INSIGHT ACQUISITION CORP. Item 1.01. Entry into a Material Definitive Agreement
On
The BCA
Structure of the Transaction
The acquisition is structured as a redomicle followed by a reverse triangular merger transaction, resulting in the following:
(a) prior to the closing of the business combination, SPAC will continue (the
"SPAC Continuance") from the State of Delaware under the Delaware General
Corporation Law ("DGCL") to the Province of Alberta under the Business
Corporations Act (Alberta ) ("ABCA") and change its name to Avila Energy
Inc. ("AB PubCo").
(b) at least one Business Day following the SPAC Continuance, and in
accordance with the applicable provisions of the the Plan of Arrangement
and the ABCA, Amalco Sub and the Company will merge to form one corporate
entity with the same effect as if they had amalgamated under Section 181
of the ABCA (the "Amalgamation"), and as a result of the Amalgamation,
(i) each Company Share issued and outstanding immediately prior to the
Amalgamation Effective Time will be automatically exchanged for the right
to receive a number of AB PubCo Common Shares equal to the Conversion
Ratio, and (ii) each Company Option and Company Warrant issued and
outstanding immediately prior to the Amalgamation Effective Time will be
assumed by AB PubCo and shall be converted into a Converted Option and
Converted Warrant, respectively, and (iii) each Company Debenture issued
and outstanding immediately prior to the Amalgamation Effective Time (for
the avoidance of doubt, excluding the Forced Conversion Company
Debentures) will be amended to be convertible for common shares of the
Avila Surviving Company , which common shares of the Avila Surviving
Company , upon issuance following exercise of the applicable Company
Debenture, will be immediately and automatically exchanged for an
equivalent number of AB PubCo Common Shares (the SPAC Continuance and the
Amalgamation, together with the other transactions related thereto, the
"Proposed Transactions").
(c) Contemporaneously with the execution of the BCA, several investors
entered into a forward share purchase agreement pursuant to which such
investors may purchase SPAC Class A Shares from other SPAC Shareholders
who have elected to redeem such shares in connection with the Proposed
Transactions. Purchases by such investors will be made through brokers in
the open market after the redemption deadline in connection with the
Proposed Transactions at a price no higher than the redemption price to
be paid by SPAC in connection with the Proposed Transactions.
(d) In addition, contemporaneously with the execution of the BCA,
(i) Mr. Leonard Van Betuw , the principal shareholder of Avila, certain
Avila directors, officers, employees and consultants (the "Company
Earn-Out Participants") entitled to receive a portion of the Earn-Out
Shares (as defined below) entered into a Company Support & Lock-Up
Agreement (the "Company Support Agreement"), pursuant to which Mr. Van
Betuw agreed, among other things, to approve the BCA and the Proposed
Transactions and such Company Earn-Out Participants agreed to certain
transfer restrictions regarding any Earn-Out Shares they may receive, and
(ii) certain holders of SPAC's common stock, par value $0.0001 per share
("SPAC Common Stock") entered into an amended and restated Sponsor
Support Agreement (the "Founder Support Agreement"), pursuant to which,
among other things, such holders of SPAC Common Stock agreed to approve
the BCA and the Proposed Transactions and pursuant to which the lock-up
provisions originally agreed to at the time of the SPAC's IPO were
modified, as more fully described below.
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Pursuant to such amended and restated Founder Support Agreement, such SPAC
parties have agreed not to transfer AB PubCo common shares, par value
• From and after the Closing Date, 50% of such SPAC party's AB PubCo Common
Shares received in the SPAC Continuance shall not be subject to any
lock-up restrictions and shall be freely tradable.
• From and after the earlier of (i) the one year anniversary of the Closing
Date, and (ii) the date on which the closing price of the AB PubCo Common
Shares equals or exceeds $12.00 per share for any twenty (20) Trading
Days within any thirty (30)-consecutive Trading Day period beginning at
least 150 days following the Closing Date, each such SPAC Party may sell
the remaining 50% of such party's AB PubCo Common Shares received in the
SPAC Continuance.
• From and after the issuance of Earn-Out Shares , if any, 50% of such SPAC
party's Earn-Out Shares shall not be subject to any lock-up restrictions
and shall be freely tradable.
• From and after the six month anniversary of the issuance of Earn-Out
Shares, each such SPAC party may sell the remaining 50% of such party's
Earn-Out Shares .
Pursuant to each Company Support Agreement, such Avila parties have agreed not
to transfer AB PubCo Common Shares received as Share Consideration or
• From and after the Closing Date, 50% of such Avila party's AB PubCo
Common Shares received as Share Consideration shall not be subject to any
lock-up restrictions and shall be freely tradable.
• From and after the earlier of (i) the one year anniversary of the Closing
Date, and (ii) the date on which the closing price of the AB PubCo Common
Shares equals or exceeds $12.00 per share for any twenty (20) Trading
Days within any thirty (30)-consecutive Trading Day period beginning at
least 150 days following the Closing Date, each such Avila Party may sell
the remaining 50% of such party's AB PubCo Common Shares received as
Share Consideration.
• From and after the issuance of Earn-Out Shares , if any, 50% of such
Avila's party's Earn-Out Shares shall not be subject to any lock-up
restrictions and shall be freely tradable.
