Clients of Macquarie and its affiliates may also compete with us for investment
opportunities meeting our initial business combination objectives. If Macquarie or any of its affiliates is engaged to act for any such clients, we may be precluded from pursuing opportunities that would conflict with Macquaries or its
affiliates obligations to such client. In addition, investment ideas generated within Macquarie or its affiliates may be suitable for our company or a client of Macquarie or its affiliates, and may be directed to any of such persons or
entities rather than to us. Macquarie or its affiliates may also be engaged to advise the seller of a company, business or assets that would qualify as an acquisition opportunity for us. In such cases, we may be precluded from participating in the
sale process or from purchasing the company, business or assets. If, however, we are permitted to pursue the opportunity, the interests of Macquarie or its affiliates, or their obligations to the seller, may diverge from our interests.
Our sponsor, officers and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an
officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination by September 17, 2019. Neither
Macquarie nor any of its affiliates (other than our sponsor) has entered into such an agreement, and, accordingly, are not precluded from participating in any other blank check company or from underwriting an offering by any other blank check
company.
Proposed Business Combination with Akazoo Limited
On January 24, 2019, we entered into the Business Transaction Agreement, pursuant to which we intend to complete the Akazoo Business
Combination. The Akazoo Business Combination will be effected as follows: (i) in accordance with Luxembourg law and the Delaware General Corporation Law (the DGCL), the Company will merge with and into PubCo, with PubCo remaining as
the surviving publicly traded entity (the Merger); (ii) no later than seven days prior to the effective date of the Merger, LuxCo will acquire the entire issued share capital of Akazoo by issuing LuxCo shares (LuxCo Shares)
to the Akazoo shareholders (the Share Exchange), such that the shareholdings of LuxCo will be identical to that of Akazoo prior to the Share Exchange; and (iii) on the calendar day following the effective date of the Merger, LuxCo
will merge with and into PubCo in accordance with Luxembourg law, with PubCo remaining as the surviving publicly traded entity (the Luxembourg Merger). Following the consummation of the Luxembourg Merger, Akazoo will be a direct, wholly
owned subsidiary of PubCo, and the current security holders of the Company and Akazoo will be shareholders of PubCo.
The PubCo ordinary
shares are expected to be listed on the Nasdaq Stock Market (Nasdaq) following consummation of the Business Combination. It is expected that the existing shareholders of Akazoo will own a majority of the PubCo ordinary shares following
the consummation of the Business Combination.
Subject to the terms of the Business Transaction Agreement and at the consummation of the
Merger, each share of the Companys common stock will convert into the right to receive one PubCo ordinary share, and each warrant to purchase the Companys common stock (each, a Company Warrant) will convert into a warrant to
purchase an equal number of PubCo ordinary shares (each, a PubCo Warrant) on the same terms as the Company warrants. Also, as a result of the transactions, the holders of the Companys currently outstanding rights to purchase the
Companys common stock will receive, with respect to each right, 0.1 PubCo ordinary shares.
Existing Akazoo shareholders will
receive an aggregate number of PubCo ordinary shares equal to an assumed Akazoo enterprise value of $380 million (less any cash payment to them) divided by the per share redemption price applicable to any redemptions by public stockholders of
the Company. The existing Akazoo shareholders prior to the Luxembourg Merger will receive a cash distribution of up to $20 million, in exchange for a portion of their shares, if and to the extent that cash available in the Companys trust
account, after the payment of transaction fees and expenses and any redemptions, exceeds $110 million.
Additionally, subject to the
terms of the Business Transaction Agreement, as consideration for the cancellation of their LuxCo shares (LuxCo Shares) in exchange for PubCo ordinary shares in the Luxembourg Merger, (i) each issued and outstanding LuxCo Share will
be cancelled, and (ii) each LuxCo shareholder will be entitled to receive its pro rata share of the Share Consideration. Also, each LuxCo shareholder will be entitled to receive its pro rata share of the Cash Payment (if any) as a compensatory
payment under Luxembourg law to be payable 10 calendar days after the closing date of the Luxembourg Merger.
For purposes of this
section, each of the following terms shall have the meaning set forth below:
Akazoo Enterprise Value means $380,000,000, less
the Cash Payment (if any);
Aggregate Redemption Payment means an amount in U.S. dollars equal to the product of the Per Share
Redemption Amount multiplied by the number of shares of Company Common Stock that are redeemed pursuant to the Company Common Stockholder Redemption;
Company Common Stockholder Redemption means the right held by certain stockholders of the Company to redeem all or a portion of
their shares of Company Common Stock upon the consummation of a business combination, for a per share redemption price of cash equal to (a) the aggregate amount then on deposit in the Companys trust account as of two business days prior to the
consummation of the Business Combination, including interest earned on the funds held in the trust account and not previously released to the Company to pay certain taxes, divided by (b) the number of then outstanding shares of Company Common Stock
issued in connection with the Companys initial public offering.
