Item 1.01. Entry into a Material Definitive Agreement
On July 7, 2022, Kingswood Acquisition Corp.,
a Delaware corporation (“Kingswood”), Binah Capital Group, Inc., a Delaware corporation and wholly-owned subsidiary
of Kingswood (“Holdings”), Kingswood Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings
(“Kingswood Merger Sub”), Wentworth Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary
of Holdings (“Wentworth Merger Sub”), and Wentworth Management Services LLC, a Delaware limited liability company (“Wentworth”),
entered into an agreement and plan of merger (the “Merger Agreement”) pursuant to which Kingswood will acquire Wentworth
for consideration of a combination of shares in Holdings and assumption of indebtedness (as further explained below). The terms of the
Merger Agreement, which contains customary representations and warranties, covenants, closing conditions and other terms relating to the
mergers and the other transactions contemplated thereby, are summarized below. Capitalized terms used in this Current Report on Form 8-K
but not otherwise defined herein have the meanings given to them in the Merger Agreement.
The Merger Agreement
Structure of the Transaction
The acquisition is structured as a “double dummy” transaction,
resulting in the following:
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(a) |
Each of Holdings, Kingswood Merger Sub and Wentworth Merger Sub are newly formed entities that were formed for the sole purpose of entering into and consummating the transactions set forth in the Merger Agreement. Holdings is a wholly-owned direct subsidiary of Kingswood and both Kingswood Merger Sub and Wentworth Merger Sub are wholly-owned direct subsidiaries of Holdings. |
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(b) |
Upon Closing: (i) Kingswood Merger Sub will merge with and into Kingswood (the “Kingswood Merger”), with Kingswood surviving the Kingswood Merger as a wholly owned subsidiary of Holdings (the “Kingswood Surviving Company”); and (ii) simultaneously with the Kingswood Merger, Wentworth Merger Sub will merge with and into Wentworth (the “Wentworth Merger”), with Wentworth surviving the Wentworth Merger as a wholly-owned subsidiary of Holdings (the “Wentworth Surviving Company”). Kingswood Surviving Company will acquire, and Holdings will contribute to Kingswood Surviving Company (the “Holdings Contribution”) all units of the Wentworth Surviving Company directly held by Holdings after the Wentworth Merger, such that, following the Holdings Contribution, the Wentworth Surviving Company will be a wholly-owned subsidiary of the Kingswood Surviving Company (together with the Kingswood Merger, the Wentworth Merger and the other transactions related thereto, the “Transactions”). |
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(c) |
In addition, contemporaneously
with the execution of the Merger Agreement, (i) certain holders of Wentworth’s membership units (“Wentworth
Securityholders”) representing a majority of Wentworth’s outstanding membership interests entered into a Wentworth
Support Agreement (the “Wentworth Support Agreement”), pursuant to which
such Wentworth Members agreed, among other things, to approve the Merger Agreement and the Transactions, and (ii) certain holders
of Kingswood’s common stock, par value $0.0001 per share (“Kingswood Common
Stock”), and Kingswood Private Placement Warrants (“Private Placement
Warrants”) entered into a Founder Support Agreement (the “Founder Support
Agreement”), pursuant to which, among other things, such holders of Kingswood Common Stock agreed to approve the Merger
Agreement and the Transactions. |
Consideration
The aggregate consideration payable to the Wentworth
Members for the Transactions (the “Wentworth Merger Consideration”) consists of Holdings Common Shares issued on the
Closing Date (the “Share Consideration”), and the assumption of all indebtedness of Wentworth as of the Closing Date
(the “Assumed Indebtedness”).
The Wentworth Merger Consideration is equal to
the quotient of: (a) the difference of (i) Enterprise Value, minus (ii) Closing Wentworth Indebtedness, minus (iii) Sponsor
Share Value, minus (iv) Outstanding Transaction Expenses, minus (v) Wentworth Class B Redemption Amount, divided
by (b) the Per Share Price, subject to the Minimum Company Share Amount.
Proxy Statement/Prospectus and Stockholder Meeting
As promptly as practicable after the date of the
Merger Agreement, (i) Kingswood will prepare and file with the Securities and Exchange Commission (the “SEC”) the proxy
statement/prospectus (as amended or supplemented from time to time, the “Proxy Statement/Prospectus”) to be sent to
the stockholders of Kingswood soliciting proxies from such stockholders to obtain the Kingswood Stockholder Approval (as defined in the
Merger Agreement) at the meeting of Kingswood’s stockholders and (ii) Holdings and Wentworth will prepare and file with the SEC
a registration statement on Form S-4 or such other applicable form (the “Form S-4”), in which the Proxy Statement/Prospectus
will be included as a prospectus, in connection with the registration under the Securities Act of 1933, as amended (the “Securities
Act”), of the Holdings securities issuable in connection with the Transactions.
Closing
The Closing will be on a date that is three (3)
Business Days after the date on which all Closing conditions have been satisfied or waived or such other time as Kingswood and Wentworth
may mutually agree in writing.
