outstanding Stock — Founder Shares and Placement
Shares.”
13
Shareholders
Agreement
In connection with the Merger, FinTech entered into a stockholders
agreement with the FTV Entities, Brian Shanahan, our executive
officers and certain of the FinTech Holders, including DGC Family
FinTech Trust, Betsy Cohen, Frank Mastrangelo, James J. McEntee,
III and Shami Patel, which are included as selling stockholders in
the table above (the “Shareholders Agreement”),
pursuant to which such stockholders have certain director nominee
designation rights and have agreed to vote for the director
nominees designated under the Shareholders Agreement. The
stockholders party thereto will cease to have any continuing
director designation rights under the Shareholders Agreement if
their respective ownership of our common stock is at any time less
than 5% of the total outstanding common stock.
Contract with
TrustWave
We rely on Trustwave Holdings, Inc. (“Trustwave”) to
provide certain Payment Card Industry compliance services. Richard
Garman, the chairman of our board of directors, was a non-executive
director of TrustWave through August 2015. During the years ended
December 31, 2015 and 2014, we recorded expenses of $647,302 and
$632,626, respectively, for these services. At December 31, 2015,
amounts due to TrustWave totaled $128,655.
Private
Placement
On July 27, 2016, we entered into securities purchase agreements
(the “Purchase Agreements”) with, each of the FTV
Entities, MKY Investments, LLC and an affiliate of Betsy Cohen
(collectively the “Investors”). On July 29, 2016, we
issued and sold 337,647 shares of our common stock to the Investors
pursuant to the Purchase Agreements for an aggregate purchase price
of approximately $3.4 million. The shares were sold to the
Investors in a private transaction exempt from registration under
Section 4(a)(2) of the Securities Act. Of the shares sold to the
Investors in this transaction, 220,000 shares were sold at a
purchase price of $10.00 per share, and the remaining 117,647
shares, which were sold to the affiliate of Mrs. Cohen, were sold
at a purchase price of $10.20 per share, the most recent closing
bid price of our common stock, as required by applicable NASDAQ
Listing Rules. All shares purchased by the Investors other than the
shares purchased by the affiliate of Mrs. Cohen are entitled to
registration rights pursuant to the Registration Rights Agreement
and are being registered in connection with this prospectus and are
included in the table above.
Directors
Richard Garman and Christopher Winship, managing members of
FTVentures Management III, LLC, are members of our board of
directors. For a description of the FTV Entities’ ownership,
see footnote (3) to the table set forth under “Selling
Stockholders.”
Betsy Cohen is a member of our board of directors.
Daniel Cohen, Shami Patel, Walter Beach and William Lamb were
members of our board of directors until the closing of the Merger
on July 29, 2016, and Mr. Cohen also served as our Chief Executive
Officer and President until the Merger closing. Mr. Cohen is the
trustee of the DGC Family FinTech Trust and the sole managing
member of Cohen Sponsor Interests, LLC.
14
DESCRIPTION OF CAPITAL
STOCK
The following is a
general description of the terms and provisions of our capital
stock and is based upon our second amended and restated certificate
of incorporation, as amended (“certificate of
incorporation”), our second amended and restated bylaws
(“bylaws”), and applicable provisions of law, in each
case as currently in effect on the date of this prospectus. The
following description is only a summary of the material provisions
of our capital stock, the certificate of incorporation and bylaws
and does not purport to be complete and is qualified in its
entirety by reference to the provisions of the certificate of
incorporation and bylaws, which have been publicly filed with the
SEC. See “Where You Can Find More Information” and
“Incorporation of Certain Documents by Reference” for
how you can obtain copies of them. We urge you to read the
certificate of incorporation and bylaws because those documents,
not this description, define your rights as holders of our common
equity.
Authorized and
Outstanding Stock
Our charter authorizes the issuance of 210,000,000 shares,
consisting of 200,000,000 shares of common stock, $0.001 par value
per share and 10,000,000 shares of preferred stock, $0.001 par
value, of which 1,500,000 shares are designated as Series A
Preferred Stock.
As of April 19, 2017, there were 31,153,197 shares of our common
stock 1,500,000 shares of our Series A Preferred Stock (as defined
herein) outstanding.
Common
Stock
Holders of common stock are entitled to one vote for each share
held on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with
the result that the holders of more than 50% of the shares voted
for the election of directors can elect all of the directors. Our
stockholders are entitled to receive ratable dividends when, as and
if declared by the board of directors out of funds legally
available therefor.
Holders of our common stock have no preemptive or other
subscription rights and there are no sinking fund or redemption
provisions applicable to our common stock. If we liquidate,
dissolve or wind up, our stockholders are entitled to share ratably
in all assets remaining available for distribution to them after
payment of liabilities and after provision is made for each class
of stock, if any, having preference over the common stock.
Preferred
Stock
Our charter provides that shares of preferred stock may be issued
from time to time in one or more series. Our board of directors
will be authorized to fix the voting rights, if any, designations,
powers, preferences, the relative, participating, optional or other
special rights and any qualifications, limitations and
restrictions, applicable to the shares of each series.
Series A Preferred
Stock
On July 29, 2016, pursuant to a purchase agreement dated June 23,
2016 and in connection with the partial financing of the Merger,
FinTech issued (a) 1,500,000 shares of FinTech’s newly
created Series A Preferred Stock (the “Series A Preferred
Stock”) and (b) 480,544 shares of common stock to Falcon
Strategic Partners V, LP (the “Series A Purchaser”).
FinTech sold the shares of Preferred Stock and common stock to the
Series A Purchaser in a private transaction exempt from
registration under Section 4(a)(2) of the Securities Act of 1933,
as amended, and/or Rule 506 of Regulation D promulgated by the
SEC.
The aggregate purchase price for the shares of Series A Preferred
Stock was $37.5 million, of which FinTech used $30.0 million to pay
a portion of the cash consideration for the Merger, repay
FTS’ existing debt in connection with the Merger, pay
transaction expenses relating to the Merger and for general
corporate purposes, and the remaining $7.5 million was placed by
FinTech in a separate account for use in funding the first two
years of cash dividends on the Series A Preferred Stock.
15
The Series A Preferred Stock has an aggregate liquidation
preference of $37.5 million plus all unpaid dividends. Until July
29, 2018, dividends accrue at 11.43% per annum, compounding
quarterly, of which 10.0% will be payable in cash and 1.43% will
accrue and be payable in connection with a redemption of the Series
A Preferred Stock or a Change of Control (as defined below). The
cash accrued dividends on the Series A Preferred Stock is paid in
cash in arrears to the holders on the 15
th
day of each September, December, March and June, which payments
commenced on September 15, 2016. Thereafter, dividends accrue at
13.40% per annum, compounding quarterly, all of which will accrue
and be payable solely in connection with a redemption of the Series
A Preferred Stock or a Change of Control.
The Series A Preferred Stock is redeemable, at the Series A
Preferred Stock holders’ option, beginning seven years
following the date of issuance or July 29, 2023 (the
“Mandatory Redemption Date”), at a price equal to the
then aggregate liquidation preference of the outstanding Series A
Preferred Stock. We have the right (the “Optional Redemption
Right”) to redeem the Preferred Stock beginning three and a
half years following the date of issuance or January 29, 2020. The
redemption price (the “Redemption Price”) will be 102%
of the liquidation preference if the redemption occurs during the
first redemption year, 101% of the liquidation preference if the
redemption occurs during the second redemption year, and 100% of
the liquidation value thereafter.
If on the Mandatory Redemption Date any shares of Series A
Preferred Stock remain outstanding, the dividend rate on the
outstanding shares of Series A Preferred Stock will increase by
1.0% per annum, with the rate per annum being increased an
additional 1.0% on the first day of each successive 180-day period
thereafter. In addition, if at any time, (1) the ratio of our
indebtedness (including for this purpose, the liquidation
preference of the Series A Preferred Stock) to our 12 month
trailing EBITDA, on a pro forma basis, exceeds 7.7x, or (2) there
is a payment or financial covenant default under our first lien
credit facility (each, a “Trigger Event”), the dividend
rate on the outstanding shares of Series A Preferred Stock will
increase upon the occurrence of the Trigger Event by the greater of
(A) any increase in the interest rate of our second lien term loan
credit facility or (B) 1.0%, with the rate per annum being
increased an additional 1.0% on the first day of each successive
180-day period. Any such additional rate increase described in the
prior sentence shall remain in effect until the default or Trigger
Event has been cured, resolved or waived by the applicable
party.
In addition, upon certain “Changes of Control” (as
defined in the Certificate of Designation for the Series A
Preferred Stock (the “Certificate of Designation”)), if
the holders of at least 66 2/3% of the outstanding shares of Series
A Preferred Stock request redemption of the Series A Preferred
Stock, we must repurchase all outstanding Series A Preferred Stock
at a price equal to the then-applicable Redemption Price, or, if
the Change of Control occurs during the period when we are not
permitted to exercise our Optional Redemption Right, at a price
equal to the liquidation preference of the Series A Preferred Stock
plus a “make whole” premium. The “make
whole” premium is equal to the total value of the Preferred
Stock dividends that would otherwise have been payable during the
period prior to the commencement of the Optional Redemption Right,
discounted at the rate applicable to U.S. Treasury bills or notes
of similar duration plus 50 basis points, plus 2.0%.
The Series A Preferred Stock is non-voting; however, the following
actions will require the consent of 66 2/3% of the outstanding
shares of Series A Preferred Stock:
•
Changes to our charter or bylaws that adversely affect the powers,
preferences, or rights of the Preferred Stock.
•
Issuances of additional shares of Series A Preferred Stock or
equity securities senior to, or pari passu with, the Series A
Preferred Stock, or issuances of capital stock by any subsidiary of
us other than issuances to us or our wholly owned subsidiary.
•
Reclassifications, alterations or amendments to any existing
security of ours that is junior to the Series A Preferred Stock in
a way that would make such security senior to, or pari passu with,
the Series A Preferred Stock.
•
Purchases or redemptions of, or distributions on, any capital stock
of ours other than the Series A Preferred Stock, and other than
certain specified redemptions of our common stock.
16
•
Issuances of any debt security or the incurrence of indebtedness
for borrowed money and capital leases, other than certain permitted
indebtedness, that (a) would result in the ratio of our
indebtedness to our trailing 12 month adjusted EBITDA, on a pro
forma basis, exceeding 6.0x for the first 12 months following the
issuance of the Series A Preferred Stock, and exceeding 5.5x
thereafter, or (b) includes terms that could prohibit us from
paying the cash dividends payable on the Series A Preferred
Stock.
