| Related Party Transactions | Note 4—Related Party Transactions
Founder Shares
On April 11, 2016, the Company’s Sponsor purchased 5,750,000
Class F ordinary shares (“Founder Shares”) for
$25,000, or approximately $0.004 per share. In August 2016, the
Company repurchased 99,000 Founder Shares from the Sponsor at their
original per share issuance price and subsequently issued such
number of Founder Shares pursuant to the 2016 Share Award Plan of
the Company (the “Plan”) for the same per share price
to certain individuals who will assist in the evaluation of
investment opportunities, including 10,000 Founder Shares to Adam
Chesnoff, the Company’s Director, President and Chief
Executive Officer, 8,000 Founder Shares to Niveen Tadros, the
Company’s Executive Vice President and General Counsel, 6,000
Founder Shares to Fred Gluckman, the Company’s former
Executive Vice President and Chief Financial Officer, and 4,000
Founder Shares to Philip Han, the Company’s Executive Vice
President and Chief Investment Officer. In September 2016, the
Company’s Sponsor transferred 30,000 Founder Shares to each
of the Company’s independent director nominees at their
original per share issue price (together with the Sponsor and the
other individuals that received founder shares, the “Initial
Shareholders”). On September 15, 2016, the Company
effected a pro rata share capitalization resulting in an increase
in the total number of Founder Shares issued and outstanding from
5,750,000 to 6,250,000 in order to maintain the ownership of
Founder Shares by the Initial Shareholders at 20% of the
Company’s issued and outstanding shares upon consummation of
the Public Offering. Following the Public Offering and the pro rata
share capitalization, the Sponsor held 6,044,570 Founder Shares,
each of the Company’s three independent directors owned
32,610 Founder Shares, and the other individuals, including the
Company’s executive officers, held 107,600 Founder Shares. On
March 16, 2017, concurrent with Mr. Bruce
Rosenblum’s resignation from the Company’s board of
directors, the Company acquired 25,110 Founder Shares from
Mr. Rosenblum and concurrent therewith, in connection with
Mr. Casey Wasserman’s appointment to the board of
directors, the Company re-issued
The Founder Shares are identical to the Public Shares, and holders
of Founder Shares have the same shareholder rights as public
shareholders, except that: (i) the Founder Shares are subject
to certain transfer restrictions; (ii) the Initial
Shareholders have entered into a letter agreement with the Company,
pursuant to which they have agreed (a) to waive their
redemption rights with respect to their Founder Shares and the
Public Shares in connection with the completion of a Business
Combination and (b) to waive their rights to liquidating
distributions from the Trust Account with respect to their Founder
Shares if the Company fails to complete a Business Combination
within the Business Combination Period, although they will be
entitled to liquidating distributions from the Trust Account with
respect to any Public Shares they hold if the Company fails to
complete a Business Combination within such time period;
(iii) the Founder Shares are automatically convertible into
Class A ordinary shares at the time of a Business Combination
on a one-for-one basis, subject to adjustment pursuant to certain
anti-dilution rights, as described in the Company’s Amended
and Restated Memorandum and Articles of Association; and
(iv) the Founder Shares are subject to registration rights. If
the Company submits a Business Combination to its public
shareholders for a vote, the Initial Shareholders have agreed to
vote their Founder Shares and any public shares purchased during or
after the Public Offering in favor of the Business Combination.
Permitted transferees of the Initial Shareholders will be subject
to the same obligations of the Initial Shareholders.
Private Placement Warrants
Simultaneously with the consummation of the Public Offering, the
Sponsor purchased 7,000,000 warrants at a price of $1.00 per
warrant, or $7,000,000 in the aggregate, in a Private Placement
(the “Private Placement Warrants”). Each Private
Placement Warrant entitles the holder to purchase one Class A
ordinary share for $11.50 per share. A portion of the proceeds from
the sale of the Private Placement Warrants were placed in the Trust
Account. The Private Placement Warrants may not be redeemed by the
Company so long as they are held by the Sponsor. If any Private
Placement Warrants are held by holders other than the Sponsor or
certain permitted transferees, such Private Placement Warrants will
be redeemable and exercisable by the holders on the same basis as
the Warrants included in the Units sold under the Public Offering.
The Sponsor has the option to exercise the Private Placement
Warrants on a cashless basis.
The Private Placement Warrants (including the Class A ordinary
shares issuable upon exercise of the Private Placement Warrants)
may not, subject to certain limited exceptions, be transferred,
assigned or sold by it until 30 days after the completion of the
Business Combination. If the Company does not complete a Business
Combination within the Business Combination Period, the proceeds of
the sale of the Private Placement Warrants then on deposit in the
Trust Account will be used to fund the redemption of the Public
Shares (subject to the requirements of applicable law), and the
Private Placement Warrants will expire worthless.
