As filed with the United States Securities and Exchange Commission on February 12, 2019

Registration No. 333-              

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

 

FORM S-4

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

 

 

 

THUNDER BRIDGE ACQUISITION, LTD.

(Exact name of registrant as specified in its charter)

 

Cayman Islands*

6770

N/A

(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

9912 Georgetown Pike
Suite D203
Great Falls, Virginia 22066
Telephone: (202) 431-0507

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

Gary A. Simanson

President and Chief Executive Officer

Thunder Bridge Acquisition, Ltd.
9912 Georgetown Pike
Suite D203
Great Falls, Virginia 22066
(202) 431-0507

(Name, address, including zip code and telephone number, including area code, of agent for service)

 

Copies to:

 

Douglas S. Ellenoff, Esq.
Stuart Neuhauser, Esq. 

Tamar Donikyan, Esq.
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
(212) 370-1300

Maripat Alpuche, Esq.

Roxane Reardon, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

(212) 455-2000

Tyler Dempsey, Esq.

Troutman Sanders LLP

600 Peachtree Street, NE

Suite 3000

Atlanta, Georgia 30308

(404) 885-3000

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after (i) this registration statement is declared effective and (ii) upon completion of the applicable transactions described in the enclosed proxy statement/prospectus.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:

  

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated Smaller reporting company ☐
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

 

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered  Amount to
be Registered
   Proposed
Maximum
Offering
Price Per
Share
   Proposed
Maximum
Aggregate
Offering
Price
   Amount of
Registration
Fee
 
Class A common stock(1)(2)(3)   25,800,000   $10.05(4)  $259,290,000.00   $31,425.95 
Redeemable warrants(1)(2(5)   25,800,000   $0.38(6)  $9,804,000.00   $1,188.24 
Total            $269,094,000.00   $32,614.19 

 

(1)Simultaneously with the completion of the Business Combination described herein, the registrant, a Cayman Islands exempted company, intends to effect a deregistration under Section 206 of the Cayman Islands Companies Law (2018 Revision) and a domestication under Section 388 of the Delaware General Corporation Law  (the “Domestication”), pursuant to which the registrant’s jurisdiction of incorporation will be transferred by way of continuation from the Cayman Islands to the State of Delaware and the name of the registrant will be changed to “Repay Holdings Corporation.”
(2)Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from share splits, share dividends or similar transactions.
(3)Represents the number of Class A ordinary shares (including Class A ordinary shares included in units) issued by the registrant in its initial public offering registered on Form S-1 (SEC File Nos. 333- 224581 and 333- 225711), which, as a result of the Domestication, will automatically be converted by operation of law into shares of Class A common stock.
(4)Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A ordinary shares on The Nasdaq Capital Market on February 7, 2019 in accordance with Rule 457(f)(1) and Rule 457(f)(3).
(5)Represents the number of redeemable warrants issued by the registrant in its initial public offering registered on Form S-1 (SEC File Nos. 333- 224581 and 333- 225711) (including redeemable warrants included in units), which, as a result of the Domestication, will become warrants to acquire the same number of shares of the Company at the same price and on the same terms.
(6)Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the redeemable warrants on The Nasdaq Capital Market on February 7, 2019 in accordance with Rule 457(f)(1).

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the SEC, acting pursuant to Section 8(a), may determine.

 

As used in this Registration Statement, the term “Registrant” refers to the Registrant (a Cayman Islands exempted company) prior to the Domestication and to the Company (a Delaware corporation) following the Domestication.

 

 

 

 

 

  

The information in this proxy statement/prospectus is not complete and may be changed. Thunder Bridge Acquisition, Ltd. may not issue the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus does not constitute an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale of these securities is not permitted.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED FEBRUARY 12, 2019

 

To the Shareholders of Thunder Bridge Acquisition, Ltd.:

 

On behalf of the board of directors of Thunder Bridge Acquisition, Ltd. (“Thunder Bridge”), we are pleased to enclose the proxy statement/prospectus relating to the proposed merger of a wholly owned subsidiary of Thunder Bridge with and into Hawk Parent Holdings LLC (“Repay”, and such transaction, the “Business Combination”), pursuant to an Amended and Restated Agreement and Plan of Merger dated effective as of January 21, 2019 (as may be further amended or supplemented from time to time, the “Merger Agreement”) among Thunder Bridge, Repay and certain other parties. It is proposed that, simultaneously with the effectiveness of the Business Combination (the “Closing”), Thunder Bridge will domesticate from a Cayman Islands exempted company to a Delaware corporation (the “Domestication”) and will change its name to “Repay Holdings Corporation.” Repay Holdings Corporation and Thunder Bridge, following the Domestication and the Business Combination, are both referred to herein as the “Company.”

 

In connection with the Domestication, the Business Combination and the other matters described herein, shareholders of Thunder Bridge are cordially invited to attend the extraordinary general meeting of Thunder Bridge (the “General Meeting”) to be held at 10:00 a.m. Eastern Time on                  , 2019 at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105. Only shareholders who held ordinary shares of Thunder Bridge at the close of business on                  , 2019 will be entitled to vote at the General Meeting and at any adjournments and postponements thereof.

 

Thunder Bridge is a blank check company incorporated on September 18, 2017 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Thunder Bridge’s units, ordinary shares and warrants are traded on the Nasdaq Stock Market (“Nasdaq”) under the symbols “TBRGU”, “TBRG” and “TBRGW”, respectively. On February 6, 2019, the closing sale prices of Thunder Bridge’s units, ordinary shares and warrants were $10.35, $10.03 and $0.44, respectively. At the closing of the Business Combination, the units will separate into their component shares of Class A common stock and warrants so that the units will no longer trade separately under “TBRGU.” Thunder Bridge has applied for the listing of the Class A common stock and warrants of the Company on Nasdaq following the completion of the Business Combination, under the symbols “RPAY” and “RPAYW”, respectively.

  

Repay provides integrated payment processing solutions to industry-oriented markets in which merchants have specific transaction processing needs. Its proprietary, integrated payment technology platform reduces the complexity of the electronic payments process for merchants, while enhancing their consumers’ overall experience.

 

At the General Meeting, Thunder Bridge’s shareholders will be asked to vote on the following proposals, as more fully described in the accompanying proxy statement/prospectus: (i) the Domestication Proposal, (ii) the Business Combination Proposal, (iii) the 2019 Equity Incentive Plan Proposal, (iv) the Director Election Proposal, (v) the Articles Amendment Proposal and (vi) the Adjournment Proposal, if presented (collectively, the “Proposals”).

 

Thunder Bridge’s board of directors unanimously determined that the Proposals are advisable, fair to and in the best interests of Thunder Bridge and its shareholders and unanimously recommends that Thunder Bridge’s shareholders vote “FOR” each of the Proposals.

 

The obligations of Thunder Bridge to complete the Business Combination are subject to a number of conditions set forth in the Merger Agreement and are summarized in the accompanying proxy statement/prospectus. More information about Thunder Bridge and Repay, the General Meeting and the transactions contemplated by the Merger Agreement, is contained in the accompanying proxy statement/prospectus. You are encouraged to read the accompanying proxy statement/prospectus in its entirety, including the section entitled “Risk Factors” beginning on page 34.

 

 

 

  

Your vote is very important. As a condition to the completion of the Business Combination, an affirmative vote of holders of a majority of the voting power of the ordinary shares of Thunder Bridge entitled to vote on the Proposals, who are present and vote at the General Meeting is required with respect to the Proposals (other than (i) the Domestication Proposal and the Articles Amendment Proposal which requires the approval of the holders of at least two-thirds of the voting power of the outstanding ordinary shares entitled to vote on such proposal that are present and vote at the General Meeting and (ii) the election of directors pursuant to the Director Election Proposal, which requires each director to be approved by holders of not less than a majority of the Class B ordinary shares of Thunder Bridge that are present and vote at the General Meeting).

 

Thunder Bridge’s board of directors strongly supports the Business Combination and the other transactions contemplated by the Merger Agreement and recommends that you vote in favor of the Proposals presented for your approval.

 

Very truly yours,
 
 
 
 
Gary A. Simanson
President and Chief Executive Officer
Thunder Bridge Acquisition, Ltd.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

The accompanying proxy statement/prospectus is dated                  , 2019 and is first being mailed to the shareholders of Thunder Bridge Acquisition, Ltd. on or about                  , 2019.

 

ADDITIONAL INFORMATION

 

The accompanying document is the proxy statement of Thunder Bridge for the General Meeting, and the prospectus for the securities of the continuing Delaware corporation following the Domestication. This registration statement and the accompanying proxy statement/prospectus is available without charge to shareholders of Thunder Bridge upon written or oral request. The accompanying proxy statement/prospectus incorporates important business and financial information about Thunder Bridge from other documents that are not included in or delivered with this proxy statement/prospectus. This additional information may obtained by either written or oral request to Gary A. Simanson, Thunder Bridge Acquisition, Ltd., 9912 Georgetown Pike, Suite D203, Great Falls, Virginia 22066 or by telephone at (202) 431-0507.

 

The Securities and Exchange Commission maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. You may obtain copies of the materials described above at the commission’s internet site at www.sec.gov.

 

In addition, if you have questions about the Proposals or the accompanying proxy statement/prospectus, would like additional copies of the accompanying proxy statement/prospectus, or need to obtain proxy cards or other information related to the proxy solicitation, please contact                  , the proxy solicitor for Thunder Bridge, toll-free at                   or collect at                  . You will not be charged for any of the documents that you request.

 

See the section entitled “Where You Can Find More Information” of the accompanying proxy statement/prospectus for further information.

 

Information contained on the Repay website, or any other website, is expressly not incorporated by reference into this proxy statement/prospectus.

 

To obtain timely delivery of the documents, you must request them no later than five business days before the date of the applicable General Meeting, or no later than                  , 2019.

 

 

 

 

THUNDER BRIDGE ACQUISITION, LTD.

9912 Georgetown Pike

Suite D203

Great Falls, Virginia 22066

 

NOTICE OF EXTRAORDINARY GENERAL MEETING
TO BE HELD ON                  , 2019

 

TO THE SHAREHOLDERS OF THUNDER BRIDGE ACQUISITION, LTD.:

 

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “General Meeting”) of Thunder Bridge Acquisition, Ltd., a Cayman Islands exempted company (“Thunder Bridge”), will be held at 10:00 a.m. Eastern Time, on                  , 2019 at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105. You are cordially invited to attend the General Meeting, which will be held for the following purposes:

 

  (1) The Domestication Proposal — To consider and vote upon a proposal to change the corporate structure and domicile of Thunder Bridge by way of continuation from an exempted company incorporated under the laws of the Cayman Islands to a corporation incorporated under the laws of the State of Delaware (the “Domestication”). The Domestication will be effected simultaneously with the Business Combination (as defined below) by Thunder Bridge filing a Certificate of Corporate Domestication and a Certificate of Incorporation with the Delaware Secretary of State and filing an application to de-register with the Registrar of Companies of the Cayman Islands. Upon the effectiveness of the Domestication, Thunder Bridge will become a Delaware corporation and will change its corporate name to “Repay Holdings Corporation” (Repay Holdings Corporation and Thunder Bridge following the Domestication and the Business Combination, the “Company”) and all outstanding securities of Thunder Bridge will convert to outstanding securities of the Company, as described in more detail in the accompanying proxy statement/prospectus. We refer to this proposal as the “Domestication Proposal.” The form of the proposed Delaware Certificate of Incorporation of the Company to become effective upon the Domestication, is attached to the accompanying proxy statement/prospectus as Annex A.
     
  (2) The Business Combination Proposal — To consider and vote upon a proposal to approve the Amended and Restated Agreement and Plan of Merger dated effective as of January 21, 2019 (as amended or supplemented from time to time, the “Merger Agreement”) by and among Thunder Bridge, TB Acquisition Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Thunder Bridge (“Merger Sub”), Hawk Parent Holdings LLC, a Delaware limited liability company (“Repay”) and, solely in its capacity as the Repay securityholder representative thereunder, CC Payment Holdings, L.L.C., a Delaware limited liability company (the “Repay Securityholder Representative”), and the transactions contemplated by the Merger Agreement, including the issuance of the merger consideration thereunder (collectively, the “Business Combination”). Pursuant to the Merger Agreement, Merger Sub will merge with and into Repay (the “Merger”), with Repay continuing as the surviving entity of the Merger and becoming a subsidiary of the Company as described in more detail in the attached proxy statement/prospectus. We refer to this proposal as the “Business Combination Proposal.” A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex B.
     
