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:
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(i) |
By
the mutual consent of PCX and Enteractive Media;
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(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; |
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(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; |
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(iv) |
by
either PCX or Enteractive Media: |
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(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; |
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(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; |
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(C)
if PCX has not received approval from its shareholders of the Merger and related transactions at the PCX Special Meeting; |
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(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”); |
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(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; |
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(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.