DESCRIPTION
OF CAPITAL STOCK AND WARRANTS
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 February 28, 2017, there were 29,136,783 shares of our common stock outstanding and 1,500,000 shares of our Series A preferred
stock 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 after our initial business combination, 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,
we issued (a) 1,500,000 shares of 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”). We 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 $30.0 million was used to
pay a portion of the cash consideration for the Merger, repay FTS’s 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 in a separate account
for use in funding the first two years of cash dividends on the Series A Preferred Stock.
The
Series A Preferred Stock has an aggregate liquidation preference of $37.5 million plus all unpaid dividends. During the first
two years following issuance, 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). Thereafter, dividends accrue at 13.40% per annum, compounding quarterly, all of which will be payable 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 (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. 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:
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Changes
to our charter or bylaws that adversely affect the powers, preferences, or rights of the Preferred Stock.
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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.
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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.
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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.
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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.
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Affiliate
transactions resulting in payments of more than $150,000 per year, subject to certain specified exceptions.
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Changes
in our tax status.
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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.
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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:
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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.
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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.
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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.
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Founder
Shares and Placement Shares
3,433,333
shares of our outstanding common stock were issued to certain initial shareholders prior to our initial public offering and are
referred to as “Founder Shares.” The Founder Shares are identical to the shares of common stock included in the units
sold in our 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, upon consummation of the Merger, (ii) with respect to 20% of such shares, when the
closing price of our common stock exceeds $12.00 for any 20 trading days within a 30-trading day period following the consummation
of the Merger, (iii) with respect to 20% of such shares, when the closing price of our common stock exceeds $13.50 for any 20
trading days within a 30-trading day period following the consummation of the Merger, (iv) 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 (v) 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 combined 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 combined Company is the surviving entity. As of March 21, 2017, the conditions precedent
to the release of the transfer restrictions set forth in subsections (i) through (iii) above have been achieved and 60% of the
Founder Shares are no longer subject to these transfer restrictions.
Warrants
As
of February 28, 2017, 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. This post-effective amendment amends
the prior registration statement, and we will use our best efforts to cause such post-effective amendment, or any other 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:
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in
whole and not in part;
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at
a price of $0.01 per warrant;
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upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption
period”) to each warrant holder; and
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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.
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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 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.
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.