  (3) The 2019 Equity Incentive Plan Proposal — To consider and vote upon the approval of the 2019 Equity Incentive Plan. We refer to this as the “2019 Equity Incentive Plan Proposal.” A copy of the 2019 Equity Incentive Plan is attached to the accompanying proxy statement/prospectus as Annex C.
     
  (4) The Director Election Proposal — To consider and vote upon a proposal to elect nine directors to serve staggered terms on the Company’s board of directors until the 2020, 2021 and 2022 annual meeting of stockholders, respectively and until their respective successors are duly elected and qualified. We refer to this as the “Director Election Proposal.”
     
  (5) The Articles Amendment Proposal — To consider and vote upon a proposal to amend the Articles in the Memorandum and Articles of Association so that the prohibition on Thunder Bridge’s having net tangible assets of less than $5,000,001 upon the completion of a business combination is revised to apply immediately prior to the completion of a business combination and measures only the net tangible assets of Thunder Bridge, without regard to the assets or liabilities of the target company of such business combination and its subsidiaries, so that Thunder Bridge may have more flexibility in effecting the Business Combination. The full text of the resolutions to amend the Memorandum and Articles of Association is attached to the accompanying proxy statement/prospectus as Annex F.
     
  (6) The Adjournment Proposal — To consider and vote upon a proposal to adjourn the General Meeting to a later date or dates, if necessary to permit further solicitation and vote of proxies if it is determined by Thunder Bridge that more time is necessary or appropriate to approve one or more proposals at the General Meeting. We refer to this proposal as the “Adjournment Proposal” and, together with the Domestication Proposal, the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal, the Director Election Proposal and the Articles Amendment Proposal as the “Proposals.”

 

 

 

  

These Proposals are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of ordinary shares of Thunder Bridge at the close of business on                  , 2019 (the “Record Date”) are entitled to notice of the General Meeting and to vote and have their votes counted at the General Meeting and any adjournments or postponements of the General Meeting.

 

After careful consideration, Thunder Bridge’s board of directors has determined that the Proposals are fair to and in the best interests of Thunder Bridge and its shareholders and unanimously recommends that the holders of Thunder Bridge’s ordinary shares entitled to vote on the Proposals, vote or give instruction to vote “FOR” the Domestication Proposal, “FOR” the Business Combination Proposal, “FOR” the 2019 Equity Incentive Plan Proposal, “FOR” the election of each of the director nominees pursuant to the Director Election Proposal, “FOR” the Articles Amendment Proposal and “FOR” the Adjournment Proposal, if presented.

 

The existence of any financial and personal interests of one or more of Thunder Bridge’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Thunder Bridge and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “Business Combination Proposal—Interests of Thunder Bridge’s Directors and Officers and Others in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of this.

 

Each of the Domestication Proposal, the Business Combination Proposal, the Director Election Proposal and the Articles Amendment Proposal is interdependent upon the others and must be approved in order for Thunder Bridge to complete the Business Combination contemplated by the Merger Agreement. The Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Adjournment Proposal must be approved by the holders of a majority of the Thunder Bridge Shares that are present and vote at the General Meeting. The Domestication Proposal and the Articles Amendment Proposal must be approved by a special resolution, being the approval of the holders of at least two-thirds of the Thunder Bridge Shares as of the record date that are present and vote at the General Meeting. The election of directors pursuant to the Director Election Proposal must be approved by an ordinary resolution of the holders of the Class B ordinary shares of Thunder Bridge, being the approval of the holders of not less than a majority of such shares as of the record date that are present and vote at the General Meeting.

 

All shareholders of Thunder Bridge are cordially invited to attend the General Meeting in person. To ensure your representation at the General Meeting, however, you are urged to mark, sign and date the enclosed proxy card and return it as soon as possible in the pre-addressed postage paid envelope provided. If you are a shareholder of record of Thunder Bridge ordinary shares, you may also cast your vote in person at the General Meeting. If your shares are held in an account at a brokerage firm or bank, or by a nominee, you must instruct your broker, bank or nominee on how to vote your shares or, if you wish to attend the General Meeting and vote in person, obtain a proxy from your broker, bank or nominee. If any of the Domestication Proposal, Business Combination Proposal or Director Election Proposal fails to receive the required approval, the Business Combination will not be completed.

 

Whether or not you plan to attend the General Meeting, we urge you to read the accompanying proxy statement/prospectus (and any documents incorporated into the accompanying proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors” in the accompanying proxy statement/prospectus.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the General Meeting or not, please mark, sign and date the enclosed proxy card and return it as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors    
     
     
     
     
     
Chief Executive Officer and President    

                       , 2019

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. YOU MAY EXERCISE YOUR RIGHTS TO DEMAND THAT THUNDER BRIDGE REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT WHETHER YOU VOTE FOR OR AGAINST THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST TENDER YOUR SHARES TO THUNDER BRIDGE’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE GENERAL MEETING. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE SHAREHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BROKER OR BANK TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE THE SECTION ENTITLED “EXTRAORDINARY GENERAL MEETING—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

 

 

 

  

TABLE OF CONTENTS

 

FREQUENTLY USED TERMS 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 6
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS 7
QUESTIONS AND ANSWERS 13
SELECTED HISTORICAL FINANCIAL INFORMATION OF THUNDER BRIDGE 26
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF REPAY 27
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 30
COMPARATIVE PER SHARE INFORMATION 33
RISK FACTORS 34
EXTRAORDINARY GENERAL MEETING 70
PROPOSAL 1: THE DOMESTICATION PROPOSAL 74
PROPOSAL 2: THE BUSINESS COMBINATION PROPOSAL 87
PROPOSAL 3: THE 2019 EQUITY INCENTIVE PLAN PROPOSAL 136
PROPOSAL 4: THE DIRECTOR ELECTION PROPOSAL 141
PROPOSAL 5: THE ARTICLES AMENDMENT PROPOSAL 144
PROPOSAL 6: THE ADJOURNMENT PROPOSAL 146
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 147
INFORMATION ABOUT THUNDER BRIDGE 159
DIRECTORS, OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE OF THUNDER BRIDGE PRIOR TO THE BUSINESS COMBINATION 162
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THUNDER BRIDGE 169
DESCRIPTION OF THUNDER BRIDGE’S AND THE COMPANY’S SECURITIES 174
MARKET PRICE AND DIVIDENDS OF SECURITIES 187
BENEFICIAL OWNERSHIP OF SECURITIES 188
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS 191
INFORMATION ABOUT REPAY 194
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF REPAY 212
MANAGEMENT OF REPAY 230
EXECUTIVE COMPENSATION OF REPAY 233
MANAGEMENT OF THE COMPANY FOLLOWING THE BUSINESS COMBINATION 239
SECURITIES ACT RESTRICTIONS ON RESALE OF THE COMPANY’S SECURITIES 244
APPRAISAL RIGHTS 245
OTHER SHAREHOLDER COMMUNICATIONS 245
LEGAL MATTERS 245
EXPERTS 245
DELIVERY OF DOCUMENTS TO SHAREHOLDERS 245
TRANSFER AGENT AND REGISTRAR 245
SUBMISSION OF SHAREHOLDER PROPOSALS 246
FUTURE STOCKHOLDER PROPOSALS 246
WHERE YOU CAN FIND MORE INFORMATION 246
INDEX TO FINANCIAL STATEMENTS F-1
ANNEX A  Certificate of Incorporation of Repay Holdings Corporation A-1
ANNEX B  Amended and Restated Agreement and Plan of Merger B-1
ANNEX C  Repay Holdings Corporation Omnibus Incentive Plan C-1
ANNEX D  Form of Exchange Agreement D-1
ANNEX E  Form of Tax Receivable Agreement E-1
ANNEX F  Text of Articles Amendment F-1

 

i

Table of Contents

 

FREQUENTLY USED TERMS

 

Definitions

 

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “Thunder Bridge” refer to Thunder Bridge Acquisition, Ltd. (which prior to the Domestication is an exempted company incorporated under the laws of the Cayman Islands and thereafter a corporation incorporated under the laws of the State of Delaware).

 

In this document:

 

2019 Equity Incentive Plan” means the Repay Holdings Corporation Omnibus Incentive Plan, which will become effective following the Business Combination. A copy of the 2019 Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C.

 

2019 Equity Incentive Plan Proposal” means the proposal to be considered at the General Meeting to approve the 2019 Equity Incentive Plan of the Company.

 

Adjournment Proposal” means the proposal to be considered at the General Meeting to adjourn the General Meeting to a later date or dates, if necessary to permit further solicitation and vote of proxies if it is determined by Thunder Bridge that more time is necessary or appropriate to approve one or more proposal at the General Meeting.

 

Amended Operating Agreement” means the Amended and Restated Operating Agreement of Repay to be in place upon the completion of the Business Combination. A copy of the Amended Operating Agreement is incorporated by reference as an exhibit to the registration statement of which this proxy statement/prospectus is a part.

 

Articles Amendment Proposalmeans the proposal to be considered at the General Meeting to approve an amendment to the Memorandum and Articles of Association. The full text of the resolutions to amend the Memorandum and Articles of Association is attached to this proxy statement/prospectus as Annex F.

 

Business Combination” means the transactions contemplated by the Merger Agreement.

 

Business Combination Proposal” means the proposal to be considered at the General Meeting to approve the Business Combination.

 

Bylawsmean the proposed bylaws of the Company to be in effect following the Business Combination, a form of which is attached as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

 

Cantor” means Cantor Fitzgerald & Co., the representative of the underwriters in the IPO.

 

Certificate of Incorporation” means the proposed certificate of incorporation of the Company to be in effect following the Domestication and the Business Combination.

 

“Class A common stock” means the Class A common stock of the Company, par value $0.0001 per share.

 

“Class A ordinary shares” means the Class A ordinary shares of Thunder Bridge, par value $0.0001 per share.

 

“Class B ordinary shares” means the Class B ordinary shares of Thunder Bridge, par value $0.0001 per share.

 

“Class V common stock” means the Class V common stock of the Company, par value $0.0001 per share.

 

“Closing” means the closing of the Business Combination.

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Companies Law” refers to the Cayman Islands Companies Law (2018 Revision).

 

Company” means Thunder Bridge as a Delaware corporation by way of continuation following the Domestication and the Business Combination. In connection with the Domestication and simultaneously with the Business Combination, Thunder Bridge will change its corporate name to “Repay Holdings Corporation.”

 

Company Board” means the board of directors of the Company subsequent to the completion of the Business Combination.

 

1

Table of Contents 

  

“Company’s Shares” means, collectively, all shares of the Class A common stock and Class V common stock of the Company.

  

Corsair” means CC Payment Holdings, L.L.C., a Delaware limited liability company, an entity controlled by Corsair Capital LLC and its affiliates.

 

Debt Commitment Letter” means that certain commitment letter, dated as of January 21, 2019, from the Debt Commitment Parties to Merger Sub in connection with the Business Combination, including, without limitation, the exhibits thereto.

 

Debt Commitment Parties” means SunTrust Bank and SunTrust Robinson Humphrey, Inc., as parties to the Debt Commitment Letter.

 

Debt Financing” means the debt financing incurred or intended to be incurred pursuant to the Debt Commitment Letter.

 

DGCL” means the Delaware General Corporation Law, as amended.

 

DLLCA” means the Delaware Limited Liability Company Act, as amended.

 

Director Election Proposal” means the proposal to be considered at the General Meeting to elect nine directors to serve staggered terms on the Company Board until the 2020, 2021 and 2022 annual meeting of stockholders, respectively and until their respective successors are duly elected and qualified.

 

Domestication” means the continuation of Thunder Bridge by way of domestication of Thunder Bridge into a Delaware corporation, with the ordinary shares of Thunder Bridge becoming shares of Class A common stock of the Delaware corporation under the applicable provisions of the Companies Law and the DGCL; the term includes all matters and necessary or ancillary changes in order to effect such Domestication, including the adoption of the Certificate of Incorporation for the Company (as attached hereto at Annex A) consistent with the DGCL and changing the name and registered office of Thunder Bridge.

 

Domestication Proposal” means the proposal to be considered at the General Meeting to approve the Domestication.

 

DWAC” means The Depository Trust Company’s deposit/withdrawal at custodian system.