• From and after the six month anniversary of the issuance of Earn-Out
Shares, each such Avila party may sell the remaining 50% of such party's
Earn-Out Shares .
In the event of certain changes of control of AB PubCo after the Closing Date pursuant to which all of its securityholders shall be entitled to exchange such securities for cash, securities or other property, all of such foregoing lock-up provisions shall terminate automatically.
Consideration
(a) Closing Share Consideration
The Share Consideration for Avila Securityholders is 12,528,000 AB PubCo Common Shares issued on the Closing Date (the "Share Consideration"), together with the assumption by AB PubCo of certain options and warrants of Avila outstanding at the Closing Date.
SPAC Common Stock and warrants issued and outstanding immediately prior to the consummation of the Proposed Transactions will become AB PubCo Common Shares or AB PubCo warrants, as the case may be, on a one-for-one basis by operation of law pursuant to the SPAC Continuance.
(b)
Certain directors, officers, employees and consultants of Avila who are
residents of
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Proxy Statement/Prospectus and Stockholder Meeting
As promptly as practicable after the date of the BCA, (i) SPAC will prepare and
file with the
Item 7.01. Regulation FD Disclosure.
On
Additional Information
In connection with the Proposed Transaction, SPAC intends to file with the
Participants in the Solicitation
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Non-Solicitation
This Current Report on Form 8-K is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or in respect of
the Proposed Transactions and shall not constitute an offer to sell or a
solicitation of an offer to buy the securities of
Forward-Looking Statements
This Current Report on Form 8-K and the attachments hereto contain forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including statements about the parties' ability to close the Proposed Transactions, the anticipated benefits of the Proposed Transactions, and the financial condition, results of operations, earnings outlook and prospects of SPAC and/or Avila and may include statements for the period following the consummation of the Proposed Transactions. In addition, any statements that refer to projections (including EBITDA, EBITDA margin and revenue projections), forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "continue," "could," "may," "might," "possible," "potential," "predict," "should," "would" and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the
management of SPAC and Avila as applicable and are inherently subject to
uncertainties and changes in circumstances and their potential effects and speak
only as of the date of such statement. There can be no assurance that future
developments will be those that have been anticipated. These forward-looking
statements involve a number of risks, uncertainties or other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to those discussed and identified in
public filings made with the
• expectations regarding Avila's strategies and future financial
performance, including its future business plans or objectives,
prospective performance and opportunities and competitors, revenues,
products and services, pricing, operating expenses, market trends,
liquidity, cash flows and uses of cash, capital expenditures, and
Avila's ability to invest in growth initiatives and pursue acquisition
opportunities;
• the occurrence of any event, change or other circumstances that could
give rise to the termination of the BCA;
• the outcome of any legal proceedings that may be instituted against
SPAC or Avila following announcement of the BCA and the transactions
contemplated therein;
• the inability to complete the Proposed Transactions due to, among
other things, the failure to obtain SPAC stockholder approval;
• the risk that the announcement and consummation of the Proposed
Transactions disrupts Avila's current plans;
• the ability to recognize the anticipated benefits of the Proposed
Transactions;
• unexpected costs related to the Proposed Transactions;
• the amount of any redemptions by existing holders of SPAC common stock
being greater than expected;
• limited liquidity and trading of SPAC's securities;
• geopolitical risk and changes in applicable laws or regulations;
• the possibility that SPAC and/or Avila may be adversely affected by
other economic, business, and/or competitive factors;
• the risks that the consummation of the Proposed Transactions is
substantially delayed or does not occur.
Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of SPAC and Avila prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
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All subsequent written and oral forward-looking statements concerning the Proposed Transactions or other matters addressed in this Current Report on Form 8-K and attributable to SPAC, Avila or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Current Report on Form 8-K. Except to the extent required by applicable law or regulation, SPAC and Avila undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of Current Report on Form 8-K to reflect the occurrence of unanticipated events.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description 2.1 Business Combination Agreement, dated as ofApril 3, 2023 , by and amongInsight Acquisition Corp. ,Avila Amalco Sub Inc. and Avila Energy Corporation* 10.1 Amended and Restated Sponsor Support Agreement, dated as ofApril 3, 2023 , by and amongInsight Acquisition Corp. , Avila Energy Corporation and founding stockholders ofInsight Acquisition Corp. 10.2 Form of Company Support & Lock-Up Agreement, dated as ofApril 3, 2023 , by and among Avila Energy Corporation,Insight Acquisition Corp. and certain stockholders of Avila Energy Corporation* 10.3 Amended and Restated Registration Rights Agreement, dated as ofApril 3, 2023 , by and amongInsight Acquisition Corp. , Avila Energy Corporation and IPO underwriters ofInsight Acquisition Corp. 10.4 Forward Share Purchase Agreement dated as ofMarch 29 2023 , by and amongInsight Acquisition Corp. , Avila Energy Corporation,Meteora Special Opportunity Fund I, LP ,Meteora Capital Partners, LP andMeteora Select Trading Opportunities Master, LP 99.1 Press Release, datedApril 3, 2023 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Certain exhibits and schedules to these exhibits have been omitted in
accordance with Item 601(b)(2) of Regulation S-K. SPAC agrees to furnish
supplementally a copy of any omitted exhibit or schedule to the
request.
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