Representations, Warranties and Covenants
The Merger Agreement contains customary representations,
warranties, and covenants of (a) Wentworth and (b) Holdings, Kingswood, Kingswood Merger Sub and Wentworth Merger Sub relating to, among
other things, their ability and authority to enter into the Merger Agreement and their capitalization.
Conditions to Closing
General Conditions
The obligation of the parties to consummate the
Transactions is conditioned on, among other things, the satisfaction or waiver (where permissible) by Kingswood and Wentworth of the following
conditions, (a) the waiting period for the HSR Filing has expired or been terminated; (b) there shall not be in force any Law that has
the effect of prohibiting or otherwise preventing the consummation of the Transactions; (c) the Offer shall have been completed in accordance
with the terms of the Proxy Statement/Prospectus; (d) the Form S-4 has been effective and no stop order suspending the effectiveness of
the Form S-4 is in effect and no proceedings for that purpose is pending before or threatened by the SEC; (e) the Kingswood Stockholder
Approval has been obtained; (f) shares of Holdings Common Stock and Holdings Warrants issued in exchange for the Kingswood Public Warrants
shall have been approved for listing on a National Exchange; (g) each party to the Registration Rights Agreement shall have delivered
duly executed counterparts thereto.
Kingswood Conditions to Closing
The obligations of Kingswood to consummate the
Transactions are subject to the satisfaction of conditions, any one or more of which may be waived in writing by Kingswood:
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Each of the representations and warranties of Wentworth relating to Corporate Organization of Wentworth, Subsidiaries, Due Authorization, Current Capitalization and Brokers’ Fees, in each case shall be true and correct in all material respects as of the Closing Date. |
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The representations and warranties of Wentworth relating to Absence of Changes shall be true and correct in all respects as of the Closing Date. |
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Each of the representations and warranties of Wentworth contained in Merger Agreement shall be true and correct as of the Closing Date as though then made except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to result in, a Material Adverse Effect. |
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Wentworth shall have performed as of or prior to the Closing all covenants of Wentworth in all material respects. |
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Wentworth shall have delivered to Kingswood a certificate signed by an officer of Wentworth certifying that the conditions relating to Wentworth’s representations and warranties and covenants, have been fulfilled. |
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Wentworth shall deliver or cause to be delivered to Kingswood a certificate of the secretary or other officer of Wentworth and each of its Subsidiaries as to (A) no amendment to the organizational documents of Kingswood or any of its Subsidiaries, and (B) the actions taken by the board of directors or managers of Wentworth to authorize the Merger Agreement. |
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No event shall have occurred between execution of the Merger Agreement and Closing Date that has had a Material Adverse Effect. |
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The amended and restated certificate of incorporation of Holdings shall have been adopted. |
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The amended and restated bylaws of Holdings shall have been adopted. |
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Wentworth shall deliver to Kingswood and Holdings, counterparts to a Lock-Up Agreement. |
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Wentworth shall have delivered to Kingswood a fully executed certificate by an executive officer of Wentworth setting forth the Wentworth’s good faith calculation of all Outstanding Company Expenses and the Wentworth Merger Consideration (including the calculation of the Company Converted Debt and the Minimum Company Share Amount). |
Wentworth Conditions to Closing
The obligations of Wentworth to consummate the
Transactions are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing
by Wentworth:
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The representations and warranties of Kingswood, Holdings, Kingswood Merger Sub, Wentworth Merger Sub be true and correct in all material respects as of the Closing Date. |
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Each of the covenants of Kingswood and Holdings to be performed as of or prior to Closing shall have been performed in all material respects. |
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Kingswood and Holdings shall have delivered to Kingswood a certificate signed by an officer of Kingswood and Holdings certifying that the conditions relating to Kingswood and Holdings’ representations and warranties and covenants, have been fulfilled. |
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Kingswood shall deliver or cause to be delivered to Wentworth a certificate of the secretary of Kingswood as to (A) no amendment to the organizational documents of Kingswood, Holdings, Kingswood Merger Sub, Wentworth Merger Sub, and (B) the actions taken by the board of directors or managers of Kingswood, Holdings, Kingswood Merger Sub, or Wentworth Merger Sub may be a party or subject, and the other transaction contemplated thereby, and (C) Kingswood Stockholder Approval. |
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The amended and restated certificate of incorporation of Holdings, substantially in the form and substances attached to the Form S-4, shall have been adopted. |
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The amended and restated bylaws of Holdings, in the form and substance attached to the Form S-4 shall have been adopted. |
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Kingswood shall have delivered to Wentworth counterparts to the Lock-Up Agreement duly executed by Holdings, Sponsor, and each other holder of Kingswood Class B Common Stock. |
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The Sponsor Loans shall have been paid in full. |
