UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 13, 2022
PARSEC CAPITAL ACQUISITIONS CORP
(Exact name of registrant as specified in its charter)
| Delaware | 001-40871 | 86-2087408 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
320 W. Main Street
Lewisville, TX 75057
(Address of principal executive offices, including zip code)
203-524-6524
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement
On October 13, 2022, Parsec Capital Acquisitions Corp., a Delaware corporation (“PCX”), entered into an agreement and plan of merger (the “Merger Agreement”) by and among PCX, Enteractive Media Inc., a Canadian corporation (“Enteractive Media”) and Enteractive Merger Sub, Inc., a Canadian corporation and a wholly owned subsidiary of PCX (“Merger Sub”). PCX and Merger Sub are sometimes referred to collectively as the “PCX Parties.” Pursuant to the Merger Agreement, a business combination between PCX and Enteractive Media will be effected through the merger of Merger Sub with and into Enteractive Media, with Enteractive Media surviving the merger as a wholly owned subsidiary of PCX (the “Merger”). Upon the closing of the Merger (the “Closing”), it is anticipated that PCX will change its name to “Enteractive Media Inc.” The board of directors of PCX has (i) approved and declared advisable the Merger Agreement, the Ancillary Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related transactions by the shareholders of PCX.
The Merger is expected to be consummated in the fourth quarter of 2022, following the receipt of the required approval by the shareholders of PCX and the shareholder of Enteractive Media and the satisfaction of certain other customary closing conditions.
Merger Consideration
The total consideration to be paid at Closing (the “Merger Consideration”) by PCX to the Enteractive Media shareholders will be Five Million (5,000,000) shares of Class A common stock, par value $0.0001 per share, of PCX (“PCX Common Stock”). All cash proceeds remaining in the trust will be used to pay transaction costs and as growth capital for Enteractive Media.
At the signing of the Merger Agreement, the authorized capital stock of Enteractive Media consists of an unlimited number of Company Class A Shares and an unlimited number of Company Class B Shares. As of the date of the Merger Agreement 60,000,000 shares of Class A Stock of Enteractive are issued and outstanding, and 0 shares of Class B Shares are outstanding (the “Enteractive Media Shares). Each Enteractive Media Share issued and outstanding immediately prior to the consummation of the Merger (other than any dissenting shares) shall be exchanged for and otherwise converted into the right to receive the applicable Merger Consideration per share pursuant to the Merger Agreement. The effective date and time of the Merger is referred to in the Merger Agreement as the effective time (the “Effective Time”).
Representations and Warranties
The Merger Agreement contains customary representations and warranties of Enteractive Media with respect to, among other things: (i) corporate existence and power; (ii) organizational documents; (iii) capitalization; (iv) authorization to enter into the Merger Agreement and related transactions; (v) no conflicts and non-contravention; (vi) permits and compliance; (vii) financial statements; (viii) no undisclosed liabilities; (ix) absence of certain changes; (x) absence of litigation; (xi) employee benefit plans; (xii) labor matters; (xiii) real property and title to assets; (xiv) intellectual property; (xv) taxes; (xvi) environmental matters; (xvii) material contracts; (xviii) customers and suppliers; (xix) insurance; (xx) internal controls; (xxi) accuracy of statements; (xxii) COVID-19 matters; (xxiii) delivery of support agreement; (xxiv) board approval; (xv) brokers and finders’ fees; (xvi) takeover laws; (xxvii) international trade matters and anti-bribery compliance; (xxix) that Enteractive Media is not an investment company; (xxx) withholding; (xxxi) exclusivity of representations and warranties; and (xxxii) full disclosure.
The Merger Agreement contains customary representations and warranties of the PCX Parties with respect to, among other things: (i) corporate existence and power; (ii) organizational documents; (iii) capitalization; (iv) authorization to enter into the Merger Agreement and related transactions; (v) no conflicts and non-contravention; (vi) compliance; (viii) PCX publicly filed documents and financial statements; (viii) absence of certain changes; (ix) absence of litigation; (x) board approval; (xi) no prior operations of Merger Sub; (xii) amount in the trust account; (xii) employees; (xiv) taxes; (xv) listing of PCX securities; (xvi) that PCX is not an investment company; (xvii) statements in public filings; (xviii) contracts; (xix) brokers and finders’ fees; (xx) delivery of support agreement; and (xxi) investigation and reliance.