Cash Payment means an aggregate amount in U.S. dollars
equal to the lesser of the Trust Amount Available for Cash Payment and $20,000,000;
Per Share Redemption Amount means an
amount in U.S. dollars equal to the quotient of (A) the trust amount held in the Companys trust account two business days prior to the consummation of the Merger, divided by (B) the number of shares of Company Common Stock that are held by all
Company stockholders other than shares held by certain Company sponsors (and not including any shares of Company Common Stock that are issuable pursuant to any Company Right);
Share Consideration means a number of PubCo ordinary shares equal to the quotient of (A) the sum of the Akazoo Enterprise Value,
divided by (B) the Per Share Redemption Amount;
Stamp Duty Amount means the aggregate stamp duty (if any) payable with
respect to the Share Exchange or the Luxembourg Merger; and
Trust Amount Available for Cash Payment means (A) the trust
amount held in the Companys trust account two business days prior to the consummation of the Merger; less (B) the Aggregate Redemption Payment; less (C) an amount equal to any and all transaction fees and expenses incurred by the Company,
PubCo, LuxCo and Akazoo in connection with the Transactions, up to a maximum of $18,000,000; less (D) the Stamp Duty Amount; less (E) $110,000,000; or if such number results in a negative number, $0.
The Business Transaction Agreement provides for customary conditions precedent to closing, including (i) approval by the Companys
stockholders of (A) the adoption of the Business Transaction Agreement and the transactions contemplated thereby pursuant to Section 251 of the DGCL, and (B) any other proposals the parties deem necessary or desirable to consummate
the Akazoo Business Combination (collectively, the Transaction Proposals), in accordance with the rules and regulations of Nasdaq, the Companys organizational documents and the DGCL, (ii) approval of the Transactions by the
Akazoo shareholders in accordance with the laws of Scotland and Akazoos organizational documents, (iii) a registration statement on Form F-4 (or other appropriate form) pursuant to which the PubCo ordinary shares, PubCo Warrants and the
PubCo ordinary shares issuable upon the exercise of such PubCo Warrants to be issued to the holders of Company Warrants pursuant to the Merger shall be registered for issuance under the Securities Act, having been declared effective by the SEC;
(iv) the issuance of all necessary permits and authorizations under state securities or blue sky laws; (v) the funds contained in the Companys Trust Account and any additional capital otherwise available to the Company
being not less than $60,000,000; (vi) the PubCo ordinary shares having been approved for listing on Nasdaq and (vii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
The Business Transaction Agreement may be terminated at any time at or prior to the consummation of the Business Combination
by mutual consent of the Company and Akazoo. In addition, the Business Transaction Agreement may be terminated:
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by either the Company or Akazoo if (i) consummation of the Business Combination has not occurred on or prior to
June 30, 2019 (the Outside Date) for any reason other than delay and/or nonperformance of the party seeking such termination; (ii) the conditions set forth in the Business Transaction Agreement cannot be satisfied prior to the Outside
Date; (iii) the Business Combination Agreement fails to receive approval from the Companys stockholders at the Stockholders Meeting; or (iv) the consummation of any of the Transactions is permanently enjoined or prohibited by the terms
of a final, non-appealable order of a court, unless the terminating partys willful breach is the primary reason for such injunction or prohibition;
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by the Company, if (i) Company stockholders do not approve a proposal to extend the time in which the Company
must complete its initial business combination (the Extension), (ii) Akazoo is in breach of the Business Transaction Agreement, and such breach is incapable of being cured or is not cured within 20 days of written notice to the Company
or (iii) there occurs disclosure of any event, fact, or circumstance that is reasonably likely to cause the failure of any condition in the Business Transaction Agreement;
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by Akazoo, if (i) the Company is in breach of the Business Transaction Agreement, and such breach is incapable
of being cured or is not cured within 20 days of written notice to the Company; (ii) the Company ceases to be listed on Nasdaq, or PubCos initial listing application in connection with the Business Combination is not approved by Nasdaq by June
30, 2019; or (iii) (A) the Company board of directors shall have failed to recommend to its stockholders that they vote in favor of the adoption of the Transaction Proposals or failed to include the Company board recommendation in the proxy
statement for the Stockholders Meeting or (B) there has been a change in recommendation, as defined in the Business Transaction Agreement.