 

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

Exchange Agreement” means the Exchange Agreement to be entered into between the Company, Repay and the Repay Equity Holders upon the completion of the Business Combination. A copy of the Exchange Agreement is attached to this proxy statement/prospectus as Annex D.

 

Founder Shares” means the 6,450,000 currently outstanding Class B ordinary shares of Thunder Bridge owned by the Sponsor.

 

GAAP” means U.S. generally accepted accounting principles.

 

General Meeting” means the extraordinary general meeting of Thunder Bridge, to be held at 10:00 a.m. Eastern Time on                  , 2019 at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105, and any adjournments or postponements thereof.

 

Insider Letter Agreement” means Thunder Bridge’s letter agreement with its Sponsor, directors and officers, dated June 18, 2018, containing provisions relating to transfer restrictions of the Founder Shares and Private Placement Warrants, indemnification of the Trust Account, waiver of Redemption Rights and participation in liquidation distributions from the Trust Account.

 

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IPO” means Thunder Bridge’s initial public offering of its units, Class A ordinary shares and warrants pursuant to a registration statement on Form S-1 declared effective by the SEC on June 18, 2018 (SEC File No. 333-224581). On June 21, 2018, Thunder Bridge completed its initial public offering.

 

Memorandum and Articles of Association” means Thunder Bridge’s current amended and restated Memorandum and Articles of Association, as may hereafter be amended.

 

Merger” means the statutory merger of Merger Sub with and into Repay pursuant to the terms of the Merger Agreement and under the applicable provisions of the DLLCA, with Repay continuing as the surviving entity and becoming a subsidiary of the Company.

 

Merger Agreement” means the Amended and Restated Agreement and Plan of Merger, dated effective as of January 21, 2019 by and among Thunder Bridge, Merger Sub, Hawk Parent Holdings LLC and, solely in its capacity as the Repay Securityholder Representative thereunder, CC Payment Holdings, L.L.C., a Delaware limited liability company, as it may be amended and supplemented from time to time. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex B.

 

Merger Sub” means TB Acquisition Merger Sub LLC, a Delaware limited liability company which is a wholly-owned subsidiary of Thunder Bridge.

 

Nasdaq” means The Nasdaq Stock Market, LLC.

 

Post-Merger Repay Units” means units representing limited liability company interests of Repay as the surviving company following the Merger, which will be non-voting interests in Repay.

 

Private Placement Warrants” means the 8,830,000 private placement warrants, each exercisable for one Class A ordinary share of Thunder Bridge at $11.50 per share, purchased by the Sponsor and Cantor for a purchase price of $8,830,000, or $1.00 per warrant.

 

Proposals” means, collectively, (i) the Domestication Proposal, (ii) the Business Combination Proposal, (iii) the 2019 Equity Incentive Plan Proposal, (iv) the Director Election Proposal, (v) the Articles Amendment Proposal and (vi) the Adjournment Proposal, if presented.

 

Public Shareholders” means the holders of Thunder Bridge Class A ordinary shares that were sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).

 

Public Shares” means Thunder Bridge’s Class A ordinary shares sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).

 

Record Date” means                  , 2019.

 

Redemption” means the redemption of Public Shares for the Redemption Price.

 

Redemption Price” means an amount equal to a pro rata portion of the aggregate amount then on deposit in the Trust Account in accordance with the Memorandum and Articles of Association (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing). The Redemption Price will be calculated two days prior to the completion of the Business Combination in accordance with Thunder Bridge’s Memorandum and Articles of Association, as currently in effect.

 

Redemption Rights” means the rights of the Thunder Bridge Public Shareholders to demand Redemption of their Public Shares into cash in accordance with the procedures set forth in the Memorandum and Articles of Association and this proxy statement/prospectus.

 

Repay” means Hawk Parent Holdings LLC, a Delaware limited liability company.

 

Repay Equity Holder” means a member of Repay prior to the Closing of the Merger.

 

Repay Securityholder Representative” means Corsair, acting in its capacity as the representative of the securityholders of Repay as set forth in the Merger Agreement.

 

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

 

SEC” means the United States Securities and Exchange Commission.

 

Securities Act” means the Securities Act of 1933, as amended.

 

Sponsor” means Thunder Bridge Acquisition, LLC, a Delaware limited liability company.

 

Subscription and Distribution Agreement” means the Subscription and Distribution Agreement to be entered into between the Company and Repay upon the completion of the Business Combination. The form of the Subscription and Distribution Agreement is incorporated by reference as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

 

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Target Companies” means Repay and its subsidiaries. 

Tax Receivable Agreement” means the Tax Receivable Agreement to be entered into between the Company and the Repay Equity Holders upon the completion of the Business Combination. A copy of the Tax Receivable Agreement is attached to this proxy statement/prospectus as Annex E

Thunder Bridge” means Thunder Bridge Acquisition, Ltd. (which prior to the Domestication is an exempted company incorporated under the laws of the Cayman Islands and after the Domestication will be a corporation incorporated under the laws of the State of Delaware and will be referred to as the Company). 

Thunder Bridge Board” means the board of directors of Thunder Bridge. 

Thunder Bridge Shares” means, collectively, the Class A ordinary shares and the Class B ordinary shares of Thunder Bridge. 

Transfer Agent” means Continental Stock Transfer & Trust Company. 

Trust Account” means the trust account of Thunder Bridge, which holds the net proceeds from the IPO and the sale of the Private Placement Warrants, together with interest earned thereon, less amounts released to pay taxes. 

Units” means the units sold in the IPO (including pursuant to the overallotment option) consisting of a Class A ordinary share of Thunder Bridge and a Warrant. 

Share Calculations and Ownership Percentages 

Unless otherwise specified, the share calculations and ownership percentages set forth in this proxy statement/prospectus with respect to the Company’s stockholders following the Business Combination are for illustrative purposes only and assume the following (certain capitalized terms below are defined elsewhere in this proxy statement/prospectus): 

1. No Public Shareholders exercise their Redemption Rights in connection with the Closing of the Business Combination. Please see the section entitled “Extraordinary General Meeting—Redemption Rights”. 

2. There is no equity financing in connection with the Business Combination. 

3. No Thunder Bridge shareholders exercise any of the 25,800,000 Warrants or the 8,830,000 Private Placement Warrants that will remain outstanding following the Business Combination. 

4. All Post-Merger Repay Units are exchanged for Class A common stock at such time (even if not yet permitted under the terms of the Exchange Agreement). Please see the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Exchange Agreement”. 

5. The Sponsor forfeits 400,000 of its Class B ordinary shares at the Closing in accordance with the Sponsor Letter Agreement and, except with respect to the number of shares calculated under the 2019 Equity Incentive Plan, forfeits the 3,900,000 shares of Class A common stock to be held in escrow in accordance with the Sponsor Letter Agreement. The calculations for the 2019 Equity Incentive Plan assume that the 3,900,000 shares held in escrow are outstanding and not forfeited. Please see the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—The Sponsor Letter  Agreement”. 

6. No Earn-Out Units are issued. Please see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—The Earn-Out”. 

7. The Cash Consideration is exactly $292,340,036 (before deducting the amount for the Cash Escrows and the Repay Securityholder Representative Amount (the amount following such deductions being the Required Cash Consideration Amount)). Please see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Merger Consideration”. 

8. For the Closing Adjustment Items: (a) the expected Indebtedness of the Target Companies, net of cash and cash equivalents, as of the Closing (assuming a March 31, 2019 Closing Date) is $79,748,964; (b) the unpaid transaction expenses of the Target Companies are $22,650,000 as of the Closing; (c) estimated Employee Payments of $6,501,000; (d) the net working capital of the Target Companies (excluding cash and cash equivalents, indebtedness, transaction expenses and Employee Payments and otherwise based on certain specified accounts) as of the Closing is equal to the target net working capital amount of $4,000,000, and there is no net working capital adjustment; (e) the Contingent Marlin Consideration Obligations are zero; and (f) the Target Companies have no cash and cash equivalents as of immediately prior to the Effective Time. The NCP Escrow Amount of $14,048,595 is put into escrow at the Closing. Please see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Merger Consideration”. 

9. There are no post-Closing adjustments to the Closing Adjustment Items. Please see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—The Escrow Units, NCP Escrow Amount and Additional Escrow Amount”. 

10. The Escrow Units are treated as if owned by the Repay Equity Holders, although they will be held in escrow and subject to return and cancellation by the Company. Please see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—The Escrow Units, NCP Escrow Amount and Additional Escrow Amount”.

11. There are no other issuances of equity securities of Thunder Bridge prior to or in connection with the Closing. 

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Market and Industry Data

 

Information contained in this prospectus/proxy statement concerning the market and the industry in which Repay competes, including its market position, general expectations of market opportunity and market size, is based on information from various third-party sources, on assumptions made by Repay based on such sources and Repay’s knowledge of the markets for its services and solutions. In addition, Repay has commissioned an independent research report from Stax Inc. (“Stax”) for market and industry information to be used by Repay. Any estimates provided herein involve numerous assumptions and limitations, and you are cautioned not to give undue weight to such information. Third-party sources, including the report from Stax, generally state that the information contained in such source has been obtained from sources believed to be reliable but that there can be no assurance as to the accuracy or completeness of such information. The industry in which Repay operates is subject to a high degree of uncertainty and risk. As a result, the estimates and market and industry information provided in this prospectus/proxy statement are subject to change based on various factors, including those described in the section entitled “Risk Factors—Risks Related to Repay’s Business” and elsewhere in this proxy statement/prospectus.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement/prospectus contains forward-looking statements. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business, and the timing and ability for Thunder Bridge and Repay to complete the Business Combination. Specifically, forward-looking statements may include statements relating to:

 

  the benefits of the Business Combination;

 

  the future financial performance of the Company following the Business Combination;

 

  changes in the market for Repay’s services;

 

  expansion plans and opportunities; and
     
 

other statements preceded by, followed by or that include the words “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

 

These forward-looking statements are based on information available as of the date of this proxy statement/prospectus and Thunder Bridge and Repay managements’ current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of Thunder Bridge, Repay and their respective directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing Thunder Bridge’s views as of any subsequent date. Thunder Bridge does not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

 

You should not place undue reliance on these forward-looking statements in deciding how your vote should be cast or in voting your shares on the Proposals. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

the occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the termination of the Merger Agreement;

 

the outcome of any legal proceedings that may be instituted against Repay or Thunder Bridge following announcement of the proposed Business Combination and transactions contemplated thereby;

 

​the inability to complete the Business Combination due to the failure to obtain approval of the Thunder Bridge shareholders, the failure of Thunder Bridge to obtain the debt financing required by the Merger Agreement or otherwise retain sufficient cash in the Trust Account or find replacement cash to meet the requirements of the Merger Agreement or the failure to meet other conditions to closing in the Merger Agreement;

 

the inability to maintain the listing of the Class A common stock of the Company on Nasdaq following the Business Combination;

 

​the risk that the proposed Business Combination disrupts current plans and operations;

 

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, and the ability of the Company to grow and manage growth profitably;

 

costs related to the Business Combination;

 

changes in the payment processing market in which Repay competes, including with respect to its competitive landscape, technology evolution or changes in applicable laws or regulations;

 

changes in the vertical markets that Repay targets;

 

changes to Repay’s relationships within the payment ecosystem;

 

the inability to launch new Repay services and products or to profitably expand into new markets;

 

the inability to execute Repay’s growth strategies, including identifying and executing acquisitions;

 

the inability to develop and maintain effective internal controls;

 

the exposure to any liability, protracted and costly litigation or reputational damage relating to Repay’s data security;

 

​the possibility that Repay or Thunder Bridge may be adversely affected by other economic, business, and/or competitive factors; and

 

other risks and uncertainties indicated in this proxy statement/prospectus, including those set forth under the section entitled “Risk Factors.”

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

This summary highlights selected information from this proxy statement/prospectus, but does not contain all of the information that may be important to you. To better understand the proposals to be considered at the General Meeting, including the Business Combination Proposal, whether or not you plan to attend the General Meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 34. See also the section entitled “Where You Can Find More Information.”

 

Parties to the Business Combination

 

Thunder Bridge

 

Thunder Bridge was incorporated as a Cayman Islands exempted company on September 18, 2017 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, one or more businesses or entities. On September 20, 2017, the Founder Shares (an aggregate of 5,750,000 Class B ordinary shares) were sold to the Sponsor at a price of approximately $0.004 per share, for an aggregate price of $25,000. On June 18, 2018, Thunder Bridge effectuated a 1.125 for 1 dividend of its ordinary shares resulting in an aggregate of 6,468,750 Founder Shares issued and outstanding.