All representations and warranties by all parties shall terminate upon the Effective Time, and no representations, warranties, covenants, obligations or other agreements contained in the Merger Agreement shall survive the Effective Time.
Covenants
The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, access to information, cooperation in the preparation of the Registration Statement on Form S-4 (the “Registration Statement”) and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of PCX’s shareholders. PCX has also agreed to include in the Proxy Statement the recommendation of its board that its shareholders approve all of the proposals to be presented at the special meeting of PCX’s shareholders that will be called in order to approve the Merger and related transactions (the “PCX Special Meeting”).
Conduct between Signing and Closing
Each of PCX, Merger Sub and Enteractive Media has agreed that from the date of the Merger Agreement until the Closing Date or, if earlier, the valid termination of the Merger Agreement in accordance with its terms, it will not initiate, encourage or engage in any negotiations with any party relating to an alternative transaction, take any action intended to facilitate an alternative transaction or approve, recommend or enter into any agreement relating to an alternative transaction. PCX and Enteractive Media also have agreed to operate their respective companies in the ordinary course through the Closing Date.
Conditions to Closing
The consummation of the Merger is conditioned upon, among other things, (i) the absence of any applicable law or order that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions; (ii) the Registration Statement shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”); (iii) approval by PCX’s shareholders of the Merger and related transactions; (iv) approval by Enteractive Media’s shareholders of the Merger and related transactions; (v) the aggregate cash available to PCX at the Closing (after giving effect to any redemptions by PCX’s shareholders and the payment of all authorized transaction expenses) being at least Six Million ($6,000,000) dollars; (vi) all Ancillary Agreements shall have been executed by all parties thereto; and (vii) all required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and with any other governmental authority shall have been completed and cleared.
Solely with respect to the PCX Parties, the consummation of the Merger is conditioned upon, among other things: (i) Enteractive Media having duly performed or complied with all of its obligations under the Merger Agreement in all material respects; (ii) the representations and warranties of Enteractive Media being true and correct in all material respects; (iii) no event having occurred that would result in a Company Material Adverse Effect (as defined in the Merger Agreement); (iv) Enteractive Media providing PCX a certificate from an authorized officer of Enteractive Media as to the accuracy of the foregoing conditions; (v) after giving effect to the Merger, PCX shall have at least $5,000,001 in net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act); and (vi) PCX shall have received executed employment agreements from certain Enteractive Media executives, in a form reasonably acceptable to PCX.
Solely with respect to Enteractive Media, the consummation of the Merger is conditioned upon, among other things: (i) the PCX Parties having duly performed or complied with all of their obligations under the Merger Agreement in all material respects; (ii) the representations and warranties of the PCX Parties being true and correct in all material respects; (iii) no event having occurred that would result in an PCX Material Adverse Effect (as defined in the Merger Agreement; and (iv) each of the PCX Parties providing Enteractive Media a certificate from an authorized officer as to the accuracy of the foregoing conditions.