Contribution Agreement
In connection with the Business Combination Agreement, the Company
and the Initial Shareholders intend to enter into a contribution
and forfeiture agreement (the “Contribution
Agreement”), pursuant to which, among other things,
(i) the holders of Founder Shares will contribute an aggregate
of 2,000,000 Founder Shares (as-converted
Registration Rights
Holders of the Founder Shares and Private Placement Warrants and
warrants that may be issued upon conversion of working capital
loans (and any ordinary shares issuable upon the exercise of the
Private Placement Warrants or warrants issued upon conversion of
the working capital loans), have registration rights pursuant to a
registration rights agreement signed on the Close Date requiring
the Company to register such securities for resale (in the case of
the Founder Shares, only after conversion to the Company’s
Class A ordinary shares). The holders of these securities are
entitled to make up to three demands, excluding short form demands,
that the Company register such securities, Class A ordinary
shares underlying the Private Placement Warrants and Class F
ordinary shares. In addition, the holders have certain
“piggy-back” registration rights with respect to
registration statements filed by the Company subsequent to its
completion of a Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415
under the Securities Act. However, the registration rights
agreement provides that the Company will not permit any
registration statement filed under the Securities Act to become
effective until termination of the applicable lock up period, which
occurs: (i) in the case of the Founder Shares, on the earlier
of (A) one year after the completion of a Business Combination
or (B) if, subsequent to a Business Combination, (x) the
last reported sale price of the Class A ordinary shares equals
or exceeds $12.00 per share (as adjusted for share splits, share
dividends, rights issuances, subdivisions reorganizations,
recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after the
Business Combination, or (y) the date following the completion
of the Business Combination on which the Company completes a
liquidation, merger, share exchange, reorganization or other
similar transaction that results in all of the Company public
shareholders having the right to exchange their Class A
ordinary shares for cash, securities or other property; and
(ii) in the case of the Private Placement Warrants and the
respective Class A ordinary shares underlying such warrants,
30 days after the completion of a Business Combination. The Company
will bear the expenses incurred in connection with the filing of
any such registration statements.
At the closing of the Panavision/SIM Business Combination, the
Company will enter into an amended and restated registration rights
agreement with the Initial Shareholders, the Sponsor PIPE Entity
and certain other equityholders of Panavision. Pursuant to the
amended and restated registration rights agreement, the Company
will agree to register for resale, pursuant to Rule 415 under the
Securities Act, certain common stock and other equity securities of
the Company that are held by the parties thereto from time to time.
Additionally, the Sponsor and the Sponsor PIPE Entity will together
be entitled to three demand registrations each fiscal year and the
Panavision Requesting Stockholders (as defined therein) will
collectively be entitled to three demand registrations each fiscal
year, in each case, subject to certain offering thresholds. The
amended and restated registration rights agreement will also
include customary piggy-back rights, subject to cooperation and
cut-back
PIPE Investment
Concurrently with the execution of the Business Combination
Agreement, the Company entered into subscription agreements with
the PIPE Investors, pursuant to which the PIPE Investors have
collectively subscribed for 5.5 million shares of common stock
of the Company (following the Domestication) for an aggregate
purchase price equal to $55.0 million, $30.0 million of
which will be funded by the Sponsor PIPE Entity, an affiliate of
the Sponsor. The PIPE Investment will be consummated substantially
concurrently with the closing of the Panavision/SIM Business
Combination and proceeds therefrom will be used to fund a portion
of the cash consideration required to effect the Business
Combination and up to $25.0 million of redemptions of Public
Shares. The PIPE Investment is conditioned upon the satisfaction or
waiver of conditions precedent to the closing of the Business
Combination and other customary conditions.
Related Party Notes
Between Inception and the Close Date, the Sponsor loaned the
Company $250,000 in unsecured promissory notes. The funds were used
to pay up-front
On March 12, 2018, the Company issued an unsecured convertible
promissory note (the “Sponsor Convertible Note”),
pursuant to which the Company may borrow up to $1,000,000 from the
Sponsor from time to time. The Sponsor Convertible Note bears
interest at a rate of 1.96% per annum and all unpaid principal
under the Sponsor Convertible Note including accrued interest
thereon will be due and payable in full on the Maturity Date (as
defined below). The Sponsor will have the option to convert any
amounts outstanding under the Sponsor Convertible Note, up to
$1,000,000 in the aggregate, into warrants to purchase Class A
ordinary shares at a conversion price of $1.00 per warrant. The
terms of such warrants will be identical to the Private Placement
Warrants, including that each such warrant will entitle the holder
thereof to purchase one Class A ordinary share at a price of
$11.50 per share, subject to the same adjustments applicable to the
Private Placement Warrants. In connection with the Business
Combination Agreement, the Sponsor has agreed to forfeit for no
consideration any other rights to obtain the warrants issuable upon
conversion of the Sponsor Convertible Note. Under the Sponsor
Convertible Note, the Sponsor has waived any and all right, title,
interest or claim of any kind in or to any distribution of or from
the Trust Account, including any right to seek recourse,
reimbursement, payment or satisfaction for any claim against the
Trust Account. The issuance of the Sponsor Convertible Note was
approved by the Company’s board of directors and its audit
committee on March 12, 2018. Executed on March 12, 2018,
$500,000 was drawn under the Sponsor Convertible Note on
March 20, 2018 and the remaining $500,000 was drawn under the
Sponsor Convertible Note on August 2, 2018.