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All Outstanding Transaction Expenses shall have been paid. |
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Kingswood shall have delivered to Wentworth fully executed version of the Kingswood Closing Date Certificate. |
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The Available Closing Date Cash shall not be less than $14,000,000. |
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The amount of shares of Holdings Common Stock
to be issued at the Closing shall not be less than the Minimum Company Share Amount. |
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Any Holdings Private Warrant Issuance shall have taken place in accordance with the terms of the Merger Agreement. |
Termination
The Merger Agreement may be terminated, and the transaction contemplated
thereby abandoned, respectively, as follows:
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(a) |
By mutual written consent of Wentworth and Kingswood; |
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(b) |
Prior to Closing, by written notice to Wentworth from Kingswood if (i)(A)
there is any breach of representation, warranty, covenant or agreement on part of Wentworth set forth in the Merger Agreement, such that
the conditions specified in Section 8.02(a) or Section 8.02(b) of the Merger Agreement would not be satisfied at the Closing or (B) the
Indebtedness of the Group Companies has not been assumed, refinanced or converted into common equity units of Wentworth prior to the Closing
Date (a “Terminating Company Breach”), except that such termination shall become effective only if the Terminating
Company Breach is not cured within the Company cure period, (ii) the Closing has not occurred on or before December 30, 2022 (the “Termination
Date”), unless Kingwood’s breach of the Agreement has been the primary cause of, or primarily resulted in, the failure
of the Closing to occur on or before such date, (iii) the consummation of the Transactions is permanently enjoined or prohibited by the
terms of a final, non-appealable Governmental Order or a statute, rule or regulation, (iv) all financial statements described in Section
5.07(a) are not provided to Kingswood as soon as reasonably practical, or (v) all conditions in Section 5.08 and Section 8.02 have been
satisfied or are capable of being satisfied were the closing to occur as of the date of such notice, except for those conditions to occur
at the Closing; |
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(c) |
Prior to the Closing, by written notice to Kingswood from Wentworth if (i)(A) there is any breach of any representation, warranty, covenant or agreement on the part of Kingswood set forth in the Merger Agreement, such that the conditions specified in Section 8.03(a) or Section 8.03(b) of the Merger Agreement would not be satisfied at the Closing, (B) the Available Closing Date Cash is less than $14,000,000 (a “Terminating Kingswood Breach”), except that such termination shall become effective only if the Terminating Kingswood Breach is not cured within the Kingswood cure period, (ii) the Closing has not occurred on or before the Termination Date, or (iii) the consummation of the Transactions is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order or a statute, rule or regulation; or |
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(d) |
by written notice from either Wentworth or Kingswood to the other if the Kingswood Stockholder Approval is not obtained at the Special Meeting (subject to any adjournment or recess of the Special Meeting). |
The foregoing description of the Merger Agreement
is qualified in its entirety by reference to the full text of Founder Support Agreement, a copy of which is included as Exhibit 2.1 to
this Current Report on Form 8-K, and incorporated herein by reference.
Founder Support Agreement
Contemporaneously with the execution of the Merger
Agreement, certain holders of the Kingswood Common Stock entered into the Founder Support Agreement, pursuant to which such holders agreed
to approve the Merger Agreement.
In addition, the holders of Private Placement
Warrants have agreed that at the Effective Time, the aggregate number of issued and outstanding Private Placement Warrants held by the
Sponsor Support Holders shall be adjusted in the following manner: (i) if the aggregate of the Trust Cash and PIPE Proceeds is less than
$15,000,000 then 100% of the Private Placement Warrants shall be forfeited; (ii) if the aggregate of the Trust Cash and PIPE Proceeds
is equal to or greater than $15,000,000 but less than $17,500,000 then 90% of the Private Placement Warrants shall be forfeited; (iii)
if the aggregate of the Trust Cash and PIPE Proceeds is equal to or greater than $17,500,000 but less than $20,000,000 then 80% of the
Private Placement Warrants shall be forfeited; (iv) if the aggregate of the Trust Cash and PIPE Proceeds is equal to or greater than $20,000,000
but less than $22,500,000 then 70% of the Private Placement Warrants shall be forfeited; (v) if the aggregate of the Trust Cash and PIPE
Proceeds is equal to or greater than $22,500,000 but less than $25,000,000 then 60% of the Private Placement Warrants shall be forfeited;
(vi) if the aggregate of the Trust Cash and PIPE Proceeds is equal to or greater than $25,000,000 but less than $27,500,000 then 50% of
the Private Placement Warrants shall be forfeited; (vii) if the aggregate of the Trust Cash and PIPE Proceeds is equal to or greater than
$27,500,000 but less than $30,000,000 then 40% of the Private Placement Warrants shall be forfeited; (viii) if the aggregate of the Trust
Cash and PIPE Proceeds is equal to or greater than $30,000,000 then 0% of the Private Placement Warrants shall be forfeited.
The foregoing description of the Founder Support
Agreement is qualified in its entirety by reference to the full text of Founder Support Agreement, a copy of which is included as Exhibit
10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Wentworth Support Agreement
Contemporaneously with the execution of the Merger
Agreement, certain Wentworth Members entered into the Wentworth Support Agreement, pursuant to which such Wentworth Members agreed to
approve the Merger Agreement.
The foregoing description of the Wentworth Support
Agreement is qualified in its entirety by reference to the full text of Wentworth Support Agreement, a copy of which is included as Exhibit
10.2 to this Current Report on Form 8-K, and incorporated herein by reference.