Termination
The Merger Agreement may be terminated as follows:
| (i) | By the mutual consent of PCX and Enteractive Media;
| |
| (ii) | by PCX, if any of the representations or warranties of Enteractive Media set forth in the Merger Agreement shall not be true and correct, or if Enteractive Media has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation to consummate the Merger), in each case such that the conditions to closing would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured (or waived by PCX) by the earlier of (i) the Outside Date (as defined below) or (ii) 10 days after written notice thereof is delivered to Enteractive Media; provided, however that PCX is not then in material breach of any representation, warranty, covenant, or obligation in the Merger Agreement, which breach has not been cured; | |
| (iii) | by Enteractive Media, if any of the representations or warranties of PCX or Merger Sub set forth in the Merger Agreement shall not be true and correct, or if PCX or Merger Sub has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation to consummate the Merger), in each case such that the conditions to closing would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured (or waived by Enteractive Media) by the earlier of (i) the Outside Date or (ii) 10 days after written notice thereof is delivered to PCX; provided, however that Enteractive Media is not then in material breach of any representation, warranty, covenant, or obligation in the Merger Agreement, which breach has not been cured; |
| (iv) | by either PCX or Enteractive Media: | |
| (A) on or after April 5, 2023 (the “Outside Date”), if the Merger shall not have been consummated prior to the Outside Date; provided, however, that this right to terminate the Merger Agreement shall not be available to a party if the failure of the Merger to have been consummated before the Outside Date was due to such party’s breach of or failure to perform any of its covenants or agreements set forth in the Merger Agreement; or; | ||
| (B) if any applicable law or order that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions shall have become final and non-appealable; | ||
| (C) if PCX has not received approval from its shareholders of the Merger and related transactions at the PCX Special Meeting; |
| (vi) | by PCX if the Enteractive Media shareholder’s written consent approving the Merger and related transactions shall not have been obtained within three business days following the Registration Statement being declared effective by the Securities and Exchange Commission (the “SEC”); | |
| (vii) | by PCX within five business days after receiving notice that the fairness opinion described in the Prospectus and delivered to PCX does not meet the terms of the Prospectus; | |
| (viii) | by PCX, in the event that Enteractive Media’s audited financial statements for 2020 and 2021 have not been delivered to the Parent Parties, and remain undelivered prior to the termination of the Merger Agreement. |
Certain Related Agreements
Sponsor Support Agreement
Concurrently with the execution of the Merger Agreement, PCX, Enteractive Media and Parsec Acquisitions Sponsor, LLC (the “Sponsor”) entered into a certain Sponsor Support Agreement dated October 13, 2022 (the “Sponsor Support Agreement”) pursuant to which the Sponsor agreed to vote all shares of PCX Common Stock beneficially owned by them, including any additional shares of PCX they acquire ownership of or the power to vote, in favor of the Merger and related transactions.
The foregoing description of the Sponsor Support Agreement is qualified in its entirety by reference to the full text of the Sponsor Support Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the terms of which are incorporated herein by reference.
Shareholder Support Agreement
Concurrently with the execution of the Merger Agreement, PCX, Enteractive Media, and shareholders of Enteractive Media (each an “Enteractive Media Shareholder”) entered into a certain Shareholder Support Agreement dated October 13, 2022 (the “Shareholder Support Agreement”), pursuant to which the Enteractive Media Shareholders agreed to vote all Enteractive Media Common Stock beneficially owned by them, including any additional shares of Enteractive Media they acquire ownership of or the power to vote, in favor of the Merger and related transactions.
The foregoing description of the Shareholder Support Agreement is qualified in its entirety by reference to the full text of the Shareholder Support Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K, and the terms of which are incorporated herein by reference.
Agreement to be Executed at Closing
Amended and Restated Registration Rights Agreement
The Merger Agreement contemplates that, at or prior to the Closing, PCX, certain shareholders of PCX and Enteractive Media’s shareholder will enter into an Amended and Restated Registration Rights Agreement which will, among other things, govern the registration and lock-up of certain shares of Enteractive Media’s common stock for resale.
Item 7.01 Regulation FD Disclosure
On October 18, 2022, PCX issued a press release announcing the execution the Merger Agreement. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 7.01 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Important Information and Where to Find It
In connection with the Merger Agreement and transactions contemplated thereby, PCX intends to file relevant materials with the SEC, including a Registration Statement on Form S-4, which will include a preliminary proxy statement/prospectus and a definitive proxy statement/prospectus. Promptly after filing its definitive proxy statement with the SEC, PCX will mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the Special Meeting relating to the transaction. INVESTORS AND STOCKHOLDERS OF PCX ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT PCX WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PCX, ENTERACTIVE MEDIA AND THE TRANSACTION. The Registration Statement, definitive proxy statement/prospectus, and other relevant materials in connection with the transaction (when they become available), and any other documents filed by PCX with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov).