On September 26, 2018, the Company issued an unsecured
promissory note (the “Sponsor Note”) pursuant to which
the Company may borrow up to $1.5 million from Sponsor. The
Sponsor Note bears interest at a rate of 2.51% per annum and all
unpaid principal under the Sponsor Note including accrued interest
thereon will be due and payable in full on the earliest of
(i) March 31, 2019, (ii) the effective date of an initial
business combination, and (iii) the termination, for any
reason, of the Business Combination Agreement (such earliest date,
the “Maturity Date”), unless accelerated upon the
occurrence of customary events of default. Under the Sponsor Note,
Sponsor has waived any and all right, title, interest or claim of
any kind in or to any distribution of or from the trust account
established in connection with the Public Offering, including any
right to seek recourse, reimbursement, payment or satisfaction for
any claim against the trust account. The issuance of the Sponsor
Note was approved by the Company’s board of directors and its
audit committee on September 13, 2018. Executed on September 26,
2018, $500,000 was drawn under the Sponsor Note on October 5,
2018.
Additionally, on September 21, 2018, the Company and the
Sponsor amended the maturity date of the Sponsor Convertible Note.
Pursuant to such amendment, all unpaid principal under the Sponsor
Convertible Note including accrued interest thereon will be due and
payable in full on the Maturity Date, unless accelerated upon the
occurrence of customary events of default.
Due to Related Party
Saban Capital Group, Inc. is an affiliate of the Sponsor which
advanced various costs on behalf of the Company. Total related
party advances amounted to $23,730 for the period January 1, 2018
through September 30, 2018 and were reported as general and
administrative expenses. As of September 30, 2018, the amount
due to related party was $107,772. Total related party advances
amounted to $28,133 and the amount due was $0 for the period
January 1, 2017 through September 30, 2017, and were reported
as general and administrative expenses. These amounts do not
include amounts owed under the Sponsor Convertible Note or the
Sponsor Note.
Administrative Service Agreement
Effective September 15, 2016, the Company entered into an agreement
to pay monthly expenses of $10,000 for office space, administrative
services and support services to an affiliate of the
Company’s Sponsor. The agreement terminates upon the earlier
of the completion of a Business Combination or the liquidation of
the Company. For the three months and nine months ended
September 30, 2018, the Company incurred expenses of $30,000
and $90,000, respectively, under this agreement. For the three
months and nine months ended September 30, 2017, the Company
incurred expenses of $30,000 and $90,000, respectively, under this
agreement.
Other Related Party Transactions
The Company’s Sponsor, officers and directors, or any of
their respective affiliates, will be reimbursed for any
out-of-pocket expenses incurred in connection with activities on
the Company’s behalf such as identifying potential target
businesses and performing due diligence on suitable business
combinations. The Company’s audit committee will review on a
quarterly basis all payments that were made to its Sponsor,
officers, directors or the Company’s or their affiliates and
will determine which expenses and the amount of expenses that will
be reimbursed. There is no cap or ceiling on the reimbursement of
out-of-pocket
As described above under Related Party Notes, on March 12,
2018, the Company issued the Sponsor Convertible Note, pursuant to
which it may borrow up to $1,000,000 from the Sponsor, from time to
time, and on September 26, 2018, the Company issued the
Sponsor Note, pursuant to which it may borrow up to $1,500,000 from
the Sponsor, from time to time. In addition, in order to finance
transaction costs in connection with the Business Combination, the
Sponsor or an affiliate of the Sponsor or certain of the
Company’s officers and directors may, but are not obligated
to, loan the Company additional funds as may be required. If the
Company completes a Business Combination, it would repay such
loaned amounts. In the event that the Business Combination does not
close, the Company may use a portion of the working capital held
outside the Trust Account to repay such loaned amounts but no
proceeds from the Trust Account would be used for such repayment.
The terms of such additional loans by the Company’s officers
and directors, if any, have not been determined and no written
agreements exist with respect to such additional loans. The Company
does not expect to seek loans from parties other than the Sponsor
or an affiliate of the Sponsor as it does not believe third parties
will be willing to loan such funds and provide a waiver against any
and all rights to seek access to funds in the Trust Account.
The Company is not prohibited from pursuing a Business Combination
with a company that is affiliated with its Sponsor, officers or
directors or making the acquisition through a joint venture or
other form of shared ownership with its Sponsor, officers or
directors. In the event the Company seeks to complete a Business
Combination with a target that is affiliated with its Sponsor,
officers or directors, the Company, or a committee of independent
and disinterested directors, would obtain an opinion from an
independent investment banking firm that is a member of Financial
Industry Regulatory Authority or from an independent accounting
firm, that such an initial Business Combination is fair to the
Company from a financial point of view. The Company is not required
to obtain an opinion with respect to the fairness of the Business
Combination in any other context.
After the Business Combination, directors or members of the
Company’s management team who remain with the Company may be
paid consulting, management or other compensation from the combined
company. All of this compensation will be fully disclosed to
shareholders, to the extent then known, in the tender offer
materials or proxy solicitation materials furnished to the
Company’s shareholders in connection with a proposed business
combination. It is unlikely the amount of such compensation will be
known at the time, because the directors of the post-combination |