•
Affiliate transactions resulting in payments of more than $150,000
per year, subject to certain specified exceptions.
•
Changes in our tax status.
•
Consummation of a Change of Control pursuant to which the
consideration payable to our stockholders would be allocated in a
manner other than as set forth in the Certificate of
Designation.
If any shares of Series A Preferred Stock are outstanding following
the Mandatory Redemption Date, or if at any time the ratio of our
total indebtedness (including for these purposes the liquidation
preference of the outstanding shares of Series A Preferred Stock
less any accumulated dividends on the Series A Preferred Stock) to
our trailing 12 month adjusted EBITDA, on a pro forma basis,
exceeds 7.7x, then the following actions will also require the
consent of 66 2/3% of the outstanding shares of Series A Preferred
Stock:
•
A sale, in one or more transactions, of in excess of 27.5% of our
consolidated net assets, except pursuant to a directed sale of
assets in connection with a foreclosure by the lenders under our
first lien credit facility.
•
The liquidation, dissolutions or winding up of our business and
affairs, a voluntary filing for bankruptcy, reorganization,
insolvency or other relief from creditors, or an assignment for the
benefit of creditors other than as contemplated by the definitive
agreements for our first lien credit facility.
•
The issuance of equity securities below fair market value other
than in an underwritten public offering or in a private placement
in which at least a majority of the securities are purchased by
persons or entities that are not affiliates of us.
Founder Shares and
Placement Shares
Our “Founder Shares” refer to 3,433,333 shares of our
outstanding common stock that were issued to certain initial
FinTech shareholders. The Founder Shares are identical to the
shares of common stock included in the units sold in
FinTech’s initial public offering, except that the Founder
Shares are subject to certain transfer restrictions as described in
more detail below.
The holders of Founder Shares have agreed not to transfer, assign
or sell any of their founder shares (except to permitted
transferees) until (i) with respect to 20% of such shares, when the
closing price of our common stock exceeds $15.00 for any 20 trading
days within a 30-trading day period following the consummation of
the Merger and (ii) with respect to 20% of such shares, when the
closing price of our common stock exceeds $17.00 for any 20 trading
days within a 30-trading day period following the consummation of
the Merger or earlier, in any case, if, following the Merger, the
Company engages in a subsequent transaction (1) resulting in our
shareholders having the right to exchange their shares for cash or
other securities or (2) involving a consolidation, merger or other
change in the majority of our board of directors or management team
in which the Company is the surviving entity.
Our “placement shares” refers to 300,000 shares of
common stock included in the 300,000 placement units sold at a
price of $10.00 per unit for an aggregate purchase price of $3.0
million in the private placement consummated in connection with
FinTech’s initial public offering. The placement units
include one placement share and one placement warrant to purchase
one share of our common stock at an exercise price of $12.00. The
placement warrants are identical to the warrants included in the
units sold in FinTech’s initial public offering, except that
if held by FinTech Investor Holdings, LLC, Cantor Fitzgerald &
Co. or their permitted assigns, they (a) may be exercised for cash
or on a cashless basis and (b) are not subject to being called for
redemption.
17
Anti-Takeover Effects of
Provisions of Delaware Law
We are subject to Section 203 of the General Corporation Law of the
State of Delaware. In general, Section 203 of the Delaware General
Corporation law prohibits a public Delaware corporation from
engaging in a “business combination” with an
“interested stockholder” for a period of three years
after the date of the transaction in which the person became an
interested stockholder, unless either the person becoming an
interested stockholder or the business combination is approved in a
prescribed manner. A “business combination” includes
mergers, asset sales or other transactions resulting in a financial
benefit to the stockholder. An “interested stockholder”
is a person who, together with affiliates and associates, owns, or
within three years, did own, 15.0% or more of the
corporation’s voting stock.
Requirements for Advance
Notification of Stockholder Nominations and Proposals
Our bylaws establish advance notice procedures with respect to
stockholder proposals and nomination of candidates for election as
directors.
Limits on Written
Consents
Any action required or permitted to be taken by the stockholders
must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in writing in
lieu of a meeting of such stockholders, subject to the rights of
the holders of any series of preferred stock.
Limits on Special
Meetings
Special meetings of the stockholders may be called at any time only
by the Board of Directors, the Chairman of the Board of Directors
or our Chief Executive Officer upon 10 days’ notice, subject
to the rights of the holders of any series of preferred stock.
Limitation of Liability
and Indemnification Matters
Our second amended and restated certificate of incorporation limits
the liability of our directors for monetary damages for breach of
their fiduciary duty as directors, except for liability that cannot
be eliminated under the Delaware General Corporation Law. Our
second amended and restated bylaws also provide that we will
indemnify our directors and executive officers to the fullest
extent permitted by Delaware law. Our second amended and restated
bylaws also permit us to purchase insurance on behalf of any
officer, director, employee or other agent for any liability
arising out of that person’s actions as our officer,
director, employee or agent, regardless of whether Delaware law
would permit indemnification. We believe that the limitation of
liability provision in our amended and restated certificate of
incorporation and the indemnification agreements will facilitate
our ability to continue to attract and retain qualified individuals
to serve as directors and officers.
Our Transfer
Agent
The transfer agent for our shares of common stock, warrants and
preferred stock is Continental Stock Transfer & Trust Company.
We have agreed to indemnify Continental Stock Transfer & Trust
Company in its roles as transfer agent and warrant agent, its
agents and each of its stockholders, directors, officers and
employees against all claims and losses that may arise out of acts
performed or omitted for its activities in that capacity, except
for any liability due to any gross negligence or intentional
misconduct of the indemnified person or entity.
Quotation of
Securities
Our common stock is quoted on The NASDAQ Capital Market under the
symbol “CCN.”
18
DESCRIPTION OF DEBT
SECURITIES
The following
description of the debt securities and terms of the indentures, as
defined below, is a summary. It summarizes only those aspects of
the debt securities and those portions of the indentures, which we
believe will be most important to your decision to invest in our
debt securities. You should keep in mind, however, that it is the
indentures, and not this summary, which define your rights as a
debtholder. There may be other provisions in the indentures which
are also important to you. You should read the indentures for a
full description of the terms of the debt. We will file the forms
of indentures with the SEC as exhibits to our registration
statement, of which this prospectus is a part. See “Where You
Can Find More Information” for information on how to obtain
copies of them.
General
We may issue senior or subordinated debt securities, which will be
direct, general obligations of the Company that may be secured or
unsecured.
The senior debt securities will constitute part of our senior debt,
will be issued under the senior debt indenture described below and
will rank equally in payment with all of our other senior and
unsubordinated debt, whether secured or unsecured.
The subordinated debt securities will constitute part of our
subordinated debt, will be issued under the subordinated debt
indenture described below and will be subordinate in right of
payment to all of our “senior debt,” as defined in the
indenture with respect to subordinated debt securities. The
prospectus supplement for any series of subordinated debt
securities or the information incorporated in this prospectus by
reference will indicate the approximate amount of senior debt
outstanding as of the end of our most recent fiscal quarter.
Neither indenture limits our ability to incur additional senior
debt, additional subordinated debt or other indebtedness.
When we refer to “debt securities” in this prospectus,
we mean both the senior debt securities and the subordinated debt
securities.
The senior debt securities and subordinated debt securities will be
governed by an indenture between us and one or more trustees
selected by us. The indentures will be substantially identical,
except for certain provisions including those relating to
subordination, which are included only in the indenture related to
subordinated debt securities. When we refer to the indenture or the
trustee with respect to any debt securities, we mean the indenture
under which those debt securities are issued and the trustee under
that indenture.
Series of Debt
Securities
We may issue multiple debt securities or series of debt securities
under either indenture. This section summarizes terms of the
securities that apply generally to all debt securities and series
of debt securities. The provisions of each indenture allow us not
only to issue debt securities with terms different from those of
debt securities previously issued under that indenture, but also to
“reopen” a previously issued series of debt securities
and issue additional debt securities of that series. We will
describe most of the financial and other specific terms of a
particular series, whether it be a series of the senior debt
securities or subordinated debt securities, in the prospectus
supplement applicable for that series. Those terms may vary from
the terms described here.
Amounts of
Issuances
The indentures do not limit the amount of debt securities that may
be issued under them. We may issue the debt securities from time to
time in one or more series. We are not required to issue all of the
debt securities of one series at the same time and, unless
otherwise provided in the applicable indenture or prospectus
supplement, we may reopen a series and issue additional debt
securities of that series without the consent of the holders of the
outstanding debt securities of that series.
Principal Amount, Stated
Maturity and Maturity
Unless otherwise stated, the principal amount of a debt security
means the principal amount payable at its stated maturity, unless
that amount is not determinable, in which case the principal amount
of a debt security is its face amount.
19
The term “stated maturity” with respect to any debt
security means the day on which the principal amount of the debt
security is scheduled to become due. The principal may become due
sooner, by reason of redemption or acceleration after a default or
otherwise in accordance with the terms of the debt security. The
day on which the principal actually becomes due, whether at the
stated maturity or earlier, is called the “maturity” of
the principal.
We also use the terms “stated maturity” and
“maturity” to refer to the days when other payments
become due. For example, we may refer to a regular interest payment
date when an installment of interest is scheduled to become due as
the “stated maturity” of that installment. When we
refer to the “stated maturity” or the
“maturity” of a debt security without specifying a
particular payment, we mean the stated maturity or maturity, as the
case may be, of the principal.