 

On June 21, 2018, Thunder Bridge completed its IPO of 22,500,000 units. Each unit consists of one Class A ordinary share and one warrant (“Warrant” or “public warrant”), with each Warrant entitling the holder thereof to purchase one Class A ordinary share for $11.50 per share. The units were sold at a price of $10.00 per Unit, generating gross proceeds to Thunder Bridge of $225,000,000. Pursuant to an option granted to Cantor, the representative of the several underwriters in the IPO, on June 28, 2018, the underwriters partially exercised the option and purchased 3,300,000 units, generating gross proceeds of $33,000,000. As a result of the underwriters not exercising the over-allotment in full, 18,750 Founder Shares were forfeited, resulting in an aggregate of 6,450,000 Founder Shares issued and outstanding. In addition, Thunder Bridge completed the sale of the Private Placement Warrants (8,830,000 Warrants at a price of $1.00 per Warrant) in a private placement to the Sponsor and Cantor, generating gross proceeds of $8,830,000. A total of $260,580,000 of the net proceeds from the IPO and the Private Placement Warrants were deposited in the Trust Account established for the benefit of the Public Shareholders and the remaining proceeds became available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest except those certain amounts withdrawn in order to pay tax obligations. As of December 31, 2018, there was approximately $263.3 million held in the Trust Account.

 

Thunder Bridge’s principal executive offices are located at 9912 Georgetown Pike, Suite D203, Great Falls, Virginia 22066 and its phone number is (202) 431-0507.

 

Merger Sub

 

Merger Sub is a Delaware limited liability company and wholly-owned subsidiary of Thunder Bridge formed on January 16, 2019. In the Merger, Merger Sub will merge with and into Repay with Repay being the surviving entity and becoming a wholly-owned subsidiary of the Company.

 

Merger Sub’s principal executive offices are located at 9912 Georgetown Pike, Suite D203, Great Falls, Virginia 22066 and its phone number is (202) 431-0507.

 

Repay

 

Headquartered in Atlanta, Georgia, Repay’s legacy business was founded as M & A Ventures, LLC, a Georgia limited liability company in 2006 by current executives John Morris and Shaler Alias. In 2013, as a result of its acquisition by certain investment funds affiliated with a private equity firm, M & A Ventures became a wholly-owned subsidiary of Repay Holdings, LLC, a Delaware limited liability company. Hawk Parent Holdings LLC, a Delaware limited liability company (referred to as Repay) was formed in 2016 to acquire Repay Holdings, LLC in connection with the acquisition of a majority interest in Repay Holdings, LLC and its subsidiaries by investment funds sponsored by, or affiliated with, Corsair Capital LLC. Repay is a holding company with no operations of its own, and its business operations are conducted almost entirely through M & A Ventures and other subsidiaries of Repay Holdings.

 

Repay provides integrated payment processing solutions to industry-oriented markets in which merchants have specific transaction processing needs—these markets are referred to as “vertical markets” or “verticals.” Repay’s proprietary, integrated payment technology platform reduces the complexity of the electronic payments process for merchants, while enhancing their consumers’ overall experience. Repay charges its clients processing fees based on the volume of payment transactions processed and other transaction or service fees. Repay intends to continue to strategically target verticals where it believes its ability to tailor payment solutions to its clients’ needs, its deep knowledge of its vertical markets and the embedded nature of Repay’s integrated payment solutions will drive strong growth by attracting new clients and fostering long-term client relationships.

 

Repay’s principal executive offices are located at 3 West Paces Ferry Road, Suite 200, Atlanta, Georgia 30305 and its phone number is (404) 504-7474.

 

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Repay Securityholder Representative

 

Corsair is acting as the Repay Securityholder Representative pursuant to the Merger Agreement. Corsair is a Delaware limited liability company formed on July 12, 2016, and is owned and managed by investment funds sponsored by Corsair Capital LLC. Corsair currently holds approximately 75% of the limited liability company membership interests in Repay.

 

The Repay Securityholder Representative’s principal executive offices are located at c/o Corsair Capital LLC, 717 Fifth Avenue, 24th Floor, New York, NY 10022 and its phone number is (212) 224-9400.

 

The Proposals

 

Proposal 1: The Domestication Proposal

 

Thunder Bridge is proposing to change its corporate structure and domicile by way of continuation from an exempted company incorporated under the laws of the Cayman Islands to a corporation incorporated under the laws of the State of Delaware. The Domestication will become effective simultaneously with the completion of the Business Combination and will be effected by the filing of a Certificate of Corporate Domestication and a Certificate of Incorporation with the Delaware Secretary of State and the filing of an application to de-register with the Registrar of Companies of the Cayman Islands and all outstanding securities of Thunder Bridge will convert to outstanding securities of the continuing Delaware corporation, as described in more detail in this proxy statement/prospectus. Upon the effectiveness of the Domestication, Thunder Bridge will continue its existence in the form of a Delaware corporation and will change its corporate name to “Repay Holdings Corporation.” Please read the section entitled “Proposal 1: The Domestication Proposal.

 

Proposal 2: The Business Combination Proposal

 

Thunder Bridge and Repay have agreed to the Business Combination under the terms the Merger Agreement. Pursuant to the terms set forth in the Merger Agreement, subject to the satisfaction or waiver of the conditions to the Closing therein, simultaneously with completion of the Domestication, Merger Sub will merge with and into Repay, with Repay continuing as the surviving entity and becoming a subsidiary of the Company.

 

Merger Agreement

 

In connection with the completion of the Merger, the Repay Equity Holders will collectively receive as consideration for their existing limited liability company interests of Repay:

 

(i) an amount of cash of up to $300 million (less $14,198,595 in cash set aside in escrow pursuant to the Merger Agreement (the “Cash Escrows”) and $2,000,000 in cash to be held by the Repay Securityholder Representative to pay its costs and expenses) (the “Repay Securityholder Representative Amount”), with any remaining of these amounts delivered to the Repay Equity Holders) (provided, that if the amount of cash is less than $290 million prior to deducting the Cash Escrows and the Repay Securityholder Representative Amount, Repay is not required to close),

  

(ii) a number of Post-Merger Repay Units (calculated based on a per-unit value of $10.00) equal to: (A) $600 million less (B) the cash consideration received by the Repay Equity Holders pursuant to clause (i) above (prior to deducting for the Cash Escrows and the Repay Securityholder Representative Amount) and (C) reduced (or increased if such amount is negative) by an amount equal to the sum of certain Closing Adjustment Items pursuant to the Merger Agreement (which amounts will be estimated at the Closing and subject to a post-Closing true-up); which Post-Merger Repay Units will be exchangeable for shares of Class A common stock on a one-for-one basis (subject to customary conversion rate adjustments, including for stock splits, stock dividends and reclassifications and other terms of the Exchange Agreement), with 60,000 of such Post-Merger Repay Units (the “Escrow Units”) being set aside in escrow pursuant to the Merger Agreement for post-Closing true-up adjustments for the Closing Adjustment Items pursuant to the Merger Agreement and described in the Section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Merger Consideration.

  

(iii) the contingent right to receive any remaining amounts of (A) the Cash Escrows, (B) the Repay Securityholder Representative Amount and (C) the Escrow Units, and

 

(iv) the contingent right to receive up to 7,500,000 Post-Merger Repay Units, subject to the satisfaction of certain stock-price based performance thresholds (the “Earn-Out Units”).

 

Additionally, pursuant to the Subscription and Distribution Agreement between the Company and Repay, immediately following the completion of the Merger, (i) the Company will issue to Repay one hundred shares of Class V common stock of the Company and (ii) Repay will distribute one share of Class V common stock to each member of Repay (the “Class V Holders”). The Class V common stock provides no economic rights in the Company to the holder thereof; however, each Class V Holder will be entitled to vote with the holders of Class A common stock of the Company, with each Class V share entitling the holder to a number of votes equal to the number of Post-Merger Repay Units held by such Class V Holder at the time of such vote (subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications).

 

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Following the Closing, pursuant to a Tax Receivable Agreement between the Company and the Repay Equity Holders, the Company will pay to exchanging holders of Post-Merger Repay Units 100% of the tax savings that the Company realizes as a result of increases in tax basis in Repay’s assets as a result of the exchange of the Post-Merger Repay Units for shares of Class A common stock pursuant to the Exchange Agreement and certain other tax attributes of Repay and tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For more information on the Tax Receivable Agreement, please see the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Tax Receivable Agreement.”

 

The obligations of the parties to the Merger Agreement to effect the Closing are subject to a number of closing conditions, including, among others:

 

With respect to the obligations of all of the parties to the Merger Agreement:

 

  expiration of the waiting period under the HSR Act,

 

  approval by Thunder Bridge’s shareholders of the Domestication Proposal, the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Director Election Proposal,

 

  the effectiveness of the registration statement (of which this proxy statement/prospectus forms a part), and

 

  immediately prior to the Closing, after giving effect to the completion of the Redemptions, Thunder Bridge, without regard to any assets or liabilities of the Target Companies, having net tangible assets of at least $5,000,001.

 

With respect to the obligations of Repay, among others:

 

Thunder Bridge having delivered cash consideration to Repay equal to $290 million (less $2 million to be set aside for Repay Securityholder Representative expenses, $14,048,595 deposited in escrow to satisfy certain earn out obligations of Repay and $150,000 deposited in escrow to satisfy certain additional potential pre-Closing taxes and related expenses of Repay),

 

after giving effect to the completion of the Closing, the indebtedness of the Company not exceeding $210 million,

 

upon the completion of the Closing, no person or group (excluding any Repay Equity Holder) owning in excess of 9.9% of the issued and outstanding shares of Company common stock, and no three persons or groups (excluding any member of Repay) owning in the aggregate in excess of 25% of the issued and outstanding shares of Company common stock,

 

the Class A common stock (including the shares of Class A common stock issuable in connection with the Domestication and upon exchange of Post-Merger Repay Units) having been listed on Nasdaq and being eligible for continued listing on Nasdaq following the Closing and after giving effect to the Redemptions (as if it were a new initial listing by an issuer that had never been listed prior to Closing),

 

the existing directors of Thunder Bridge having resigned and the nine directors set forth in the Merger Agreement (or their replacements) having been appointed to the Company Board in accordance with the DGCL, and

 

the completion of the Domestication simultaneously with the Business Combination.

 

See the section entitled “Proposal 2: The Business Combination Proposal” for a summary of the terms of the Merger Agreement and additional information regarding the terms of the Business Combination Proposal.

 

Proposal 3: The 2019 Equity Incentive Plan Proposal

 

Thunder Bridge is proposing that its shareholders approve the 2019 Equity Incentive Plan which will become effective upon the Closing and will be used by the Company on a going-forward basis following the Closing. A summary of the 2019 Equity Incentive Plan is set forth in the section entitled “Proposal 3: The 2019 Equity Incentive Plan Proposal” of this proxy statement/prospectus and a complete copy of the 2019 Equity Incentive Plan is attached hereto as Annex C.

 

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Proposal 4: The Director Election Proposal

 

Thunder Bridge is proposing that its shareholders approve the election of nine directors to serve staggered terms on the Company Board until the 2020, 2021 and 2022 annual meeting of stockholders, respectively, and until their respective successors are duly elected and qualified. A summary of the Director Election Proposal is set forth in the section entitled “Proposal 4: The Director Election Proposal” of this proxy statement/prospectus.

 

Proposal 5: The Articles Amendment Proposal

 

Thunder Bridge is proposing that its shareholders approve an amendment to the Memorandum and Articles of Association so that the prohibition on Thunder Bridge’s having net tangible assets of less than $5,000,001 upon the completion of a business combination is revised to apply immediately prior to the completion of a business combination and measures only the net tangible assets of Thunder Bridge, without regard to the assets or liabilities of the target company of such business combination and its subsidiaries, so that Thunder Bridge may have more flexibility in effecting the Business Combination. A summary of the Articles Amendment Proposal is set forth in the section entitled “Proposal 5: The Articles Amendment Proposal” of this proxy statement/prospectus.

