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Pursuant to the terms of a securities purchase agreement with the Issuer effective as of June 28, 2013 (the “Securities Purchase Agreement”), the Sponsor purchased 3,593,750 shares of Common Stock (the “Founder Shares”) for an aggregate purchase price of $25,000 in cash, or approximately $0.007 per share. Pursuant to the terms of a securities assignment agreement (the “Securities Assignment Agreement”), 171,875 of those shares were transferred to each of two directors of the Issuer on August 22, 2013 for a price of $0.007 per share.
Sponsor Warrants
Pursuant to an amended and restated sponsor warrants purchase agreement dated as of August 19, 2013 (the “Sponsor Warrants Purchase Agreement”), the Sponsor purchased 8,000,000 warrants (the “Sponsor Warrants”) for an aggregate price of $4,000,000, in a private placement on September 20, 2013. Each Sponsor Warrant entitles the holder to purchase one-half of one share of Common Stock for $5.75 per half share and is exercisable beginning on the later of one year after issuance and 30 days after the completion of the Issuer’s initial business combination and may be exercised on a cashless basis. The Sponsor Warrants will expire five years after they become exercisable. The Sponsor Warrants (including the shares of common stock issuable upon exercise of the Sponsor Warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of the Issuer’s initial business combination (except, among other limited exceptions, to officers and directors of the Issuer and other persons or entities affiliated with the Sponsor) and they are not redeemable by the Issuer so long as they are held by the Sponsor or its permitted transferees. Permitted transferees must agree to the same limitations on transfer. On September 20, 2013, the Sponsor Warrants were sold by the Sponsor to CMAG, an affiliated company, for an aggregate of $4,000,000.
Registration Rights
The Sponsor is party to a registration rights agreement dated September 16, 2013 (the “Registration Rights Agreement”) with the Issuer. Pursuant to the Registration Rights Agreement, the holders of 20% in interest of the Founder Shares (or their permitted transferees) and the Sponsor Warrants and the underlying shares that may be acquired upon exercise of the Sponsor Warrants (or its permitted transferees), shall be entitled to require the Issuer, on three occasions at any time after the date on which the Insider Shares or Sponsor Warrants, respectively, are released from lockup, to register the Insider Shares and Sponsor Warrants (and the shares that may be acquired upon exercise of the Sponsor Warrants). In addition, the holders of the Founder Shares and Sponsor Warrants have “piggyback” registration rights with respect to the Founder Shares and Sponsor Warrants commencing on the date on which the Founder Shares and Sponsor Warrants, respectively, are released from lockup. As a permitted transferee, CMAG is entitled to the benefits of the Registration Rights Agreement.
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Letter Agreement
On September 16, 2013, the Issuer entered into a letter agreement (the “Letter Agreement”) with the Sponsor, the directors and each of the officers of the Issuer. The Letter Agreement is also
binding on CMAG as a permitted transferee of the Sponsor Warrants.
Pursuant to the Letter Agreement, the Sponsor returned to the Issuer for cancellation, at no cost, 468,750 of the Founder Shares held by it, since the Underwriters did not exercise their over-allotment option to purchase an additional 1,875,000 shares of Common Stock. The forfeited shares are not included in the beneficial ownership of the Reporting Persons for purposes of this Schedule 13D. Up to an additional 781,250 of the Founder Shares held by the Sponsor may be forfeited pursuant to the terms of the Letter Agreement unless (1) the last sales price of the Issuer’s shares exceeds $13.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20
trading
days within at least one 30-trading day period within 5 years following the closing of the Issuer’s initial business combination or (2) the Issuer complete a liquidation, merger, stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of Common Stock for consideration in cash, securities or other property with a value which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).
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