Specific Terms of Debt
Securities
The applicable prospectus supplement will describe the specific
terms of the debt securities, which will include some or all of the
following:
•
the title of the series and whether it is a senior debt security or
a subordinated debt security;
•
any limit on the total principal amount of the debt securities of
the same series;
•
the stated maturity;
•
the currency or currencies for principal and interest, if not U.S.
dollars;
•
the price at which we originally issue the debt security, expressed
as a percentage of the principal amount, and the original issue
date;
•
whether the debt security is a fixed rate debt security, a floating
rate debt security or an indexed debt security;
•
if the debt security is a fixed rate debt security, the yearly rate
at which the debt security will bear interest, if any, and the
interest payment dates;
•
if the debt security is a floating rate debt security, the interest
rate basis; any applicable index currency or index maturity, spread
or spread multiplier or initial base rate, maximum rate or minimum
rate; the interest reset, determination, calculation and payment
dates; the day count convention used to calculate interest payments
for any period; the business day convention; and the calculation
agent;
•
if the debt security is an indexed debt security, the principal
amount, if any, we will pay at maturity, interest payment dates,
the amount of interest, if any, we will pay on an interest payment
date or the formula we will use to calculate these amounts, if any,
and the terms on which the debt security will be exchangeable for
or payable in cash, securities or other property;
•
if the debt security may be converted into or exercised or
exchanged for common or preferred stock or other securities of the
Company, the terms on which conversion, exercise or exchange may
occur, including whether conversion, exercise or exchange is
mandatory, at the option of the holder or at our option, the period
during which conversion, exercise or exchange may occur, the
initial conversion, exercise or exchange price or rate and the
circumstances or manner in which the amount of common or preferred
stock or other securities issuable upon conversion, exercise or
exchange may be adjusted;
•
if the debt security is also an original issue discount debt
security, the yield to maturity;
•
if applicable, the circumstances under which the debt security may
be redeemed at our option or repaid at the holder’s option
before the stated maturity, including any redemption commencement
date, repayment date(s), redemption price(s) and redemption
period(s);
•
the authorized denominations, if other than $1,000 and integral
multiples of $1,000;
•
the depositary for the debt security, if other than The Depository
Trust Company (“DTC”), and any circumstances under
which the holder may request securities in non-global form, if we
choose not to issue the debt security in book-entry form only;
20
•
if applicable, the circumstances under which we will pay additional
amounts on any debt securities held by a person who is not a United
States person for tax purposes and under which we can redeem the
debt securities if we have to pay additional amounts;
•
the assets, if any, that will be pledged as security for the
payment of the debt security;
•
the names and duties of any co-trustees, depositaries,
authenticating agents, paying agents, transfer agents or registrars
for the debt security, as applicable; and
•
any other terms of the debt security which could be different from
those described in this prospectus.
Governing Law
The indentures and the debt securities will be governed by the laws
of the State of New York, without regard to conflicts of laws
principles thereof.
Form of Debt
Securities
We will issue each debt security only in registered form, without
coupons, unless we specify otherwise in the applicable prospectus
supplement. In addition, we will issue each debt security in global
—
i.e.,
book-entry — form only, unless we specify otherwise in the
applicable prospectus supplement. Debt securities in book-entry
form will be represented by a global security registered in the
name of a depositary, which will be the holder of all the debt
securities represented by the global security. Those who own
beneficial interests in a global debt security will do so through
participants in the depositary’s securities clearance system,
and the rights of these indirect owners will be governed solely by
the applicable procedures of the depositary and its participants.
References to “holders” in this section mean those who
own debt securities registered in their own names, on the books
that we or the trustee maintain for this purpose, and not those who
own beneficial interests in debt securities registered in street
name or in debt securities issued in book-entry form through one or
more depositaries.
Unless otherwise indicated in the prospectus supplement, the
following is a summary of the depositary arrangements applicable to
debt securities issued in global form and for which DTC acts as
depositary.
Each global debt security will be deposited with, or on behalf of,
DTC, as depositary, or its nominee, and registered in the name of a
nominee of DTC. Except under the limited circumstances described
below, global debt securities are not exchangeable for definitive
certificated debt securities.
Ownership of beneficial
interests in a global debt security is limited to institutions that
have accounts with DTC or its nominee, or persons that may hold
interests through those participants. In addition, ownership of
beneficial interests by participants in a global debt security will
be evidenced only by, and the transfer of that ownership interest
will be effected only through, records maintained by DTC or its
nominee for a global debt security. Ownership of beneficial
interests in a global debt security by persons that hold those
interests through participants will be evidenced only by, and the
transfer of that ownership interest within that participant will be
effected only through, records maintained by that participant. DTC
has no knowledge of the actual beneficial owners of the debt
securities. Beneficial owners will not receive written confirmation
from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the
participants through which the beneficial owners entered the
transaction. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of securities they
purchase in definitive form. These laws may impair a holder’s
ability to transfer beneficial interests in a global debt
security.
We will make payment of principal of, and interest on, debt
securities represented by a global debt security registered in the
name of or held by DTC or its nominee to DTC or its nominee, as the
case may be, as the registered owner and holder of the global debt
security representing those debt securities. DTC has advised us
that upon receipt of any payment of principal of, or interest on, a
global debt security, DTC immediately will credit accounts of
participants on its book-entry registration and transfer system
with payments in amounts proportionate to their respective
interests in the principal amount of that global debt security, as
shown in the records of DTC. Payments by participants to owners of
beneficial interests in a global debt security held through those
participants will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers in bearer form or registered in
“street name,” and will be the sole responsibility of
those participants, subject to any statutory or regulatory
requirements that may be in effect from time to time.
21
Neither we, any trustee nor any of our respective agents will be
responsible for any aspect of the records of DTC, any nominee or
any participant relating to, or payments made on account of,
beneficial interests in a permanent global debt security or for
maintaining, supervising or reviewing any of the records of DTC,
any nominee or any participant relating to such beneficial
interests.
A global debt security is exchangeable for definitive debt
securities registered in the name of, and a transfer of a global
debt security may be registered to, any person other than DTC or
its nominee, only if:
•
DTC notifies us that it is unwilling or unable to continue as
depositary for that global security or has ceased to be a
registered clearing agency and we do not appoint another
institution to act as depositary within 90 days; or
•
we notify the trustee that we wish to terminate that global
security.
Any global debt security that is exchangeable pursuant to the
preceding sentence will be exchangeable in whole for definitive
debt securities in registered form, of like tenor and of an equal
aggregate principal amount as the global debt security, in
denominations specified in the applicable prospectus supplement, if
other than $1,000 and multiples of $1,000. The definitive debt
securities will be registered by the registrar in the name or names
instructed by DTC. We expect that these instructions may be based
upon directions received by DTC from its participants with respect
to ownership of beneficial interests in the global debt
security.
Except as provided above, owners of the beneficial interests in a
global debt security will not be entitled to receive physical
delivery of debt securities in definitive form and will not be
considered the holders of debt securities for any purpose under the
indentures. No global debt security shall be exchangeable except
for another global debt security of like denomination and tenor to
be registered in the name of DTC or its nominee. Accordingly, each
person owning a beneficial interest in a global debt security must
rely on the procedures of DTC and, if that person is not a
participant, on the procedures of the participant through which
that person owns its interest, to exercise any rights of a holder
under the global debt security or the indentures.
We understand that, under existing industry practices, in the event
that we request any action of holders, or an owner of a beneficial
interest in a global debt security desires to give or take any
action that a holder is entitled to give or take under the debt
securities or the indentures, DTC would authorize the participants
holding the relevant beneficial interests to give or take that
action. Additionally, those participants would authorize beneficial
owners owning through those participants to give or take that
action or would otherwise act upon the instructions of beneficial
owners owning through them.
DTC has advised us as follows:
•
DTC is:
•
a limited-purpose trust company organized under the New York
Banking Law,
•
a “banking organization” within the meaning of the New
York Banking Law,
•
a member of the Federal Reserve System,
•
a “clearing corporation” within the meaning of the New
York Uniform Commercial Code, and
•
a “clearing agency” registered under Section 17A of the
Exchange Act;
•
DTC was created to hold
securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in
those securities through electronic book-entry changes in accounts
of the participants, thereby eliminating the need for physical
movement of securities certificates;
•
DTC’s participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations;
•
DTC is a wholly owned subsidiary of The Depository Trust &
Clearing Corporation, or “DTCC,” which is the holding
company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing
agencies and DTCC is owned by the users of its regulated
subsidiaries; and
22
•
Access to DTC’s book-entry system is also available to
others, such as banks, brokers, dealers and trust companies, that
clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The rules applicable to DTC and its participants are on file with
the SEC.
Investors may hold interests in the debt securities outside the
United States through the Euroclear System
(“Euroclear”) or Clearstream Banking
(“Clearstream”) if they are participants in those
systems, or indirectly through organizations which are participants
in those systems. Euroclear and Clearstream will hold interests on
behalf of their participants through customers’ securities
accounts in Euroclear’s and Clearstream’s names on the
books of their respective depositaries which in turn will hold such
positions in customers’ securities accounts in the names of
the nominees of the depositaries on the books of DTC. All
securities in Euroclear or Clearstream are held on a fungible basis
without attribution of specific certificates to specific securities
clearance accounts.
The following is based on information furnished by Euroclear or
Clearstream, as the case may be.
Euroclear has advised us that:
•
it was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement
of certificates and any risk from lack of simultaneous transfers of
securities and cash;
•
Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in
several countries;
•
Euroclear is operated by Euroclear Bank S.A./N.V., as operator of
the Euroclear System (the “Euroclear Operator”), under
contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the “Cooperative”);
•
the Euroclear Operator conducts all operations, and all Euroclear
securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other
professional financial intermediaries and may include underwriters
of debt securities offered by this prospectus;
•
indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
participant, either directly or indirectly;
•
securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear
System, and applicable Belgian law (collectively, the “Terms
and Conditions”);
•
the Terms and Conditions govern transfers of securities and cash
within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in
Euroclear. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear participants, and has no
record of or relationship with persons holding through Euroclear
participants; and
•
distributions with respect to debt securities held beneficially
through Euroclear will be credited to the cash accounts of
Euroclear participants in accordance with the Terms and Conditions,
to the extent received by the U.S. depositary for Euroclear.
Clearstream has advised us that:
•
it is incorporated under the laws of Luxembourg as a professional
depositary and holds securities for its participating organizations
and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic
book-entry changes in accounts of Clearstream participants, thereby
eliminating the need for physical movement of certificates;
23
•
Clearstream provides to Clearstream participants, among other
things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities
lending and borrowing. Clearstream interfaces with domestic markets
in several countries;
•
as a professional depositary, Clearstream is subject to regulation
by the Luxembourg Monetary Institute;
•
Clearstream participants are recognized financial institutions
around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain
other organizations and may include underwriters of debt securities
offered by this prospectus;
•
indirect access to Clearstream is also available to others, such as
banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Clearstream participant
either directly or indirectly; and
•
distributions with respect to the debt securities held beneficially
through Clearstream will be credited to cash accounts of
Clearstream participants in accordance with its rules and
procedures, to the extent received by the U.S. depositary for
Clearstream.
We have provided the descriptions herein of the operations and
procedures of Euroclear and Clearstream solely as a matter of
convenience. These operations and procedures are solely within the
control of Euroclear and Clearstream and are subject to change by
them from time to time. Neither we, any underwriters nor the
trustee takes any responsibility for these operations or
procedures, and you are urged to contact Euroclear or Clearstream
or their respective participants directly to discuss these
matters.