 

Proposal 6: The Adjournment Proposal

 

The Adjournment Proposal, if adopted, will allow the Thunder Bridge Board to adjourn the General Meeting to a later date or dates, including, if necessary to permit further solicitation and vote of proxies if it is determined by Thunder Bridge that more time is necessary or appropriate to approve one or more proposals at the General Meeting. A summary of the Adjournment Proposal is set forth in the section entitled “Proposal 6: The Adjournment Proposal” of this proxy statement/prospectus.

 

The General Meeting

 

Date, Time and Place of General Meeting of Thunder Bridge’s Shareholders

 

The General Meeting will be held at 10:00 a.m. Eastern time, on                  , 2019, at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

 

Record Date; Outstanding Shares; Shareholders Entitled to Vote

 

Thunder Bridge has fixed the close of business on                  , 2019, as the Record Date for determining the Thunder Bridge shareholders entitled to notice of and to attend and vote at the General Meeting. As of the close of business on such date, there were 25,800,000 Class A ordinary shares and 6,450,000 Founder Shares outstanding and entitled to vote. The Class A ordinary shares and the Founder Shares vote together as a single class, except in the election of directors, and each share is entitled to one vote per share at the General Meeting.

 

The Sponsor owns 6,450,000 Founder Shares, which are Class B ordinary shares of Thunder Bridge. Pursuant to the Insider Letter Agreement among Thunder Bridge, the Sponsor and Thunder Bridge’s directors and officers, (i) the 6,450,000 Founder Shares owned by the Sponsor and (ii) any other ordinary shares of Thunder Bridge owned by the Sponsor or Thunder Bridge’s officers and directors will be voted in favor of the Business Combination Proposal at the General Meeting. Under the Merger Agreement, Thunder Bridge agreed to enforce the voting obligations contained in the Insider Letter Agreement against the Sponsor and the Thunder Bridge officers and directors.

 

Proxy Solicitation

 

Proxies with respect to the General Meeting may be solicited by telephone, by facsimile, by mail, on the Internet or in person. Thunder Bridge has engaged                   to assist in the solicitation of proxies. If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the General Meeting. A shareholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “Extraordinary General Meeting of Shareholders—Revoking Your Proxy—Changing Your Vote.”

 

Quorum and Required Vote for the Proposals

 

A quorum of Thunder Bridge shareholders is necessary to hold a valid meeting. The presence, in person or by proxy, of Thunder Bridge shareholders representing a majority of the ordinary shares issued and outstanding on the Record Date and entitled to vote on the Proposals to be considered at the General Meeting will constitute a quorum for the General Meeting.

 

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Each of the Domestication Proposal, the Business Combination Proposal, the Director Election Proposal and the Articles Amendment Proposal is interdependent upon the others and must be approved in order for Thunder Bridge to complete the Business Combination as contemplated by the Merger Agreement. The Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Adjournment Proposal will require an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Shares that are present and vote at the General Meeting. The Domestication Proposal and the Articles Amendment Proposal must be approved by a special resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the Thunder Bridge Shares as of the Record Date that are present and vote at the General Meeting. The election of directors pursuant to the Director Election Proposal will require an ordinary resolution of the holders of the Thunder Bridge Class B ordinary shares as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Class B ordinary shares that are present and vote at the General Meeting. If any of the Domestication Proposal, the Business Combination Proposal or the Director Election Proposal fails to receive the required approval, none of the Proposals will be approved and the Business Combination will not be completed.

 

Regulatory Approvals

 

The Business Combination and the transactions contemplated by the Merger Agreement are not subject to any additional regulatory requirement or approval, except for (i) filings with Cayman Islands and Delaware necessary to effectuate the Domestication, (ii) filings required with the SEC in pursuant to the reporting requirements applicable to Thunder Bridge, and the requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934, including the requirement to file the registration statement of which this proxy statement/prospectus forms a part and to disseminate this proxy statement/prospectus to Thunder Bridge’s shareholders and (iii) filings required under the HSR Act in connection with the Business Combination. Thunder Bridge must comply with applicable United States federal and state securities laws in connection with the Domestication, including the filing with Nasdaq of a press release disclosing the Domestication, among other things.

 

Appraisal Rights

 

Thunder Bridge’s shareholders do not have appraisal rights under the Companies Law in connection with the Business Combination or the other Proposals.

 

Material U.S. Federal Income Tax Consequences

 

As discussed more fully under the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders” below, it is intended that the Domestication will constitute a tax-free reorganization within the meaning of Section 368(a)(l)(F) of the Code. Assuming that the Domestication so qualifies, U.S. Holders (as defined in such section) of Thunder Bridge Shares will be subject to Section 367(b) of the Code and, as a result:

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of Thunder Bridge’s earnings in income;

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally recognize gain (but not loss) on the exchange of Thunder Bridge Shares for shares in the Company (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend the “all earnings and profits amounts,” (as defined in Treasury Regulation Section 1.367(b)-2(d)) attributable to their Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication; and

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, and who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally be required to include in income as a dividend the “all earnings and profits amount,” (as defined in Treasury Regulation Section 1.367(b)-2(d))) attributable to its Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

 

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Furthermore, even if the Domestication qualifies as a reorganization under Section 368(a) of the Code, a U.S. Holder of Thunder Bridge Shares may still recognize gain (but not loss) upon the exchange of its Thunder Bridge Shares for the common stock of the Delaware corporation pursuant to the Domestication under the “passive foreign investment company,” or PFIC, rules of the Code equal to the excess, if any, of the fair market value of the common stock of the Delaware corporation received in the Domestication and the U.S. Holder’s adjusted tax basis in the corresponding Thunder Bridge Shares surrendered in exchange therefor. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply. In such event, the U.S. Holder’s aggregate tax basis in the common stock of the Delaware corporation received in connection with the Domestication should be the same as the aggregate tax basis of Thunder Bridge Shares surrendered in the transaction, increased by any amount included in the income of such U.S. Holder under the PFIC rules. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the discussion in the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—U.S. Holders PFIC Considerations.

 

For a description of the tax consequences for Public Shareholders holders exercising Redemption Rights in connection with the Business Combination, see the sections entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—Tax Consequences to U.S. Holders That Elect to Have Their Thunder Bridge Shares Converted for Cash” and “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—Tax Consequences to Non-U.S. Holders That Elect to Have Their Thunder Bridge Shares Converted for Cash.”

 

Recommendation to Shareholders of Thunder Bridge

 

The Thunder Bridge Board has unanimously determined that each of the proposals is fair to and in the best interests of Thunder Bridge and its shareholders and has unanimously approved such proposals. The Board unanimously recommends that shareholders:

  

Vote “FOR” the Domestication Proposal;

 

Vote “FOR” the Business Combination Proposal;

 

Vote “FOR” the 2019 Equity Incentive Plan Proposal;

 

Vote “FOR” the election of each of the directors pursuant to the Director Election Proposal;

 

Vote “FOR” the Articles Amendment Proposal; and

 

Vote “FOR” the Adjournment Proposal, in the best interests of Thunder Bridge if it is presented at the General Meeting.

 

The existence of any financial and personal interests of one or more of Thunder Bridge’s directors may be argued to result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Thunder Bridge and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the Proposals. See the section entitled “Proposal 2: The Business Combination Proposal—Interests of Thunder Bridge’s Directors and Officers and Others in the Business Combination” in this proxy statement/prospectus for a further discussion of such interests and potential conflicts of interest.

 

Risk Factors

 

In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 34.

 

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QUESTIONS AND ANSWERS

 

Q.Why am I receiving this proxy statement/prospectus?

 

A.You are receiving this proxy statement/prospectus in connection with the General Meeting of Thunder Bridge shareholders. Thunder Bridge is holding the General Meeting to consider and vote upon the following six proposals. Your vote is important. You are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

 

Thunder Bridge’s shareholders are being asked to consider and vote upon the Domestication Proposal to change the corporate structure and domicile of Thunder Bridge by way of continuation from an exempted company incorporated under the laws of the Cayman Islands to a corporation incorporated under the laws of the State of Delaware. The Domestication will be effected by Thunder Bridge filing a Certificate of Corporate Domestication and a Certificate of Incorporation with the Delaware Secretary of State and filing an application to de-register with the Registrar of Companies of the Cayman Islands and all outstanding securities of Thunder Bridge will convert to outstanding securities of the Company, as described in more detail in this proxy statement/prospectus. In connection with the Domestication, and simultaneously with the Business Combination, Thunder Bridge will change its corporate name to “Repay Holdings Corporation.” The Domestication will become effective simultaneously with the completion of the Business Combination. The form of the proposed Delaware Certificate of Incorporation of the Company is attached to this proxy statement/prospectus as Annex A. See the section entitled “Proposal 1: The Domestication Proposal.

 

Thunder Bridge’s shareholders are also being asked to consider and vote upon the Business Combination Proposal to approve the Merger Agreement and the Business Combination contemplated thereby. The Merger Agreement provides that, among other things, Thunder Bridge’s wholly-owned subsidiary, Merger Sub, will merge with and into Repay, with Repay continuing as the surviving entity and becoming a subsidiary of the Company. Shareholder approval of the Merger Agreement and the transactions contemplated thereby is required by the Merger Agreement and the Memorandum and Articles of Association as well as to comply with Nasdaq listing rules 5635(a) and (d). A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex B and Thunder Bridge encourages its shareholders to read it in its entirety. See the section entitled “Proposal 2: The Business Combination Proposal.”

 

Thunder Bridge’s shareholders are also being asked to consider and vote upon the 2019 Equity Incentive Plan Proposal to adopt the 2019 Equity Incentive Plan. Among other things, the 2019 Equity Incentive Plan, which would become effective upon the completion of the Business Combination, is intended to maintain and strengthen the Company’s ability to attract and retain key employees, directors, consultants and certain other individuals providing services to the Company and to motivate them to remain focused on long-term shareholder value. See the section entitled “Proposal 3: The 2019 Equity Incentive Plan Proposal.” A copy of the 2019 Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C, and Thunder Bridge encourages its shareholders to read the plan in its entirety.

 

Thunder Bridge’s Class B shareholders are also being asked to vote upon the Director Election Proposal to elect nine directors to serve staggered terms on the Company Board until the 2020, 2021 and 2022 annual meeting of stockholders, respectively and until their respective successors are duly elected and qualified. See the section entitled “Proposal 4: The Director Election Proposal.”

 

Thunder Bridge’s shareholders are also being asked to consider and vote upon an amendment to the Memorandum and Articles of Association so that the prohibition on Thunder Bridge’s having net tangible assets of less than $5,000,001 upon the completion of a business combination is revised to apply immediately prior to the completion of a business combination and measures only the net tangible assets of Thunder Bridge, without regard to the assets or liabilities of the target company of such business combination or its subsidiaries, so that Thunder Bridge may have more flexibility in effecting the Business Combination. See the section entitled “Proposal 5: The Articles Amendment Proposal.”

 

Thunder Bridge’s shareholders are also being asked to consider and vote upon the Adjournment Proposal to adjourn the General Meeting to a later date or dates, including, if necessary, including to permit further solicitation and vote of proxies if it is determined by Thunder Bridge that more time is necessary or appropriate to approve one or more proposals to the General Meeting. See the section entitled “Proposal 6: The Adjournment Proposal.”

 

The presence, in person or by proxy, of Thunder Bridge shareholders representing a majority of the issued and outstanding ordinary shares on the Record Date and entitled to vote on the Proposals to be considered at the General Meeting, including a majority of the issued and outstanding Class B ordinary shares as of the Record Date in the case of the Director Election Proposal, will constitute a quorum for the General Meeting.

 

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YOUR VOTE IS IMPORTANT. YOU ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.

 

Q:What is being voted on at the General Meeting?

 

A:The shareholders of Thunder Bridge are being asked to vote on the following proposals:

 

The Domestication Proposal;

 

The Business Combination Proposal;

 

The 2019 Equity Incentive Plan Proposal;

 

The Director Election Proposal;

 

The Articles Amendment Proposal; and

 

The Adjournment Proposal.

 

Q:Are the Proposals conditioned on one another?

 

A:Each of the Domestication Proposal, the Business Combination Proposal, the Director Election Proposal and the Articles Amendment Proposal is interdependent upon the others and each must be approved in order for Thunder Bridge to complete the Business Combination contemplated by the Merger Agreement. The Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Adjournment Proposal must be approved by the holders of a majority of the Thunder Bridge Shares that are present and vote at the General Meeting. The Domestication Proposal and the Articles Amendment Proposal must be approved by a special resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the Thunder Bridge Shares as of the Record Date that are present and vote at the General Meeting. The election of directors pursuant to the Director Election Proposal will require an ordinary resolution of the holders of the Thunder Bridge Class B ordinary shares as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Class B ordinary shares that are present and vote at the General Meeting.