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Pursuant to the Business Transaction Agreement, Akazoo and its representatives waive all rights or claims to collect from the Trust Account
any monies that may be owed to them by the Company, including for a breach of the Business Transaction Agreement or any agreements or understandings with the Company, and will not seek recourse against the Trust Account except as expressly
contemplated by the Business Transaction Agreement. However, (i) nothing contained in the Business Transaction Agreement will limit or prohibit Akazoos right to pursue a claim against the Company for legal relief against assets held outside
the Trust Account, and (ii) nothing contained in the Business Transaction Agreement will serve to limit or prohibit any claims that Akazoo may have in the future against the Companys assets or funds that are not held in the Trust Account
(including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds).
Concurrent with the execution of the Business Transaction Agreement, the Company, Akazoo and certain shareholders representing a majority of
Akazoos existing voting shares entered into separate Voting Agreements (the Voting Agreements). Pursuant to the Voting Agreements, the shareholders party thereto agreed to (i) vote their shares in favor of the Transactions, against
any other transaction and against actions that would have the effect of delaying or inhibiting the timely consummation of the Transactions, and (ii) take any other actions set forth in the transaction step plan contemplated by the Business
Transaction Agreement, including exercising their drag-along rights in furtherance of the Share Exchange. Additionally, the shareholder parties made certain customary representations and warranties with respect to the shares of Akazoo and LuxCo
owned by such shareholder.
In connection with the consummation of the transactions contemplated by the Business Transaction Agreement,
PubCo and its majority shareholders will enter into a Shareholders Agreement (the Shareholders Agreement) to set forth certain agreements regarding the relationships among themselves and the governance of PubCo.
The initial PubCo board of directors (the PubCo Board) will be composed of up to seven directors, with one individual designated
by the investor shareholders (Tosca Penta Music Limited Partnership and InternetQ Group Limited), who need not be independent, one individual designated by the Company shareholders (either Modern Media Sponsor, LLC, or if such entity is dissolved
prior to the closing, MIHI LLC and Modern Media LLC), and one individual designated by certain management shareholders (including Mr. Zervos), each of whom need not be independent, as described in the Shareholders Agreement. For a period of
three years following entry into the Shareholders Agreement, Lewis W. Dickey, Jr. will be the non-executive Chairman of the PubCo Board and a member of the PubCo Board. Mr. Zervos will be the initial Chief Executive Officer and an initial
member of the PubCo Board. At all times during the term of the Shareholders Agreement, the shareholder parties will cause the majority of the PubCo Board to be comprised of independent directors.
The Company and Akazoo continue to work toward satisfaction of the conditions to closing the Akazoo Business Combination and the related
Transactions, and while management of the Company currently anticipates that the Transactions will be completed prior to the Second Extension, there can be no assurances that all of the conditions will be satisfied or waived, or that the
Transactions will be completed on the terms or the timing currently anticipated, or at all.
Sourcing of Potential Business Combination Targets
We believe our management teams significant operating and transaction experience and relationships with companies has provided
us with a substantial number of potential initial business combination opportunities. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships. This network has grown
through the activities of our management team sourcing, acquiring, financing and exiting investments and properties, our management teams relationships with sellers, financing sources and target management teams and the experience of our
management team in executing transactions under varying economic and financial market conditions.
This network provides our management
team with a robust and consistent flow of acquisition opportunities which were proprietary or where a limited group of investors were invited to participate in the sale process. In addition, we anticipate that target business candidates will be
brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to
divest non-core assets
or
divisions.
We are not prohibited from pursuing our initial business combination with a company that is affiliated with our sponsor,
officers or directors or making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent and disinterested directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, that such
initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context, other than as provided below in Selection of a Target Business and Structuring of our
Initial Business Combination.
As more fully described elsewhere herein, if any of our officers or directors becomes aware of a
business combination opportunity that falls within the line of business of any entity to which he or she
has pre-existing fiduciary
or contractual obligations, he or she may be required to present
such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently and in the future may have fiduciary duties or contractual obligations to various entities
that may present a conflict of interest. As a result of these duties and obligations, situations may arise in which business opportunities may be given to one or more of these other entities prior to being presented to us.
Status as a Public Company
We believe
our status as a public company makes us an attractive business combination partner to target businesses. As an existing public company, we will be able to offer a target business an alternative to the traditional initial public offering through a
merger or other business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to
tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective process to
becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in
connection with a business combination with us.
Furthermore, once a proposed initial business combination is completed, the target
business will have effectively become public, whereas an initial public offering is always subject to the underwriters ability to complete the offering, as well as general market conditions, which could delay the offering or prevent the
offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders interests. It can offer further benefits by
augmenting a companys profile among potential new customers and vendors and aid in attracting talented employees.
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