Secondary market trading between Euroclear participants and
Clearstream participants will occur in the ordinary way in
accordance with the applicable rules and operating procedures of
Euroclear and Clearstream and will be settled using the procedures
applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly
through Euroclear or Clearstream participants, on the other, will
be effected within DTC in accordance with DTC’s rules on
behalf of the relevant European international clearing system by
its U.S. depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. depositary to take
action to effect final settlement on its behalf by delivering or
receiving debt securities in DTC, and making or receiving payment
in accordance with normal procedures. Euroclear participants and
Clearstream participants may not deliver instructions directly to
their respective U.S. depositaries.
Because of time-zone differences, credits of securities received in
Euroclear or Clearstream as a result of a transaction with a DTC
participant will be made during subsequent securities settlement
processing and dated the business day following the DTC settlement
date. Such credits, or any transactions in the securities settled
during such processing, will be reported to the relevant Euroclear
participants or Clearstream participants on that business day. Cash
received in Euroclear or Clearstream as a result of sales of
securities by or through a Euroclear participant or a Clearstream
participant to a DTC participant will be received with value on the
business day of settlement in DTC but will be available in the
relevant Euroclear or Clearstream cash account only as of the
business day following settlement in DTC.
Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures in order to facilitate transfers of debt
securities among participants of DTC, Euroclear and Clearstream,
they are under no obligation to perform or continue to perform such
procedures and they may discontinue the procedures at any time.
Redemption or
Repayment
If there are any provisions regarding redemption or repayment
applicable to a debt security, we will describe them in the
applicable prospectus supplement.
24
We or our affiliates may purchase debt securities from investors
who are willing to sell from time to time, either in the open
market at prevailing prices or in private transactions at
negotiated prices. Debt securities that we or they purchase may, at
our discretion, be held, resold or cancelled.
Mergers and Similar
Transactions
We are generally permitted under the indenture for the relevant
series to merge or consolidate with another corporation or other
entity. We are also permitted under the indenture for the relevant
series to sell all or substantially all of our assets to another
corporation or other entity. With regard to any series of debt
securities, however, we may not take any of the foregoing actions
unless all the following conditions, among other things, are
met.
•
If the successor entity in the transaction is not CardConnect
Corp., the successor entity must expressly assume our obligations
under the debt securities of that series and the indenture with
respect to that series. The successor entity may be organized and
existing under the laws of the United States, any State thereof or
the District of Columbia.
•
Immediately after the transaction, no default under the debt
securities of that series has occurred and is continuing. For this
purpose, “default under the debt securities of that
series” means an event of default with respect to that series
or any event that would be an event of default with respect to that
series if the requirements for giving us default notice and for our
default having to continue for a specific period of time were
disregarded. We describe these matters below under “—
Default, Remedies and Waiver of Default.”
If the conditions described above are satisfied with respect to the
debt securities of any series, we will not need to obtain the
approval of the holders of those debt securities in order to merge
or consolidate or to sell our assets. Also, these conditions will
apply only if we wish to merge or consolidate with another entity
or sell all or substantially all of our assets to another entity.
We will not need to satisfy these conditions if we enter into other
types of transactions, including any transaction in which we
acquire the stock or assets of another entity, any transaction that
involves a change of control of CardConnect Corp. but in which we
do not merge or consolidate and any transaction in which we sell
less than substantially all our assets.
If we sell all or substantially all of our assets, we will be
released from all our liabilities and obligations under the debt
securities of any series and the indenture with respect to that
series.
Subordination
Provisions
Holders of subordinated debt securities should recognize that
contractual provisions in the subordinated debt indenture may
prohibit us from making payments on those securities. Subordinated
debt securities are subordinate and junior in right of payment, to
the extent and in the manner stated in the subordinated debt
indenture, to all of our senior debt, as defined in the
subordinated debt indenture, including all debt securities we have
issued and will issue under the senior debt indenture.
The subordinated debt indenture defines “senior debt”
as:
•
our indebtedness under or in respect of our credit agreement,
whether for principal, interest (including interest accruing after
the filing of a petition initiating any proceeding pursuant to any
bankruptcy law, whether or not the claim for such interest is
allowed as a claim in such proceeding), reimbursement obligations,
fees, commissions, expenses, indemnities or other amounts; and
•
any other indebtedness permitted under the terms of that indenture,
unless the instrument under which such indebtedness is incurred
expressly provides that it is on a parity with or subordinated in
right of payment to the subordinated debt securities.
25
Notwithstanding the foregoing, “senior debt” will not
include: (i) equity interests; (ii) any liability for taxes; (iii)
any trade payables; (iv) any indebtedness to any of its
subsidiaries or affiliates; or (v) any indebtedness incurred in
violation of the subordinated debt indenture.
We may modify the subordination provisions, including the
definition of senior debt, with respect to one or more series of
subordinated debt securities. Such modifications will be set forth
in the applicable prospectus supplement.
The subordinated debt indenture provides that, unless all principal
of and any premium or interest on the senior debt has been paid in
full, no payment or other distribution may be made in respect of
any subordinated debt securities in the following
circumstances:
•
in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for creditors
or other similar proceedings or events involving us or our
assets;
•
(a) in the event and during
the continuation of any default in the payment of principal,
premium or interest on any senior debt beyond any applicable grace
period or (b) in the event that any event of default with respect
to any senior debt has occurred and is continuing, permitting the
holders of that senior debt (or a trustee) to accelerate the
maturity of that senior debt, whether or not the maturity is in
fact accelerated (unless, in the case of (a) or (b), the payment
default or event of default has been cured or waived or ceased to
exist and any related acceleration has been rescinded) or (c) in
the event that any judicial proceeding is pending with respect to a
payment default or event of default described in (a) or (b);
or
•
in the event that any subordinated debt securities have been
declared due and payable before their stated maturity.
If the trustee under the subordinated debt indenture or any holders
of the subordinated debt securities receive any payment or
distribution that is prohibited under the subordination provisions,
then the trustee or the holders will have to repay that money to
the holders of the senior debt.
Even if the subordination provisions prevent us from making any
payment when due on the subordinated debt securities of any series,
we will be in default on our obligations under that series if we do
not make the payment when due. This means that the trustee under
the subordinated debt indenture and the holders of that series can
take action against us, but they will not receive any money until
the claims of the holders of senior debt have been fully
satisfied.
The subordinated debt indenture allows the holders of senior debt
to obtain a court order requiring us and any holder of subordinated
debt securities to comply with the subordination provisions.
Defeasance, Covenant
Defeasance and Satisfaction and Discharge
When we use the term defeasance, we mean discharge from some or all
of our obligations under the indenture. If we deposit with the
trustee funds or government securities, or if so provided in the
applicable prospectus supplement, obligations other than government
securities, sufficient to make payments on any series of debt
securities on the dates those payments are due and payable and
other specified conditions are satisfied, then, at our option,
either of the following will occur:
•
we will be discharged from our obligations with respect to the debt
securities of such series (“legal defeasance”); or
•
we will be discharged from any covenants we make in the applicable
indenture for the benefit of such series and the related events of
default will no longer apply to us (“covenant
defeasance”).
If we defease any series of debt securities, the holders of such
securities will not be entitled to the benefits of the indenture,
except for our obligations to register the transfer or exchange of
such securities, replace stolen, lost or mutilated securities or
maintain paying agencies and hold moneys for payment in trust. In
case of covenant defeasance, our obligation to pay principal,
premium and interest on the applicable series of debt securities
will also survive.
26
We will be required to deliver to the trustee an opinion of counsel
that the deposit and related defeasance would not cause the holders
of the applicable series of debt securities to recognize gain or
loss for federal income tax purposes. If we elect legal defeasance,
that opinion of counsel must be based upon a ruling from the United
States Internal Revenue Service or a change in law to that
effect.
In addition, we may satisfy and discharge all our obligations under
the indenture with respect to debt securities of any series, other
than our obligation to register the transfer of and exchange debt
securities of that series, provided that we either:
•
deliver all outstanding debt securities of that series to the
trustee for cancellation; or
•
all such debt securities not so delivered for cancellation have
either become due and payable or will become due and payable at
their stated maturity within one year or are to be called for
redemption within one year, and in the case of this bullet point,
we have deposited with the trustee in trust an amount of cash
sufficient to pay the entire indebtedness of such debt securities,
including interest to the stated maturity or applicable redemption
date.
Default, Remedies and
Waiver of Default
Unless otherwise specified in the applicable prospectus supplement,
when we refer to an event of default with respect to any series of
debt securities, we mean any of the following:
•
we do not pay the principal or any premium on any debt security of
that series when due at its stated maturity, upon optional
redemption, upon required purchase, upon declaration of
acceleration or otherwise;
•
we do not pay interest on any debt security of that series within
30 days after the due date;
•
we fail to comply with our obligations under the merger
covenant;
•
we fail to comply for 90 days after notice with the other
agreements contained in the indenture, which notice must be sent by
the trustee or the holders of at least 30% in principal amount of
the relevant series of debt securities;
•
we file for bankruptcy or other events of bankruptcy, insolvency or
reorganization relating to us occur; or
•
if the applicable prospectus supplement states that any additional
event of default applies to the series, that event of default
occurs.
We may change, eliminate, or add to the events of default with
respect to any particular series or any particular debt security or
debt securities within a series, as indicated in the applicable
prospectus supplement.
If you are the holder of a subordinated debt security, all the
remedies available upon the occurrence of an event of default under
the subordinated debt indenture will be subject to the restrictions
on the subordinated debt securities described above under
“— Subordination Provisions.”
Except as otherwise specified in the applicable prospectus
supplement, if an event of default has occurred with respect to any
series of debt securities and has not been cured or waived, the
trustee or the holders of not less than 30% in principal amount of
all debt securities of that series then outstanding may declare the
entire principal amount of the debt securities of that series to be
due immediately. Except as otherwise specified in the applicable
prospectus supplement, if the event of default occurs because of
events in bankruptcy, insolvency or reorganization relating to the
Company, the entire principal amount of the debt securities of that
series will be automatically accelerated, without any action by the
trustee or any holder.
Each of the situations described above may result in an
acceleration of the stated maturity of the affected series of debt
securities. Except as otherwise specified in the applicable
prospectus supplement, if the stated maturity of any series is
accelerated and a judgment for payment has not yet been obtained,
the holders of a majority in principal amount of the debt
securities of that series may cancel the acceleration for the
entire series.
27
If an event of default occurs, the trustee will have special
duties. In that situation, the trustee will be obligated to use
those of its rights and powers under the relevant indenture, and to
use the same degree of care and skill in doing so, that a prudent
person would use in that situation in conducting his or her own
affairs.