 

Q.Why is Thunder Bridge proposing the Domestication?

 

A.The Thunder Bridge Board believes that it would be in the best interests of Thunder Bridge to effect the Domestication to enable the Company to avoid certain taxes that would be imposed on the Company if the Company were to conduct an operating business in the United States as a foreign corporation following the Business Combination. In addition, the Thunder Bridge Board believes Delaware provides a recognized body of corporate law that will facilitate corporate governance by the Company’s officers and directors. Delaware maintains a favorable legal and regulatory environment in which to operate. For many years, Delaware has followed a policy of encouraging companies to incorporate there and, in furtherance of that policy, has adopted comprehensive, modern and flexible corporate laws that are regularly updated and revised to meet changing business needs. As a result, many major corporations have initially chosen Delaware as their domicile or have subsequently reincorporated in Delaware in a manner similar to the procedures Thunder Bridge is proposing. Due to Delaware’s longstanding policy of encouraging incorporation in that state and consequently its popularity as the state of incorporation, the Delaware courts have developed a considerable expertise in dealing with corporate issues and a substantial body of case law has developed construing the DGCL and establishing public policies with respect to Delaware corporations. It is anticipated that the DGCL will continue to be interpreted and explained in a number of significant court decisions that may provide greater predictability with respect to the Company’s corporate legal affairs.

 

The Domestication will not occur unless the Thunder Bridge shareholders have approved the Domestication Proposal, the Business Combination Proposal, the Director Election Proposal and the Articles Amendment Proposal and upon the Merger Agreement being in full force and effect prior to the Domestication. The Domestication will only occur upon the simultaneous completion of the Business Combination.

 

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Q.What is involved with the Domestication?

 

A.The Domestication will require Thunder Bridge to file certain documents in both the Cayman Islands and the State of Delaware. At the effective time of the Domestication, which will be the effective time of the Business Combination, Thunder Bridge will cease to be a company incorporated under the laws of the Cayman Islands and in connection with the Business Combination, Thunder Bridge will continue as a Delaware corporation and, in connection with the Domestication, and simultaneously with the Business Combination, will change its corporate name to “Repay Holdings Corporation.” The Memorandum and Articles of Association will be replaced by the Delaware Certificate of Incorporation and Bylaws and your rights as a shareholder will cease to be governed by the laws of the Cayman Islands and will be governed by Delaware law.

 

Q.When do you expect that the Domestication will be effective?

 

A.The Domestication is expected to become effective simultaneously with the completion of the Business Combination.

 

Q.How will the Domestication affect my securities of Thunder Bridge?

 

A.Pursuant to the Domestication and without further action on the part of Thunder Bridge’s shareholders, each outstanding Class A ordinary share and Class B ordinary share of Thunder Bridge will convert to one outstanding share of the Company’s Class A common stock. Although it will not be necessary for you to exchange your certificates representing ordinary shares after the Domestication, the Company will, upon request, exchange your Thunder Bridge share certificates for the applicable number of shares of Company’s Class A common stock and all certificates for securities issued after the Domestication will be certificates representing securities of the Company.

 

Q.What are the material U.S. federal income tax consequences of the Domestication to U.S. Holders of Thunder Bridge Shares?

 

A.The Domestication should qualify as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. However, due to the absence of guidance directly on how the provisions of Section 368(a) of the Code apply in the case of a statutory conversion of a corporation with no active business and only investment-type assets such as Thunder Bridge, this result is subject to some uncertainty. If the Domestication qualifies as a reorganization within the meaning of Section 368(a), a U.S. Holder of Thunder Bridge Shares will be subject to Section 367(b) of the Code and as a result:

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of Thunder Bridge’s earnings in income;

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally recognize gain (but not loss) on the exchange of Thunder Bridge Shares for shares in the Company (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend the “all earnings and profits amounts,” (as defined in Treasury Regulation Section 1.367(b)-2(d)) attributable to their Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication; and

 

A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, and who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally be required to include in income as a dividend the “all earnings and profits amount,” (as defined in Treasury Regulation Section 1.367(b)-2(d))) attributable to its Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

 

Furthermore, even if the Domestication qualifies as a reorganization, the Domestication may be a taxable event to U.S. Holders of Thunder Bridge Shares under special rules applicable to U.S. Holders who hold shares of a “passive foreign investment company,” or “PFIC” as described in “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—U.S. Holders—PFIC Considerations.” Thunder Bridge believes it has been treated as a PFIC since its inception. If the Domestication should fail to qualify as a reorganization under Section 368(a), a U.S. Holder of Thunder Bridge Shares generally would recognize gain or loss with respect to its Thunder Bridge Shares in an amount equal to the difference, if any, between the fair market value of the corresponding Company Shares received in the Domestication and the U.S. Holder’s adjusted tax basis in its Thunder Bridge Shares surrendered. For a more complete discussion of the material U.S. federal income tax consequences of the Domestication, see the discussion in the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders.”

 

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Q.What are the material U.S. federal income tax consequences to U.S. Holders that exercise their Redemption Rights?

 

A.U.S. Holders that elect to exercise their Redemption Rights generally will recognize capital gain or loss equal to the difference between the amount of cash received on the Redemption of the Thunder Bridge Shares and such U.S. Holder’s adjusted tax basis in such Thunder Bridge Shares, which generally will be equal to the cost of such Thunder Bridge Shares. A U.S. Holder who purchased Thunder Bridge Shares in the IPO generally will have a tax basis in the Thunder Bridge Shares that were part of the units equal to the portion of the purchase price of such units allocated to the Thunder Bridge Shares (such allocation based on the relative fair market value of the Thunder Bridge Shares and the Warrants at the time). However, in certain circumstances, the cash paid to such U.S. Holders will be treated as dividend income for U.S. federal income tax purposes. Moreover, because Thunder Bridge should be considered a PFIC for U.S. federal income tax purposes, such U.S. Holders may be subjected to special rules applicable to PFICs as described in “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—U.S. Holders—PFIC Considerations.” For a more complete discussion of the material U.S. federal income tax consequences to U.S. Holders that elect to exercise their Redemption Rights, see the discussion in the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—U.S. Holders—Tax Consequences to U.S. Holders That Elect to Have Their Thunder Bridge Shares Converted for Cash.”

 

Q.Why is Thunder Bridge proposing the Business Combination?

 

A.Thunder Bridge was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. Since Thunder Bridge’s organization, the Thunder Bridge Board has sought to identify suitable candidates in order to effect such a transaction. In its review of Repay, the Thunder Bridge Board considered a variety of factors weighing positively and negatively in connection with the Business Combination. After careful consideration, the Thunder Bridge Board has determined that the Business Combination presents a highly-attractive business combination opportunity and is in the best interests of Thunder Bridge shareholders. The Thunder Bridge Board believes that, based on its review and consideration, the Business Combination with Repay presents an opportunity to increase shareholder value. However, there can be no assurance that the anticipated benefits of the Business Combination will be achieved. Shareholder approval of the Business Combination is required by the Merger Agreement and the Memorandum and Articles of Association as well as to comply with Nasdaq listing rules 5635(a) and (d).

 

Q.What will happen in the Business Combination?

 

A.The Business Combination consists of a series of transactions pursuant to which (i) Thunder Bridge will complete the Domestication and (ii) Merger Sub will, simultaneously with the Domestication, merge with and into Repay with Repay continuing as the surviving entity and a subsidiary of the Company. Upon the completion of the Domestication and the Business Combination, each issued and outstanding Class A ordinary share and Class B ordinary share of Thunder Bridge will become a share of Class A common stock of the Company, and each issued and outstanding warrant to purchase Class A ordinary shares of Thunder Bridge will become a warrant to purchase an equal number of shares of Class A common stock of the Company.

 

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Q.What is the form of consideration that the Repay Equity Holders will receive in return for the acquisition of Repay by Thunder Bridge?

 

Upon the Closing, the Repay limited liability company interests of the Repay Equity Holders will convert into the right to receive (A) certain cash consideration, (B) Post-Merger Repay Units and (C) the contingent right to receive (i) additional cash consideration upon the settlement of escrow accounts for the Cash Escrows and, any cash remaining after the payment of the Repay Securityholder Representative’s expenses and (ii) the Escrow Units and (D) the contingent right to receive additional Post-Merger Repay Units issued (i) as a result of the post-Closing adjustment of the Merger Consideration under the Merger Agreement and (ii) as an earn-out under the Merger Agreement after the Closing.

 

Pursuant to the Exchange Agreement, at any time after the six month anniversary of the Closing, each holder of Post-Merger Repay Units will be entitled to exchange such units for Class A common stock of the Company on a one-for-one basis (subject to customary conversion rate adjustments, including for stock splits, stock dividends and reclassifications). Based on the assumptions set forth under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”, the total number of Post-Merger Repay Units issuable to the Repay Equity Holders will be 21,376,000, entitling such members collectively to exchange them for 43.3% of the Company’s Class A common stock in the aggregate.

 

Each share of Class A common stock of the Company will provide the holder the rights to vote, receive dividends, and share in distributions in connection with a liquidation and other stockholder rights with respect to the Company.

 

Pursuant to a Tax Receivable Agreement between the Company and the Repay Equity Holders, the Company will pay to exchanging holders of Post-Merger Repay Units 100% of the tax savings that the Company realizes as a result of increases in tax basis in Repay’s assets as a result of the exchange of the Post-Merger Repay Units for shares of Class A common stock pursuant to the Exchange Agreement and certain other tax attributes of Repay and tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For more information on the Tax Receivable Agreement, please see the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Tax Receivable Agreement.”

 

Additionally, pursuant to the Subscription and Distribution Agreement, immediately following the completion of the Merger, (i) the Company will issue to Repay one hundred shares of Class V common stock of the Company and (ii) Repay will distribute one share of Class V common stock to each holder of Post-Merger Repay Units. The Class V common stock provides no economic rights in the Company to the Class V Holder; however, each Class V Holder will be entitled to vote as a common stockholder of the Company, with the number of votes equal to the number of Post-Merger Repay Units held by such Class V Holder at the time of such vote. If, at any time, a Class V Holder no longer holds any Post-Merger Repay Units, such holder’s share of Class V common stock will automatically be canceled.

 

Q.How much consideration will the Repay Equity Holders receive in connection with the acquisition of Repay by Thunder Bridge?

 

A.Pursuant to the Merger Agreement, the Repay Equity Holders will be entitled to receive consideration (the “Merger Consideration”) in an amount equal to $600,000,000, paid in a mix of cash and Post-Merger Repay Units (valued at $10.00 per unit), and which is subject to adjustment as described below. The Merger Consideration of $600,000,000 will be reduced (or increased if such amount is negative) by an amount equal to the sum of certain Closing Adjustment Items (as defined below) and may be increased by any amounts remaining of the following, which will be deducted from the Merger Consideration and escrowed or otherwise set aside under the Merger Agreement: (a) $600,000 in Post-Merger Repay Units to be set aside and held in escrow until the completion of the purchase price adjustment under the Merger Agreement, which we refer to as the Escrow Units, (b) the Repay Securityholder Representative Amount (to be held by the Repay Securityholder Representative to pay its costs and expenses), (c) $14,048,595 (the “NCP Escrow Amount”) in cash to be set aside and held in escrow for certain contingent earn-out obligations of Repay and (d) $150,000 in cash to be set aside and held in escrow to pay certain potential post-Closing expenses of Thunder Bridge (the “Additional Escrow Amount”, which, together with the NCP Escrow Amount, is referred to as the Cash Escrows). For more information on the adjustments to the Merger Consideration, see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Merger Consideration.”