Participants in the Solicitation
PCX and its directors and executive officers may be deemed participants in the solicitation of proxies from PCX’s shareholders with respect to the proposed business combination. A list of the names of those directors and executive officers and a description of their interests in PCX will be included in the proxy statement/prospectus for the proposed business combination and be available at www.sec.gov. Additional information regarding the interests of such participants will be contained in the proxy statement/prospectus for the proposed business combination when available. Information about PCX’s directors and executive officers and their ownership of PCX Common Stock is set forth in PCX’s prospectus, dated October 7, 2021, as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such filing. Other information regarding the interests of the participants in the proxy solicitation will be included in the proxy statement pertaining to the proposed business combination when it becomes available. These documents can be obtained free of charge from the sources indicated above.
Enteractive Media and its directors and executive officers also may be deemed to be participants in the solicitation of proxies from the shareholders of PCX in connection with the proposed business combination. A list of the names of such directors and executive officers and information regarding their interests in the proposed business combination will be included in the proxy statement/prospectus for the proposed business combination.
Forward-Looking Statements
This Current Report on Form 8-K and the documents incorporated by reference herein (this “Current Report”) contain certain “forward-looking statements” within the meaning of “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements can be identified by words such as: “target,” “believe,” “expect,” “will,” “shall,” “may,” “anticipate,” “estimate,” “would,” “positioned,” “future,” “forecast,” “intend,” “plan,” “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Examples of forward-looking statements include, among others, statements made in this Current Report regarding the proposed transactions contemplated by the Merger Agreement, including the benefits of the Merger, integration plans, expected synergies and revenue opportunities, anticipated future financial and operating performance and results, including estimates for growth, the expected management and governance of the combined company, and the expected timing of the Merger. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on PCX’s and Enteractive Media’s managements’ current beliefs, expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results and outcomes may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results and outcomes to differ materially from those indicated in the forward-looking statements include, among others, the following: (1) the occurrence of any event, change or other circumstances that could give rise to an amendment or termination of the Merger Agreement and the proposed transaction contemplated thereby; (2) the inability to complete the transactions contemplated by the Merger Agreement due to the failure to obtain approval of the shareholders of PCX or the shareholders of Enteractive Media or other conditions to closing in the Merger Agreement; (3) the inability to project with any certainty the amount of cash proceeds remaining in the PCX trust account at the closing of the transaction; (4) the uncertainty relative to the cash made available to Enteractive Media at the closing should any material redemption requests be made by the PCX shareholders (since the sources of cash projected in this press release assume that no redemptions will be requested by PCX shareholders); (5) the inability of the company post-closing to obtain or maintain the listing of its securities on Nasdaq following the business combination; (6) the amount of costs related to the business combination; (7) Enteractive Media’s ability to yield sufficient cash proceeds from the transaction to support its short-term operations and research and development efforts since the Merger Agreement requires no minimum level of funding in the trust account to close the transaction; (8) the outcome of any legal proceedings that may be instituted against the parties following the announcement of the business combination; changes in applicable laws or regulations; (9) the ability of Enteractive Media to meet its post-closing financial and strategic goals, due to, among other things, competition; (10) the ability of the company post-closing to grow and manage growth profitability and retain its key employees; (11) the possibility that the company post-closing may be adversely affected by other economic, business, and/or competitive factors;(12) risks relating to the successful retention of Enteractive Media’s customers; (13) the potential impact that COVID-19 may have on Enteractive Media’s customers, suppliers, vendors, regulatory agencies, employees and the global economy as a whole; (14) the expected duration over which Enteractive Media’s balances will fund its operations; (15) and other risks and uncertainties described herein, as well as those risks and uncertainties indicated from time to time in the final prospectus of PCX for its initial public offering dated February 2, 2022, filed with the SEC and the proxy statement on Schedule 14A relating to the proposed business combination, including those under “Risk Factors” therein, and in PCX’s other filings with the SEC. PCX cautions that the foregoing list of factors is not exclusive. PCX cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. PCX does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions, or circumstances on which any such statement is based.
No Offer or Solicitation
This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, or an exemption therefrom.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| October 18, 2022 | Parsec Capital Acquisitions Corp | |
| By: | /s/ Patricia Trompeter | |
| Name: | Patricia Trompeter | |
| Title: | Chief Executive Officer | |