Except as described in the prior paragraph, the trustee is not
required to take any action under the relevant indenture at the
request of any holders unless the holders offer the trustee
protection satisfactory to it from loss, liability or expense.
These majority holders may also direct the trustee in performing
any other action under the relevant indenture with respect to the
debt securities of that series.
Except as otherwise specified in the applicable prospectus
supplement, before a holder may take steps to enforce its rights or
protect its interests relating to any debt security, all of the
following must occur:
•
the holder must give the trustee written notice that an event of
default has occurred with respect to the debt securities of the
series, and the event of default must not have been cured or
waived;
•
the holders of at least 30% in principal amount of all debt
securities of the series must request that the trustee take action
because of the default, and they or other holders must offer to the
trustee indemnity reasonably satisfactory to the trustee against
the cost and other liabilities of taking that action;
•
the trustee must not have taken action for 90 days after the above
steps have been taken; and
•
during those 90 days, the holders of a majority in principal amount
of the debt securities of the series must not have given the
trustee directions that are inconsistent with such request.
Book-entry and other indirect owners should consult their banks or
brokers for information on how to give notice or direction to or
make a request of the trustee and how to declare or cancel an
acceleration of the maturity.
Waiver of Default.
Except
as otherwise specified in the applicable prospectus supplement, the
holders of a majority in principal amount of the debt securities of
any series may by notice to the trustee waive an existing default
and its consequences for all debt securities of that series except
(i) a default in the payment of the principal of or interest on a
debt security (ii) a default arising from the failure to redeem or
purchase any debt security when required pursuant to the indenture
or (iii) a default in respect of a provision that under the
indenture cannot be amended without the consent of each
securityholder affected. If a waiver occurs, the default is deemed
cured, but no such waiver shall extend to any subsequent or other
default or impair any consequent right.
Annual Information about Defaults to the Trustee.
We
will furnish each trustee every year a certificate indicating
whether the signers thereof know of any default that occurred in
the previous year.
Modifications and
Waivers
Changes Requiring Each Holder’s Approval.
Except
as otherwise specified in the applicable prospectus supplement, we
and the trustee may amend the indentures or the debt securities
with the written consent of the holders of at least a majority in
principal amount of the debt securities then outstanding. However,
without the consent of each securityholder affected thereby, an
amendment or waiver may not, except as otherwise specified in the
applicable prospectus supplement:
•
reduce the amount of debt securities whose holders must consent to
an amendment;
•
reduce the rate of, or extend the time for payment of, the interest
on any debt security;
•
reduce the principal of or change the stated maturity on any debt
security;
•
reduce the amount payable upon redemption of any debt security or
change the time at which any debt security may be redeemed as
described in the applicable indenture;
•
permit redemption of a debt security if not previously
permitted;
•
change the currency of any payment on a debt security;
•
impair the right of any holder of a debt security to institute suit
for the enforcement of any payment on or with respect to such
holder’s debt security;
28
•
change the amendment provisions which require each holder’s
consent or in the waiver provisions; or
•
change the ranking or priority of any debt security that would
adversely affect the securityholders.
Changes Not Requiring Approval.
We and
the trustee may amend the indentures or the debt securities without
notice to or consent of any securityholder:
•
to cure any ambiguity, omission, defect or inconsistency;
•
to provide for the assumption by a successor corporation of the
obligations of the Company under the indenture;
•
to provide for uncertificated debt securities in addition to or in
place of certificated debt securities (provided that the
uncertificated debt securities are issued in registered form for
United States federal income tax purposes);
•
to add to the covenants of the Company for the benefit of the
holders of the debt securities or to surrender any right or power
conferred upon the Company;
•
to make any change that does not adversely affect the rights of any
holder of the debt securities in any material respect;
•
to comply with any requirement of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act of
1939, as amended; or
•
to make any amendment to the provisions of the indenture relating
to the transfer and legending of debt securities; provided,
however, that (a) compliance with the indenture as so amended would
not result in debt securities being transferred in violation of the
Securities Act or any other applicable securities law and (b) such
amendment does not materially and adversely affect the rights of
holders to transfer debt securities.
Modification of Subordination Provisions.
We may not
amend the indenture related to subordinated debt securities to
alter the subordination of any outstanding subordinated debt
securities without the written consent of each holder of senior
debt then outstanding who would be adversely affected (or the group
or representative thereof authorized or required to consent thereto
pursuant to the instrument creating or evidencing, or pursuant to
which there is outstanding, such senior debt). In addition, we may
not modify the subordination provisions of the indenture related to
subordinated debt securities in a manner that would adversely
affect the subordinated debt securities of any one or more series
then outstanding in any material respect, without the consent of
the holders of a majority in aggregate principal amount of all
affected series then outstanding, voting together as one class (and
also of any affected series that by its terms is entitled to vote
separately as a series, as described below).
Book-entry and other indirect owners should consult their banks or
brokers for information on how approval may be granted or denied if
we seek to change an indenture or any debt securities or request a
waiver.
Changes Requiring Majority Approval.
Any other change
to a particular indenture and the debt securities issued under that
indenture would require the following approval:
•
if the change affects only particular debt securities within a
series issued under the applicable indenture, it must be approved
by the holders of a majority in principal amount of such particular
debt securities; or
•
if the change affects debt securities of more than one series
issued under the applicable indenture, it must be approved by the
holders of a majority in principal amount of all debt securities of
all such series affected by the change, with all such affected debt
securities voting together as one class for this purpose and such
affected debt securities of any series potentially comprising fewer
than all debt securities of such series, in each case, except as
may otherwise be provided pursuant to such indenture for all or any
particular debt securities of any series. This means that
modification of terms with respect to certain securities of a
series could be effectuated without obtaining the consent of the
holders of a majority in principal amount of other securities of
such series that are not affected by such modification.
29
Special Rules for Action
by Holders
Only holders of outstanding debt securities of the applicable
series will be eligible to take any action under the applicable
indenture, such as giving a notice of default, declaring an
acceleration, approving any change or waiver or giving the trustee
an instruction with respect to debt securities of that series.
Also, we will count only outstanding debt securities in determining
whether the various percentage requirements for taking action have
been met. Any debt securities owned by us or any of our affiliates
or surrendered for cancellation or for payment or redemption of
which money has been set aside in trust are not deemed to be
outstanding. Any required approval or waiver must be given by
written consent.
In some situations, we may follow special rules in calculating the
principal amount of debt securities that are to be treated as
outstanding for the purposes described above. This may happen, for
example, if the principal amount is payable in a non-U.S. dollar
currency, increases over time or is not to be fixed until
maturity.
We will generally be entitled to set any day as a record date for
the purpose of determining the holders that are entitled to take
action under either indenture. In certain limited circumstances,
only the trustee will be entitled to set a record date for action
by holders. If we or the trustee sets a record date for an approval
or other action to be taken by holders, that vote or action may be
taken only by persons or entities who are holders on the record
date and must be taken during the period that we specify for this
purpose, or that the trustee specifies if it sets the record date.
We or the trustee, as applicable, may shorten or lengthen this
period from time to time. This period, however, may not extend
beyond the 180
th
day after the record date for the action. In addition, record dates
for any global debt security may be set in accordance with
procedures established by the depositary from time to time.
Accordingly, record dates for global debt securities may differ
from those for other debt securities.
Form, Exchange and
Transfer
If any debt securities cease to be issued in registered global
form, they will be issued only in fully registered form, without
interest coupons and, unless we indicate otherwise in the
applicable prospectus supplement, in denominations of $1,000 and
integral multiples of $1,000.
Holders may exchange their debt securities for debt securities of
smaller denominations or combined into fewer debt securities of
larger denominations, as long as the total principal amount is not
changed. Holders may not exchange debt securities for securities of
a different series or having different terms, unless permitted by
the terms of that series and described in the applicable prospectus
supplement.
Holders may exchange or transfer their debt securities at the
office of the trustee. They may also replace lost, stolen,
destroyed or mutilated debt securities at that office. We have
appointed the trustee to act as our agent for registering debt
securities in the names of holders and transferring and replacing
debt securities. We may appoint another entity to perform these
functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or
exchange their debt securities, but they may be required to pay for
any tax or other governmental charge associated with the exchange
or transfer. The transfer or exchange, and any replacement, will be
made only if our transfer agent is satisfied with the
holder’s proof of legal ownership. The transfer agent may
require an indemnity before replacing any debt securities.
If we have designated additional transfer agents for a debt
security, they will be named in the applicable prospectus
supplement. We may appoint additional transfer agents or cancel the
appointment of any particular transfer agent. We may also approve a
change in the office through which any transfer agent acts.
If the debt securities of any series are redeemable and we redeem
less than all those debt securities, we may block the transfer or
exchange of those debt securities during the period beginning 15
days before the day we mail the notice of redemption and ending on
the day of that mailing, in order to freeze the list of holders to
prepare the mailing. We may also refuse to register transfers of or
exchange any debt security selected for redemption, except that we
will continue to permit transfers and exchanges of the unredeemed
portion of any debt security being partially redeemed.
If a debt security is issued as a global debt security, only DTC or
other depositary will be entitled to transfer and exchange the debt
security as described in this subsection, since the depositary will
be the sole holder of the debt security.
30
The rules for exchange described above apply to exchange of debt
securities for other debt securities of the same series and kind.
If a debt security is convertible, exercisable or exchangeable into
or for a different kind of security, such as one that we have not
issued, or for other property, the rules governing that type of
conversion, exercise or exchange will be described in the
applicable prospectus supplement.
Payments
We will pay interest, principal and other amounts payable with
respect to the debt securities of any series to the holders of
record of those debt securities as of the record dates and
otherwise in the manner specified below or in the prospectus
supplement for that series.
We will make payments on a global debt security in accordance with
the applicable policies of the depositary as in effect from time to
time. Under those policies, we will pay directly to the depositary,
or its nominee, and not to any indirect owners who own beneficial
interests in the global debt security. An indirect owner’s
right to receive those payments will be governed by the rules and
practices of the depositary and its participants.
We will make payments on a debt security in non-global, registered
form as follows. We will pay interest that is due on an interest
payment date by check mailed on the interest payment date to the
holder at his or her address shown on the trustee’s records
as of the close of business on the regular record date. We will
make all other payments by check at the paying agent described
below, against surrender of the debt security. All payments by
check will be made in next-day funds — i.e., funds that
become available on the day after the check is cashed.
Alternatively, if a non-global debt security has a face amount of
at least $1,000,000 and the holder asks us to do so, we will pay
any amount that becomes due on the debt security by wire transfer
of immediately available funds to an account at a bank in New York
City, on the due date. To request wire payment, the holder must
give the paying agent appropriate wire transfer instructions at
least five business days before the requested wire payment is due.