 

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The cash consideration (the “Cash Consideration”) to be delivered by Thunder Bridge to Repay at Closing pursuant to the Merger Agreement will be calculated as follows: (i) the total cash and cash equivalents of Thunder Bridge (including funds in its Trust Account after all Redemptions by its Public Shareholders and the proceeds of any debt or equity financing), minus (ii) the amount of Thunder Bridge’s unpaid expenses and obligations (including any indebtedness owed to the Sponsor), plus (iii) the cash and cash equivalents of the Target Companies as of immediately prior to the effective time (excluding restricted cash), minus (iv) the amount of unpaid transaction expenses of the Target Companies as of the Closing, minus (v) the amount of the indebtedness of the Target Companies as of the Closing, minus (vi) the amount of certain payments to be made to employees, independent contractors, directors, managers or officers of the Target Companies as a result of the Merger, minus (vii) an amount of cash reserves of Repay equal to $10,000,000, minus (viii) the NCP Escrow Amount, minus (ix) the amount of certain other contingent consideration obligations of the Target Companies in connection with the acquisition of Paymaxx Pro, LLC, minus, (x) the Additional Escrow Amount; but in no event will Thunder Bridge deliver Cash Consideration in excess of an amount equal to $290,000,000, minus the Repay Securityholder Representative Amount, minus the NCP Escrow Amount, minus the Additional Escrow Amount (such amount, the “Required Cash Consideration Amount”), plus $10,000,000.

 

The remainder of the Merger Consideration (other than any remaining amounts of the Cash Escrows or the Repay Securityholder Representative Amount that the Repay Equity Holders may receive) following the payment of the Cash Consideration will be paid in equity in the form of Post-Merger Repay Units, valued at $10.00 per unit, less the Escrow Units, which will be based on an estimate of the Closing Adjustment Items at the Closing and subject to a post-Closing true-up.

 

After the Closing, Repay’s members will also have a contingent earn-out right to receive up to an additional 7,500,000 Post-Merger Repay Units referred to as the Earn-Out Units, subject to certain stock price performance thresholds of the Company during the twelve-month and twenty-four month periods following Closing.

 

See the section entitled, “Proposal 2: The Business Combination Proposal—The Merger Agreement—Merger Consideration.”

 

Q.What is the Tax Receivable Agreement?

 

A.In connection with the Business Combination, the Company will enter into the Tax Receivable Agreement with the Repay Equity Holders. Pursuant to the Tax Receivable Agreement, the Company will pay to exchanging holders of Post-Merger Repay Units 100% of the tax savings that the Company realizes as a result of the exchange of the Post-Merger Repay Units for shares of Class A common stock pursuant to the Exchange Agreement and certain other tax attributes of Repay and tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For more information on the Tax Receivable Agreement, please see the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Tax Receivable Agreement.”

 

Q.What equity stake will current Thunder Bridge shareholders and Repay Equity Holders hold in the Company immediately after the completion of the Business Combination?

 

A. Upon the completion of the Business Combination (assuming, among other things, that no Thunder Bridge shareholders exercise Redemption Rights with respect to their ordinary shares upon completion of the Business Combination and the other assumptions regarding the total Merger Consideration paid at Closing described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”), the Repay Equity Holders are expected to own approximately 43.3% of the Company’s outstanding Class A common stock and the current holders of Thunder Bridge ordinary shares are expected to own approximately 56.7% of the Company’s outstanding Class A common stock.

 

If any of Thunder Bridge’s shareholders exercise their Redemption Rights, the percentage of the Company’s outstanding common stock held by the current holders of Thunder Bridge ordinary shares will decrease and the percentages of the Company’s outstanding common stock held by the Repay Equity Holders will increase, in each case relative to the percentage held if none of the Thunder Bridge ordinary shares are redeemed.

 

All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages.” Should one or more of the assumptions prove incorrect, actual beneficial ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended.

 

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Q.Did the Thunder Bridge Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A.No. The Thunder Bridge Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Thunder Bridge’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Thunder Bridge’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. Accordingly, investors will be relying solely on the judgment of the Thunder Bridge Board in valuing Repay’s business and assuming the risk that the Thunder Bridge Board may not have properly valued such business.

 

Q.What happens to the funds deposited in the Trust Account after completion of the Business Combination?

 

A.After completion of the Business Combination, the funds in the Trust Account will be used to pay holders of the Public Shares who exercise Redemption Rights and, after paying the Redemptions, a portion will be used to pay the Cash Consideration to be delivered to the members of Repay at Closing, as well as to pay transaction expenses incurred in connection with the Business Combination, including deferred IPO underwriting fees to Thunder Bridge’s investment bankers and for working capital of the Company and its subsidiaries and general corporate purposes of the Company and its subsidiaries. Such funds may also be used to reduce the indebtedness and certain other liabilities of the Company and its subsidiaries. As of December 31, 2018, there were cash and marketable securities held in the Trust Account of approximately $263.3 million. These funds will not be released until the earlier of the completion of the Business Combination or the Redemption of the Public Shares if Thunder Bridge is unable to complete a Business Combination by December 21, 2019 (except that interest earned on the amounts held in the Trust Account may be released earlier as necessary to pay for any franchise or income taxes and up to $100,000 in liquidation expenses).

  

Q.What happens if a substantial number of Public Shareholders vote in favor of the Business Combination Proposal and exercise their Redemption Rights?

 

A. Public Shareholders may vote in favor of the Business Combination and still exercise their Redemption Rights, provided that Thunder Bridge (without regard to any assets or liabilities of the Target Companies) after payment of all such Redemptions, has at least $5,000,001 in net tangible assets immediately prior to the Closing. The Business Combination may be completed even though the funds available from the Trust Account and the number of Public Shareholders are substantially reduced as a result of Redemptions by Public Shareholders. It is a condition to Repay’s obligations to complete the Business Combination that Thunder Bridge is able to deliver an amount of Cash Consideration equal to the Required Cash Consideration Amount to the Repay Equity Holders at Closing; however, Repay may waive this condition, in which case the Repay Equity Holders would receive additional Post-Merger Repay Units. If the Business Combination is completed notwithstanding Redemptions, the Company will have fewer Public Shares and Public Shareholders, the trading market for the Company’s securities may be less liquid and the Company may not be able to meet the minimum listing standards for a national securities exchange. Furthermore, the funds available from the Trust Account for working capital purposes of the Company after the Business Combination may not be sufficient for its future operations and may not allow the Company to reduce Repay’s indebtedness and/or pursue its strategy for growth.

 

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Q.What conditions must be satisfied to complete the Merger?

 

A.Unless waived by the parties to the Merger Agreement, and subject to applicable law, the completion of the Merger is subject to a number of conditions set forth in the Merger Agreement, including, among others:

 

expiration of the waiting period under the HSR Act;

 

the approval by Thunder Bridge’s shareholders of the Domestication Proposal, the Business Combination Proposal and the Director Election Proposal;
   
 approval by Repay Equity Holders of the adoption of the Merger Agreement and the Related Agreements and the transactions contemplated thereby in accordance with the DLLCA and Repay’s organizational documents;

 

the effectiveness of the registration statement of which this proxy statement/prospectus forms a part;

 

immediately prior to the Closing, Thunder Bridge, without regard to any assets or liabilities of the Target Companies, having net tangible assets of at least $5,000,001;

 

Thunder Bridge’s delivery of the Required Cash Consideration Amount to Repay at Closing;

 

after giving effect to the completion of the Closing, that the indebtedness of the Company does not exceed $210 million;

 

upon the completion of the Closing, that no person or group (excluding any member of Repay) owns in excess of 9.9% of the issued and outstanding shares of Company common stock, and no three persons or groups (excluding any member of Repay) will own in the aggregate in excess of 25% of the issued and outstanding shares of Company common stock;

 

the Class A common stock (including the shares of Class A common stock issuable upon exchange of Post-Merger Repay Units) being listed on Nasdaq and eligible for continued listing on Nasdaq following the Closing and after giving effect to the Redemptions (as if the Class A common stock were a new initial listing by an issuer that had never been listed prior to Closing); and

 

the existing directors of Thunder Bridge having resigned and the nine director nominees submitted for approval by the shareholders of Thunder Bridge having been appointed to the Company Board.

 

For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled, “Proposal 2: The Business Combination Proposal—The Merger Agreement—Closing Conditions.”

 

Q.When do you expect the Business Combination to be completed?

 

A.It is currently expected that the Business Combination will be completed in the second quarter of 2019. This timing depends, among other things, on the approval of the Proposals to be presented to Thunder Bridge shareholders at the General Meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by the shareholders at the General Meeting and Thunder Bridge elects to adjourn the General Meeting to a later date or dates to permit further solicitation and vote of proxies if reasonably determined to be necessary or desirable by Thunder Bridge.

 

Q.Will Thunder Bridge enter into any financing arrangements in connection with the Business Combination?

 

A.Yes. In order to finance a portion of the consideration for, and fees and expenses incurred in connection with, the Business Combination, to refinance, or repay in full, certain existing third party indebtedness of Repay, and for working capital and other general corporate purposes, on January 21, 2019, Merger Sub executed the Debt Commitment Letter for the purpose of obtaining, on the date of Closing, the Debt Financing, which consists of (i) a six-year senior secured term loan facility in an aggregate principal amount of $170.0 million (the “Term Loan Facility”) and (ii) a five-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $20.0 million, up to $5.0 million of which will be made available as swingline loans, the respective maturity of each of which may be extended, subject to terms and conditions to be agreed upon.

 

In addition, the terms of the Debt Financing are expected to provide that under certain circumstances, the borrower (initially Merger Sub, and Repay following the Merger) would have the option to raise incremental term loan facilities and/or increase the Term Loan Facility and/or the Revolving Credit Facility up to (a) a fixed dollar amount to be agreed plus (b) unlimited additional amounts so long as on a pro forma basis after giving effect to such incurrence (assuming the full amount thereof is drawn), the total net leverage ratio (as defined in the Debt Commitment Letter) does not exceed a threshold to be agreed, in each case subject to applicable terms and conditions described in the Debt Commitment Letter.

 

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The obligations under the Debt Financing will be secured by a lien on all of the equity interests in Merger Sub (and Repay following the Merger) and all of the equity interests in certain of its U.S. subsidiaries (or 65% of the voting equity interests (and all of the non-voting equity interests) in certain of its first tier foreign subsidiaries) and by a security interest in all of the personal and real property of Merger Sub (and Repay and certain its affiliates after the Merger), subject to customary exceptions and exclusions.

 

The Debt Commitment Letter provides for certain mandatory prepayments of the Term Loan Facility based on certain percentages of excess cash flow which is determined upon total net leverage ratio thresholds, upon certain non-ordinary course asset sales or dispositions (subject to customary reinvestment rights) or the issuance of debt that is not otherwise permitted to be incurred.

 

At the borrower’s option, term loans and revolving loans under the Debt Financing will bear interest at either (i) (a) a base rate based on the highest of (x) a prime rate, as established by the applicable administrative agent, (y) the federal funds rate plus 0.50% and (z) an adjusted LIBOR rate for a one-month interest period plus 1.00% plus (b) an applicable margin per year, or (ii) an adjusted LIBOR rate plus an applicable margin per year. The applicable margin is determined based on a total net leverage ratio, as defined in the Debt Commitment Letter, and ranges from (i) with respect to base rate loans, 3.00% to 3.25% for revolving loans and 3.25% to 3.50% for term loans, and (ii) with respect to adjusted LIBOR rate loans, 4.00% to 4.25% for revolving loans and 4.25% to 4.50% for term loans.

 

The Debt Commitment Letter and the commitments and agreements of the Debt Commitment Parties will automatically terminate (unless the Debt Commitment Parties will, in their discretion, agree to an extension in writing) upon the earliest to occur of (i) the termination of the Merger Agreement prior to the completion of the Business Combination, (ii) the completion of the Business Combination with or without the funding of the Debt Financing and (iii) 5:00 p.m., New York City time, on June 30, 2019. Thunder Bridge may terminate the Debt Commitment Letter at any time prior to the date of the initial funding under the Debt Financing.

 

The documentation governing the Debt Financing has not been finalized and, accordingly, the actual terms of the Debt Financing may differ from those described herein or in the Debt Commitment Letter.

 

Despite the Debt Financing, Thunder Bridge may not be able to complete the Business Combination under the Merger Agreement in the event that too many of its Public Shareholders exercise their Redemption Rights and Thunder Bridge cannot deliver the Required Cash Consideration Amount to Repay’s members at Closing (or such lesser amount as Repay specifies in any waiver of such condition). Thunder Bridge may determine prior to the Closing that it wants to seek equity financing in order to ensure that it has sufficient cash at the Closing, although Repay has consent rights under the Merger Agreement with respect to any equity financing. The availability of the borrowings under the Debt Financing is subject to the satisfaction of certain customary conditions, including the completion of the Business Combination.

 

Q.Why is Thunder Bridge proposing the 2019 Equity Incentive Plan Proposal?