In the case of any interest payment due on an interest payment
date, the instructions must be given by the person or entity who is
the holder on the relevant regular record date. In the case of any
other payment, payment will be made only after the debt security is
surrendered to the paying agent. Any wire instructions, once
properly given, will remain in effect unless and until new
instructions are given in the manner described above.
Book-entry and other indirect owners should consult their banks or
brokers for information on how they will receive payments on their
debt securities.
Regardless of who acts as paying agent, all money paid by us to a
paying agent that remains unclaimed at the end of two years after
the amount is due to a holder will be repaid to us. After that
two-year period, the holder may look only to us for payment and not
to the trustee, any other paying agent or anyone else.
Paying Agents
We may appoint one or more financial institutions to act as our
paying agents, at whose designated offices debt securities in
non-global entry form may be surrendered for payment at their
maturity. We call each of those offices a paying agent. We may add,
replace or terminate paying agents from time to time. We may also
choose to act as our own paying agent. We will specify in the
applicable prospectus supplement for each debt security the initial
location of each paying agent for that debt security. We must
notify the trustee of changes in the paying agents.
Notices
Notices to be given to holders of a global debt security will be
given only to the depositary in accordance with its applicable
policies as in effect from time to time. Notices to be given to
holders of debt securities not in global form will be sent by mail
to the respective addresses of the holders as they appear in the
trustee’s records, and will be deemed given when mailed.
Neither the failure to give any notice to a particular holder, nor
any defect in a notice given to a particular holder, will affect
the sufficiency of any notice given to another holder.
Book-entry and other indirect owners should consult their banks or
brokers for information on how they will receive notices.
31
Our Relationship With
the Trustee
The prospectus supplement for any debt security will describe any
material relationships we may have with the trustee with respect to
that debt security.
The same financial institution may initially serve as the trustee
for our senior debt securities and subordinated debt securities.
Consequently, if an actual or potential event of default occurs
with respect to any of these securities, the trustee may be
considered to have a conflicting interest for purposes of the Trust
Indenture Act of 1939, as amended. In that case, the trustee may be
required to resign under one or more of the indentures and we would
be required to appoint a successor trustee. For this purpose, a
“potential” event of default means an event that would
be an event of default if the requirements for giving us default
notice or for the default having to exist for a specific period of
time were disregarded.
32
DESCRIPTION OF
WARRANTS
The following
description of the warrants and terms of the warrant agreement is a
summary. It summarizes only those aspects of the warrants and those
portions of the warrant agreement which we believe will be most
important to your decision to invest in our warrants. You should
keep in mind, however, that it is the warrant agreement and the
warrant certificate relating to the warrants, and not this summary,
which defines your rights as a warrantholder. There may be other
provisions in the warrant agreement and the warrant certificate
relating to the warrants which are also important to you. You
should read these documents for a full description of the terms of
the warrants.
General
We may issue warrants to purchase our debt or equity securities,
including rights to receive payment in cash or securities based on
the value, rate or price of one or more specified commodities,
currencies, securities or indices, or any combination of the
foregoing. Warrants may be issued independently or together with
any other securities and may be attached to, or separate from, such
securities. The terms of any warrants to be issued and a
description of the material provisions of any warrant agreement
will be set forth in the applicable prospectus supplement.
Public
Warrants
As of December 31, 2016, we had 10,300,000 common stock purchase
warrants outstanding. Each warrant entitles the registered holder
to purchase one share of our common stock at a price of $12.00 per
share, subject to adjustment as discussed below, at any time
commencing on August 28, 2016. The warrants will expire on July 29,
2021, at 5:00 p.m., New York time, or earlier upon redemption or
our liquidation.
We will not be obligated to deliver any shares of common stock
pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement
under the Securities Act with respect to the shares of common stock
underlying the warrants is then effective and a prospectus relating
thereto is current, subject to our satisfying our obligations
described below with respect to registration. No warrant will be
exercisable and we will not be obligated to issue shares of common
stock upon exercise of a warrant unless common stock issuable upon
such warrant exercise has been registered, qualified or deemed to
be exempt from the registration or qualifications requirements of
the securities laws of the state of residence of the registered
holder of the warrants. If the conditions in the two immediately
preceding sentences are not satisfied with respect to a warrant,
the warrant holder will not be entitled to exercise such warrant
and such warrant may have no value and expire worthless. In no
event will we be required to net cash settle any warrant. In the
event that a registration statement is not effective for the
exercised warrants, the purchaser of a unit containing such warrant
will have paid the full purchase price for the unit solely for the
share of common stock underlying such unit.
No warrants will be exercisable for cash unless we have an
effective and current registration statement covering the shares of
common stock issuable upon exercise of the warrants and a current
prospectus relating to such shares of common stock. On August 25,
2016, we filed with the SEC a registration statement for the
registration of the shares of common stock issuable upon exercise
of the warrants. Such registration statement was declared effective
by the SEC on September 26, 2016, and we will use our best efforts
to cause any post-effective amendment or new registration statement
covering the same securities to become effective and to maintain
the effectiveness of such registration statement, and a current
prospectus relating thereto, until the expiration of the warrants
in accordance with the provisions of the warrant agreement. In
addition, we have agreed to use our best efforts to register the
shares of common stock issuable upon exercise of a warrant under
the blue sky laws of the states of residence of the exercising
warrant holder to the extent an exemption is not available.
We may call the warrants for redemption:
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon not less than 30 days’ prior written notice of
redemption (the “30-day redemption period”) to each
warrant holder; and
33
•
if, and only if, the reported last sale price of the common stock
(or the closing bid price of our common stock in the event shares
of our common stock are not traded on any specific day) equals or
exceeds $18.00 per share for any 20 trading days within a 30
trading day period ending three business days before we send the
notice of redemption to the warrant holders.
We will not redeem the warrants unless an effective registration
statement covering the shares of common stock issuable upon
exercise of the warrants is current and available throughout the
30-day redemption period.
We have established the last of the redemption criterion discussed
above to prevent a redemption call unless there is at the time of
the call a significant premium to the warrant exercise price. If
the foregoing conditions are satisfied and we issue a notice of
redemption of the warrants, each warrant holder will be entitled to
exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the common stock may fall below the
$18.00 redemption trigger price as well as the $12.00 warrant
exercise price after the redemption notice is issued.
A holder of a warrant may notify us in writing if it elects to be
subject to a requirement that such holder will not have the right
to exercise such warrant, to the extent that after giving effect to
such exercise, such person (together with such person’s
affiliates), to the warrant agent’s actual knowledge, would
beneficially own in excess of 9.8% of the shares of common stock
outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of common stock is increased by
a stock dividend payable in shares of common stock, or by a
split-up of shares of common stock or other similar event, then, on
the effective date of such stock dividend, split-up or similar
event, the number of shares of common stock issuable on exercise of
each warrant will be increased in proportion to such increase in
the outstanding shares of common stock. A rights offering to
holders of common stock entitling holders to purchase shares of
common stock at a price less than the fair market value will be
deemed a stock dividend of a number of shares of common stock equal
to the product of (i) the number of shares of common stock actually
sold in such rights offering (or issuable under any other equity
securities sold in such rights offering that are convertible into
or exercisable for common stock) multiplied (ii) one (1) minus the
quotient of (x) the price per share of common stock paid in such
rights offering divided by (y) the fair market value. For these
purposes (i) if the rights offering is for securities convertible
into or exercisable for common stock, in determining the price
payable for common stock, there will be taken into account any
consideration received for such rights, as well as any additional
amount payable upon exercise or conversion and (ii) fair market
value means the volume weighted average price of common stock as
reported during the ten (10) trading day period ending on the
trading day prior to the first date on which the shares of common
stock trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding
and unexpired, pay a dividend or make a distribution in cash,
securities or other assets to the holders of common stock on
account of such shares of common stock (or other shares of our
capital stock into which the warrants are convertible), other than
(a) as described above, (b) certain ordinary cash dividends, (c) to
satisfy the redemption rights of the holders of common stock in
connection with a proposed initial business combination, or (d) in
connection with the redemption of our public shares upon our
failure to consummate our initial business combination, then the
warrant exercise price will be decreased, effective immediately
after the effective date of such event, by the amount of cash
and/or the fair market value of any securities or other assets paid
on each share of common stock in respect of such event.
If the number of outstanding shares of our common stock is
decreased by a consolidation, combination, reverse stock split or
reclassification of shares of common stock or other similar event,
then, on the effective date of such consolidation, combination,
reverse stock split, reclassification or similar event, the number
of shares of common stock issuable on exercise of each warrant will
be decreased in proportion to such decrease in outstanding shares
of common stock.
Whenever the number of shares of common stock purchasable upon the
exercise of the warrants is adjusted, as described above, the
warrant exercise price will be adjusted by multiplying the warrant
exercise price immediately prior to such adjustment by a fraction
(x) the numerator of which will be the number of shares of common
stock purchasable upon the exercise of the warrants immediately
prior to such adjustment, and (y) the denominator of which will be
the number of shares of common stock so purchasable immediately
thereafter.
If, at any time while the warrants are outstanding, we effect (a) a
merger with another company, in which our stockholders immediately
prior to such transaction own less than a majority of the
outstanding stock of the
34
surviving entity, (b) any sale of all or substantially all of our
assets in one or a series of related transactions, (c) a tender
offer or exchange offer approved or authorized by our board is
completed pursuant to which holders of at least a majority of our
outstanding shares of common stock tender or exchange their shares
for other securities, cash or property, or (d) a reclassification
of our shares or any compulsory share exchange pursuant to which
shares of our common stock are effectively converted into or
exchanged for other securities, cash or property (other than as a
result of a subdivision or combination of our common stock), the
holders of the warrants will thereafter have the right to receive,
upon the basis and upon the terms and conditions specified in the
warrants and in lieu of the shares of our common stock immediately
theretofore purchasable and receivable upon the exercise of the
rights represented thereby, the kind and amount of shares or other
securities or property receivable upon such event, that the holder
of the warrants would have received if such holder had exercised
his or its warrants immediately before the event. If less than 70%
of the consideration receivable by the holders of common stock in
such a transaction is payable in the form of common stock in the
successor entity that is listed for trading on a national
securities exchange or is quoted in an established over-the-counter
market, or is to be so listed for trading or quoted immediately
following such event, and if the registered holder of the warrant
properly exercises the warrant within thirty days following public
disclosure of such transaction, the warrant exercise price will be
reduced as specified in the warrant agreement based on the
Black-Scholes value (as defined in the warrant agreement) of the
warrant.
The warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price (or on a cashless
basis, if applicable), by certified or official bank check payable
to us, for the number of warrants being exercised. The warrant
holders do not have the rights or privileges of holders of common
stock and any voting rights until they exercise their warrants and
receive shares of common stock. After the issuance of shares of
common stock upon exercise of the warrants, each holder will be
entitled to one vote for each share held of record on all matters
to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants.
If, upon exercise of the warrants, a holder would be entitled to
receive a fractional interest in a share, we will, upon exercise,
round down to the nearest whole number the number of shares of
common stock to be issued to the warrant holder.
Placement
Warrants
Certain stockholders and Cantor Fitzgerald hold an aggregate of
300,000 placement warrants. The placement warrants are identical to
the public warrants, except that, if held by such stockholders or
their permitted assigns, they (a) may be exercised for cash or on a
cashless basis; and (b) are not subject to being called for
redemption. In addition, for as long as the placement warrants are
held by Cantor Fitzgerald (the underwriter of Fintech’s
initial public offering) or its designees or affiliates, they may
not be exercised after February 12, 2020.
Quotation of
Securities
Our warrants are quoted on the OTCQX U.S. market under the symbol
“CCNWW.”
35
DESCRIPTION OF
UNITS
We may issue from time to time units comprised of one or more of
the other securities that may be offered under this prospectus, in
any combination. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of
a holder of each included security. The unit agreement under which
a unit is issued may provide that the securities included in the
unit may not be held or transferred separately at any time, or at
any time before a specified date.
Any applicable prospectus supplement will describe:
•
the material terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;
•
any material provisions relating to the issuance, payment,
settlement, transfer or exchange of the units or of the securities
comprising the units; and
•
any material provisions of the governing unit agreement that differ
from those described above.
36
PLAN OF
DISTRIBUTION
We or the selling stockholders may sell the securities from time to
time pursuant to one or more of the following ways:
•
directly to investors, including through a specific bidding,
auction or other process;
•
to investors through agents;
•
directly to agents;
•
to or through brokers or dealers;
•
to the public through underwriting syndicates led by one or more
managing underwriters;
•
to one or more underwriters acting alone for resale to investors or
to the public; and
•
through a combination of any such methods of sale.
The securities may be distributed from time to time in one or more
transactions:
•
at a fixed price or prices, which may be changed;
•
at market prices prevailing at the time of sale;
•
at prices related to such prevailing market prices; or
•
at negotiated prices.
•
Each time that we sell securities covered by this prospectus, we
will provide a prospectus supplement or supplements that will
describe the method of distribution and set forth the terms and
conditions of the offering of such securities, including the
offering price of the securities and the proceeds to us.
Each time any of the selling
stockholders sells shares of common stock covered by this
prospectus, and a revised prospectus or prospectus supplement is
required, we will prepare and file such document that will include
updated information required to be included therein. Such
information may include the terms of the offering, including the
name or names of any underwriters, dealers, brokers or agents, any
discounts, commissions, concessions and other items constituting
compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
Any prospectus supplement, and, if necessary, a post-effective
amendment to the registration statement of which this prospectus is
a part will be filed with the SEC to reflect the disclosure of
additional information with respect to the distribution of shares
of common stock covered by this prospectus. We will not receive any
proceeds from any sale of shares of common stock by the selling
stockholders.
Offers to purchase the securities being offered by this prospectus
may be solicited directly. Agents may also be designated to solicit
offers to purchase the securities from time to time. Any agent
involved in the offer or sale of our securities will be identified
in a prospectus supplement.
If a dealer is utilized in the sale of the securities being offered
by this prospectus, the securities will be sold to the dealer, as
principal. The dealer may then resell the securities to the public
at varying prices to be determined by the dealer at the time of
resale.
If an underwriter is utilized in the sale of the securities being
offered by this prospectus, an underwriting agreement will be
executed with the underwriter at the time of sale and the name of
any underwriter will be provided in the prospectus supplement that
the underwriter will use to make resales of the securities to the
public. In connection with the sale of the securities, we, or the
selling stockholders, or the purchasers of securities for whom the
underwriter may act as agent, may compensate the underwriter in the
form of underwriting discounts or commissions. The underwriter may
sell the securities to or through dealers, and those dealers may
receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the
purchasers for which they may act as agent. Unless otherwise
indicated in a prospectus supplement, an agent will be acting on a
best efforts basis and a dealer will purchase securities as a
principal, and may then resell the securities at varying prices to
be determined by the dealer.
37
Any compensation paid to underwriters, brokers, dealers or agents
in connection with the offering of the securities, and any
discounts, concessions or commissions allowed by underwriters to
participating dealers will be disclosed in the applicable
prospectus supplement. The selling stockholders and any brokers,
dealers and agents participating in the distribution of the
securities may be deemed to be “underwriters” within
the meaning of the Securities Act. In such event any discounts and
commissions received by such brokers, dealers and agents and any
profit realized by them on resale of the securities may be deemed
to be underwriting discounts and commissions. We may enter into
agreements to indemnify underwriters, brokers, dealers and agents
against civil liabilities, including liabilities under the
Securities Act, or to contribute to payments they may be required
to make in respect thereof and to reimburse those persons for
certain expenses.
Any shares of common stock will be listed on The NASDAQ Capital
Market, but any other securities may or may not be listed on a
national securities exchange. To facilitate the offering of
securities, certain persons participating in the offering may
engage in transactions that stabilize, maintain or otherwise affect
the price of the securities. This may include over-allotments or
short sales of the securities, which involve the sale by persons
participating in the offering of more securities than were sold to
them. In these circumstances, these persons would cover such
over-allotments or short positions by making purchases in the open
market or by exercising their over-allotment option, if any. In
addition, these persons may stabilize or maintain the price of the
securities by bidding for or purchasing securities in the open
market or by imposing penalty bids, whereby selling concessions
allowed to dealers participating in the offering may be reclaimed
if securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be
to stabilize or maintain the market price of the securities at a
level above that which might otherwise prevail in the open market.
These transactions may be discontinued at any time.
If indicated in the applicable prospectus supplement, underwriters
or other persons acting as agents may be authorized to solicit
offers by institutions or other suitable purchasers to purchase the
securities at the public offering price set forth in the prospectus
supplement, pursuant to delayed delivery contracts providing for
payment and delivery on the date or dates stated in the prospectus
supplement. These purchasers may include, among others, commercial
and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. Delayed
delivery contracts will be subject to the condition that the
purchase of the securities covered by the delayed delivery
contracts will not at the time of delivery be prohibited under the
laws of any jurisdiction in the United States to which the
purchaser is subject. The underwriters and agents will not have any
responsibility with respect to the validity or performance of these
contracts.
We may engage in at-the-market offerings into an existing trading
market in accordance with Rule 415(a)(4) under the Securities Act.
In addition, we may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If any prospectus
supplement so indicates, in connection with those derivatives, the
third parties may sell securities covered by this prospectus and
any prospectus supplement, including in short sale transactions. If
so, the third party may use securities pledged by us or borrowed
from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us
in settlement of those derivatives to close out any related open
borrowings of stock. The third party in such sale transactions will
be an underwriter and, if not identified in this prospectus, will
be named in the applicable prospectus supplement (or a
post-effective amendment). In addition, we may otherwise loan or
pledge securities to a financial institution or other third party
that in turn may sell the securities short using this prospectus
and an applicable prospectus supplement. Such financial institution
or other third party may transfer its economic short position to
investors in our securities or in connection with a concurrent
offering of other securities.
The specific terms of any lock-up provisions in respect of any
given offering will be described in the applicable prospectus
supplement.
Underwriters, brokers, dealers and agents may engage in
transactions with us, or perform services for us, in the ordinary
course of business for which they receive compensation.
There can be no assurance that any selling stockholder will sell
any shares of common stock pursuant to this prospectus. Further, we
cannot assure you that any selling stockholder will not transfer
shares of their common stock by other means not described in this
prospectus. In addition, any sale of shares of common stock covered
by this prospectus that qualifies for sale pursuant to Rule 144 of
the Securities Act may be sold pursuant to Rule 144 rather than
pursuant to this prospectus.
38
We have agreed to indemnify the selling stockholders and certain of
their affiliates against certain liabilities, including liabilities
under the Securities Act. In addition, we have agreed to pay all
costs, expenses and fees in connection with the registration of the
common stock by the selling stockholders, including fees of our
counsel and accountants, fees payable to the SEC and listing fees.
In certain circumstances we will be required to pay all or a
portion of the fees of counsel to the selling stockholders. The
selling stockholders will pay all underwriting discounts and
commissions and similar selling expenses, if any, attributable to
their sale of common stock covered by this prospectus.
39
LEGAL MATTERS
Ledgewood PC, Philadelphia, Pennsylvania, will issue an opinion
about certain legal matters with respect to the securities offered
hereby. Any underwriters or agents will be advised about other
issues relating to any offering by counsel named in the applicable
prospectus supplement.
EXPERTS
The consolidated financial statements of CardConnect Corp. and
Subsidiaries as of December 31, 2016 and 2015 and for the years
ended December 31, 2016, 2015 and 2014 incorporated by reference in
this prospectus have been audited by Marcum LLP, an independent
registered public accounting firm, as set forth in its report
thereon incorporated in this prospectus, and are incorporated in
reliance on such report given on the authority of such firm as an
expert in accounting and auditing.
The financial statements of MertzCo, Inc. (d/b/a CardConnect)
included in CardConnect Corp.’s Form 8-K as filed with the
SEC on April 7, 2017 as of December 31, 2016 and for the year ended
December 31, 2016 have been audited by Mueller & Co., LLP,
certified public accountants, as set forth in its report thereon,
and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE
INFORMATION
This prospectus does not contain all the information set forth in
the registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further
information with respect to us and the securities offered by this
prospectus, reference is made to the registration statement,
including the exhibits thereto, and any prospectus supplement.
Statements contained in this prospectus concerning the provisions
of such documents are necessarily summaries of such documents and
each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the SEC.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. We also make available free of
charge through our website at
www.cardconnect.com
,
our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, as soon as
reasonably practicable after they are filed electronically with the
SEC. You may read and copy any reports, statements or other
information that we have filed with the SEC at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. You may request copies of these documents, upon payment of a
copying fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for information on the operation of the Public
Reference Room. Our SEC filings are also available to the public on
the SEC internet site at
http:
//
www.sec.gov
.
Unless specifically listed under “Incorporation of Certain
Documents by Reference,” below, the information contained on
our website or the SEC website is not incorporated by reference in
this prospectus and you should not consider that information a part
of this prospectus.
40
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the
information we file with it, which means that we can disclose
important information to you by referring you to documents we have
filed with the SEC but that we do not include in this prospectus.
The information incorporated by reference is considered to be part
of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We
incorporate by reference the documents listed below that we have
filed with the SEC:
•
Our Annual Report on Form 10-K for the fiscal year ended December
31, 2016 filed with the SEC on March 16, 2017, including the
information specifically incorporated in our Annual Report on Form
10-K from our Definitive Proxy Statement on Schedule 14A filed with
the SEC on April 20, 2017.
•
Our Current Reports on Form 8-K filed on January 6, 2017, February
27, 2017, and April 7, 2017 (except with respect to Item 7.01).
•
The description of our common stock contained in our Registration
Statement on Form S-1
(File No. 333-213327),
initially
filed with the SEC on August 25, 2016 and any amendment or report
updating that description.
We also incorporate by reference into this prospectus all documents
(other than current reports furnished under Items 2.02 or Item 7.01
of Form 8-K and exhibits filed on such form that are related to
such items) that are filed by us with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of
the initial filing of the registration statement of which this
prospectus is a part and prior to the effectiveness of the
registration statement, or (ii) after the date of this prospectus
until we sell all of the securities covered by this prospectus or
the sale of securities by us pursuant to this prospectus is
terminated.
A statement contained in a document incorporated by reference into
this prospectus shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement
contained in this prospectus, any prospectus supplement or in any
other subsequently filed document which is also incorporated in
this prospectus modifies or replaces such statement. Any statements
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
You should not assume that the information in this prospectus or in
the documents incorporated by reference is accurate as of any other
than the date on the front of this prospectus or those
documents.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and telephone number:
CardConnect Corp.
1000 Continental Drive, Suite 300,
King of Prussia, PA 19406
(484) 581-2920
Attention: Jeffrey Shanahan
You should rely only on the information incorporated by reference
or provided in this prospectus, any supplement to this prospectus
or any other offering materials we may use. We have not authorized
any person to provide information other than that provided in this
prospectus, any supplement to this prospectus or any other offering
materials we may use. You should assume that the information in
this prospectus, any prospectus supplement and any other offering
materials we may use is accurate only as of the date on its cover
page and that any information in a document we have incorporated by
reference is accurate only as of the date of the document
incorporated by reference.
The statements that we make in this prospectus or in any document
incorporated by reference in this prospectus about the contents of
any other documents are not necessarily complete, and are qualified
in their entirety by referring you to copies of those documents
that are filed as exhibits to the registration statement, of which
this prospectus forms a part, or as an exhibit to the documents
incorporated by reference. You can obtain copies of these documents
from the SEC or from us, as described above.
41
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
and
15,569,526 Shares of Common Stock
Offered
by the Selling Stockholders
__________________________
PROSPECTUS
__________________________
The date of this
prospectus is ,
2017.
You should rely only on
the information contained or incorporated by reference in this
prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information
contained or incorporated by reference in this prospectus is
accurate as of any date other than the date of this prospectus. We
are not making an offer of these securities in any state where the
offer is not permitted.
PART II
INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 14. Other Expenses
of Issuance and Distribution
The following table sets forth all costs and expenses in connection
with the offer and sale of the securities being registered.
|
|
|
SEC registration fee
|
$
|
36,655
|
Legal fees and expenses
|
|
*
|
FINRA filing fee
|
$
|
47,940
|
Stock exchange listing fees
|
|
*
|
Accounting fees and expenses
|
|
*
|
Printing costs
|
|
*
|
Transfer agent and trustee fees
|
|
*
|
Miscellaneous expenses
|
|
*
|
Total
|
$
|
*
|
Item 15. Indemnification
of Officers and Directors
Section 145 of the Delaware General Corporation Law
(“DGCL”) authorizes a court to award, or a
corporation’s board of directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities,
including reimbursement for expenses incurred, arising under the
Securities Act of 1933, as amended, or the Securities Act.
Our charter provides for that our directors shall not be liable to
us or our stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the DGCL
amended. Our bylaws provide for indemnification of our directors
and officers to the maximum extent permitted by the DGCL.
We expect to maintain standard policies of insurance that provide
coverage to our directors and officers against loss rising from
claims made by reason of breach of duty or other wrongful act.
Item 16. Exhibits and
Financial Statement Schedules
(a)
The list
of exhibits is set forth under “Exhibit Index” at the
end of this registration statement.
Item 17.
Undertakings
(a)
The undersigned registrant hereby
undertakes:
(1)
To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i)
To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in
the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or
II-1
high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in
the effective registration statement;
(iii)
To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however,
that
paragraphs (a)(l)(i), (a)(l)(ii) and (a)(l)(iii) do not apply if
the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are in the
registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is a part of the registration
statement.
(2)
That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3)
To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4)
That, for the purpose of determining liability
under the Securities Act to any purchaser:
(i)
Each prospectus filed by the registrant pursuant
to Rule 424(b)(3) shall be deemed to be part of the registration
statement as of the date the filed prospectus was deemed part of
and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering made
pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included
in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of
the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes
of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in
any such document immediately prior to such effective
date.
(5)
That, for the purpose of determining liability
of the registrant under the Securities Act of 1933 to any purchaser
in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used
to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities
to such purchaser:
(i)
Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424 (§ 230.424 of this
chapter);
(ii)
Any free writing prospectus relating to the
offering prepared by or on behalf of the undersigned registrant or
used or referred to by the undersigned registrant;
II-2
(iii)
The portion of any other free writing prospectus relating
to the offering containing material information about the
undersigned registrant or its securities provided by or on behalf
of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser.
(b)
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant’s annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c)
The undersigned Registrant hereby undertakes to
supplement the prospectus, after the expiration of the subscription
period, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period,
the amount of unsubscribed securities to be purchased by the
underwriters, and the terms of any subsequent reoffering thereof.
If any public offering by the underwriters is to be made on terms
differing from those set forth on the cover page of the prospectus,
a post-effective amendment will be filed to set forth the terms of
such offering.
(d)
Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(e)
The undersigned registrant hereby undertakes
that:
(i)
For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed
by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective;
and
(ii)
For the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(f)
The undersigned Registrant hereby undertakes to
file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of King
of Prussia, Commonwealth of Pennsylvania, on April 24,
2017.
|
|
CARDCONNECT CORP.
|
|
|
|
|
|
/s/ Jeffrey Shanahan
|
|
|
Jeffrey Shanahan
|
|
|
Chief Executive Officer and President
|
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below
constitutes and appoints Jeffrey Shanahan and Charles Bernicker,
and each of them singly, as his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place, and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement and any additional registration statement filed pursuant
to Rule 462 promulgated under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith as fully
to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities indicated on April 24, 2017.
/s/ Jeffrey Shanahan
|
|
Chief Executive Officer, President and
Director
|
|
April 24, 2017
|
Jeffrey Shanahan
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Charles Bernicker
|
|
Chief Financial Officer
|
|
April 24, 2017
|
Charles Bernicker
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ Anthony Hrzic
|
|
Controller
|
|
April 24, 2017
|
Anthony Hrzic
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
/s/ Richard Garman
|
|
Chairman of the Board of Directors
|
|
April 24, 2017
|
Richard Garman
|
|
|
|
|
|
|
|
|
|
/s/ Peter Burns
|
|
Director
|
|
April 24, 2017
|
Peter Burns
|
|
|
|
|
|
|
|
|
|
/s/ Betsy Cohen
|
|
Director
|
|
April 24, 2017
|
Betsy Cohen
|
|
|
|
|
|
|
|
|
|
/s/ Toos Daruvala
|
|
Director
|
|
April 24, 2017
|
Toos Daruvala
|
|
|
|
|
|
|
|
|
|
/s/ Ronald Taylor
|
|
Director
|
|
April 24, 2017
|
Ronald Taylor
|
|
|
|
|
|
|
|
|
|
/s/ Christopher Winship
|
|
Director
|
|
April 24, 2017
|
Christopher Winship
|
|
|
|
|
II-4
EXHIBIT INDEX
|
|
|
1.1
|
|
Form of Underwriting Agreement*
|
2.1(a)
|
|
Agreement and Plan of Merger, dated March 7,
2016, between the Company, FinTech Merger Sub, Inc. and FTS Holding
Corporation (The exhibits and schedules to this Exhibit have been
omitted in accordance with Regulation S-K Item 601(b)(2). The
Registrant agrees to furnish supplementally a copy of all omitted
exhibits and schedules to the Securities and Exchange Commission
upon its request).
(1)
|
2.1(b)
|
|
Amendment No. 1, dated June 24, 2016, to
Agreement and Plan of Merger, dated March 7, 2016, among the
Company, FinTech Merger Sub, Inc. and FTS Holding Corporation (The
exhibits and schedules to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(b)(2). The Registrant
agrees to furnish supplementally a copy of all omitted exhibits and
schedules to the Securities and Exchange Commission upon its
request).
(1)
|
4.1
|
|
Certificate of Designation of Preferences,
Rights and Limitations of Series A Preferred Stock.
(2)
|
4.2
|
|
Specimen Common Stock Certificate.
(2)
|
4.3
|
|
Specimen Warrant Certificate (included in
Exhibit 4.4).
|
4.4
|
|
Warrant Agreement, dated February 12, 2015,
between Continental Stock Transfer & Trust Company and the
Company.
(1)
|
4.5
|
|
Shareholder Agreement, dated July 29, 2016,
between the Company and the stockholders of the Company signatory
thereto.
(2)
|
4.6
|
|
Form of Indenture for Senior Notes
|
4.7
|
|
Form of Indenture for Subordinated
Notes
|
4.8
|
|
Form of Senior Note*
|
4.9
|
|
Form of Subordinated Note*
|
4.10
|
|
Form of Unit Agreement and Unit*
|
5.1
|
|
Legal Opinion of Ledgewood PC
|
12.1
|
|
Computation of Ratio of Earnings to Fixed
Charges
|
23.1
|
|
Consent of Marcum LLP
|
23.2
|
|
Consent of Mueller & Co., LLP
|
23.3
|
|
Consent of Ledgewood PC (included in Exhibit
5.1)
|
24.1
|
|
Power of Attorney (included in the signature
page hereto)
|
25.1
|
|
Statement of Eligibility under the Trust
Indenture Act of 1939 on Form T-1 of Trustee for senior debt
securities**
|
25.2
|
|
Statement of Eligibility under the Trust
Indenture Act of 1939 on Form T-1 of Trustee for subordinated debt
securities**
|
II-5