 

A.The purpose of the 2019 Equity Incentive Plan is to enable the Company to offer eligible employees, directors and consultants cash and stock-based incentive awards in order to attract, retain and reward these individuals and strengthen the mutuality of interests between them and the Company’s stockholders. For more information, see the section entitled “Proposal 3: The 2019 Equity Incentive Plan Proposal.”

 

Q.Why is Thunder Bridge proposing the Director Election Proposal?

 

A.The Merger Agreement requires that the initial Company Board following the completion of the Business Combination to be comprised of Jeremy Schein, Gary A. Simanson and Shaler Alias to serve as Class I directors for a term expiring at the Company’s annual meeting in 2020, James E. Kirk, Robert H. Hartheimer and Maryann Goebel to serve as Class II directors for a term expiring at the Company’s annual meeting in 2021 and William Jacobs, John Morris and Peter J. Kight to serve as Class III directors for a term expiring at the Company’s annual meeting in 2022. The Director Election Proposal is being presented to implement the requirement of the Merger Agreement to install the Company Board. See the section entitled “Proposal 4: Director Election Proposal” for additional information.
  
Q.

Why is Thunder Bridge proposing the Articles Amendment Proposal?

  
A.The Memorandum and Articles of Association currently prohibits Thunder Bridge from completing a business combination if, upon the completion of the business combination, Thunder Bridge will have net tangible assets of less-than $5,000,001. This prohibition is meant to ensure that Thunder Bridge does become subject to the SEC’s “penny stock” rules by having less than $5,000,001 in net tangible assets. However, because Thunder Bridge is listed on Nasdaq and, following the Business Combination, we expect the Company will remain listed on Nasdaq, neither Thunder Bridge nor the Company will be considered “penny stocks” under the applicable rules, whether or not the value of its net tangible assets falls below $5,000,001. As such, the current prohibition in the Memorandum and Articles of Association is unnecessary to protect Thunder Bridge or the Company from becoming subject to the penny stock rules as a result of the Business Combination. Further, depending on the amount of Redemptions exercised in connection with the Business Combination, expenses incurred by the parties to the Business Combination, amounts of any additional debt and equity financing, and other factors, the Memorandum and Articles as written could inadvertently prohibit the Closing of the Business Combination. For this reason Thunder Bridge proposes amending the Memorandum and Articles of Association pursuant to the Articles Amendment Proposal. For more information, see the section entitled “Proposal 5: The Articles Amendment Proposal.

 

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Q.Why is Thunder Bridge proposing the Adjournment Proposal?

 

A.Thunder Bridge is proposing the Adjournment Proposal to allow the adjournment of the General Meeting to a later date or dates, including if necessary to permit further solicitation and vote of proxies if it is determined by Thunder Bridge that more time is necessary or appropriate to approve one or more proposals at the General Meeting. Please see the section entitled “Proposal 6: The Adjournment Proposal” for additional information.

 

Q.When and where will the General Meeting be held?

 

A.The General Meeting will be held at 10:00 a.m. Eastern Time on                   , 2019 at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105. Only shareholders who held ordinary shares of Thunder Bridge at the close of business on                   , 2019 will be entitled to vote at the General Meeting and at any adjournments and postponements thereof.

 

Q.Who is entitled to vote at the General Meeting?

 

A.Thunder Bridge has fixed                   , 2019 as the Record Date. If you were a shareholder of Thunder Bridge at the close of business on the Record Date, you are entitled to vote on matters that come before the General Meeting except that only holders of Class B ordinary shares as of the Record Date are entitled to vote on the Director Election Proposal. However, a shareholder may only vote his, her or its shares if he, she or it is present in person or is represented by proxy at the General Meeting.

 

Q.How do I vote?

 

A.If you are a record owner of your shares, there are two ways to vote your Thunder Bridge Shares at the General Meeting:

 

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Thunder Bridge Board “FOR” the Domestication Proposal, the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal, the election of each of the directors pursuant to The Director Election Proposal, for holders of Thunder Bridge’s Class B ordinary shares, the Articles Amendment Proposal and the Adjournment Proposal (if presented). Votes received after a matter has been voted upon at the General Meeting will not be counted.

 

You Can Attend the General Meeting and Vote in Person. When you arrive, you will receive a ballot that you may use to cast your vote.

 

If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the General Meeting and vote in person and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way Thunder Bridge can be sure that the broker, bank or nominee has not already voted your shares

 

Q:What if I do not vote my Thunder Bridge Shares or if I abstain from voting?

 

A:The approval of the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote of a majority of the outstanding Thunder Bridge Shares as of the Record Date that are present and vote at the General Meeting. The Domestication Proposal and the Articles Amendment Proposal must be approved by a special resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the Thunder Bridge Shares as of the Record Date that are present and vote at the General Meeting. The election of directors pursuant to the Director Election Proposal will require an ordinary resolution of the holders of the Thunder Bridge Class B ordinary shares as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Class B ordinary shares that are present and vote at the General Meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on the Proposals. As a result, if you abstain from voting on the Proposals, your Thunder Bridge Shares will be counted as present for purposes of establishing a quorum (if so present in accordance with the terms of the Memorandum and Articles of Association), but the abstention will have no effect on the outcome of such proposal.

 

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Q:What proposals must be passed in order for the Business Combination to be completed?

 

A:The Business Combination will not be completed unless the Domestication Proposal, the Business Combination Proposal, the Director Election Proposal and the Articles Amendment Proposal are approved. If Thunder Bridge does not complete a Business Combination by December 21, 2019, Thunder Bridge will be required to dissolve and liquidate itself and return the monies held within its Trust Account to its Public Shareholders unless Thunder Bridge submits and its shareholders approve an extension.

 

Q:How does the Thunder Bridge Board recommend that I vote on the proposals?

 

A:The Thunder Bridge Board unanimously recommends that the holders of Thunder Bridge’s ordinary shares entitled to vote on the Proposals, vote as follows:

 

“FOR” approval of the Domestication Proposal;

 

“FOR” approval of the Business Combination Proposal;

 

“FOR” approval of the 2019 Equity Incentive Plan Proposal;

 

“FOR” approval of the election of each of the director nominees pursuant to the Director Election Proposal;

 

“FOR” approval of the Articles Amendment Proposal; and

 

“FOR” approval of the Adjournment Proposal, if presented.

 

Q:How many votes do I have?

 

A:Thunder Bridge shareholders have one vote per each ordinary share of Thunder Bridge held by them on the Record Date on each proposal to be voted upon.

 

Q.How will the Sponsor and Thunder Bridge’s officers and directors vote in connection with the Proposals?

 

A.As of the date of this proxy statement/prospectus, the Sponsor owned of record an aggregate of 6,450,000 Founder Shares, representing 20% of the issued and outstanding Thunder Bridge Shares. Pursuant to the Insider Letter Agreement, the Sponsor and Thunder Bridge’s directors and officers have agreed to vote the ordinary shares owned by them (including the Founder Shares) in favor of the Proposals. The Sponsor and Thunder Bridge’s officers and directors, as of the date of this proxy statement/prospectus, have not acquired any Thunder Bridge ordinary shares during or after our IPO in the open market. However, any subsequent purchases of Thunder Bridge ordinary shares prior to the Record Date by the Sponsor or Thunder Bridge’s officers and directors in the aftermarket will make it more likely that the Proposals will be approved as such shares would be voted in favor of the Proposals. As of the Record Date, there were 32,250,000 ordinary shares of Thunder Bridge outstanding.

 

Q.Do I have Redemption Rights with respect to my Thunder Bridge Shares?

 

A.Under Section 49.2 of the Memorandum and Articles of Association, prior to the completion of the Business Combination, Thunder Bridge will provide all of the Public Shareholders with the opportunity to have their shares redeemed upon the completion of the Business Combination, subject to certain limitations, for cash equal to the applicable Redemption Price; provided, however, that Thunder Bridge may not redeem such shares to the extent that such Redemption would result in Thunder Bridge having net tangible assets (as determined under the Exchange Act) of less than $5,000,001 upon the completion of the Business Combination (or if the Articles Amendment is approved, immediately prior to the completion of the Business Combination without regard to the assets or liabilities of the Target Companies).

 

Public Shareholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination, whether or not they were holders of Thunder Bridge ordinary shares as of the Record Date or acquired their shares after the Record Date. The Redemptions will be effectuated in accordance with the Memorandum and Articles of Association and Cayman Islands law. Any Public Shareholder who holds ordinary shares of Thunder Bridge on or before                  , 2019 (two business days before the General Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the completion of the Business Combination); provided that such Public Shareholders follow the procedures provided for exercising such Redemption as set forth in the Memorandum and Articles of Association, as described below, by such date. However, the proceeds held in the Trust Account could be subject to claims that could take priority over those of Public Shareholders exercising Redemption Rights, regardless of whether such holders vote for or against the Business Combination Proposal and whether such holders are holders of Thunder Bridge ordinary shares as of the Record Date. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. A Public Shareholder will be entitled to receive cash for these shares only if the Business Combination is completed.

 

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Q:May the Sponsor, Thunder Bridge’s directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination?

 

A:The Sponsor and Thunder Bridge’s directors, officers, advisors or their affiliates may purchase Thunder Bridge Shares in privately negotiated transactions or in the open market either prior to or after the Closing of the Business Combination, including from Thunder Bridge shareholders who would have otherwise exercised their Registration Rights. However, the Sponsor, directors and officers have no current commitments or plans to engage in such transactions and have not formulated any terms or conditions for any such transactions at the date of this proxy statement/prospectus. If Thunder Bridge engages in such transactions, any such purchases will be subject to limitations regarding possession of any material nonpublic information not disclosed to the seller of such shares and they will not make any such purchases if such purchases are prohibited by Regulation M under the Exchange Act. Any such purchase after the Record Date would include a contractual acknowledgement that the selling shareholder, although still the record holder of Thunder Bridge Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event the Sponsor or Thunder Bridge’s directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the aggregate amount then on deposit in the Trust Account.

 

Pursuant to the Insider Letter Agreement, the Sponsor and Thunder Bridge’s directors and officers have agreed to waive their Redemption Rights with respect to (i) the 6,450,000 Founder Shares owned by the Sponsor and (ii) any other Thunder Bridge ordinary shares owned by the Sponsor or Thunder Bridge’s directors and officers, and such shares will be excluded from the pro rata calculation used to determine the per-share Redemption Price. However, if the Sponsor or Thunder Bridge’s directors, officers and their affiliates acquired Public Shares in or after the IPO (or acquire Public Shares following the date of this proxy statement/prospectus), they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if Thunder Bridge fails to complete a Business Combination by December 21, 2019.

 

Q.Is there a limit on the number of shares I may redeem?

 

A.Each Public Shareholder, together with any affiliate or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking Redemption Rights with respect to 15% or more of the Public Shares. Accordingly, any shares held by a Public Shareholder or “group” in excess of such 15% cap will not be redeemed by Thunder Bridge. Any Public Shareholder who holds less than 15% of the Public Shares may have all of the Public Shares held by him or her redeemed for cash.

 

Q.How do I exercise my Redemption Rights?

 

A.If you are a Public Shareholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time on                  , 2019 (two (2) business days before the General Meeting), that Thunder Bridge redeem your shares into cash; (ii) affirmatively certify in your request to Thunder Bridge’s Transfer Agent for Redemption if you “ARE” or “ARE NOT” acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) and (iii) submit your request in writing to Thunder Bridge’s Transfer Agent, at the address listed at the end of this section and deliver your shares to Thunder Bridge’s Transfer Agent physically or electronically using The Depository Trust Company’s DWAC system at least two business days prior to the vote at the General Meeting.

 

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Any request for Redemption, once made by a Public Shareholder, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the General Meeting. In addition, if you deliver your shares for Redemption to Thunder Bridge’s Transfer Agent and later decide prior to the General Meeting not to elect Redemption, you may request that Thunder Bridge’s Transfer Agent return the shares (physically or electronically). You may make such request by contacting Thunder Bridge’s Transfer Agent at the phone number or address listed at the end of this section.

 

Any corrected or changed written demand of Redemption Rights must be received by Thunder Bridge’s secretary two business days prior to the vote taken on the Business Combination Proposal at the General Meeting. No demand for Redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to the Transfer Agent at least two business days prior to the vote at the General Meeting.

 

Public Shareholders seeking to exercise their Redemption Rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is Thunder Bridge’s understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Thunder Bridge does not have any control over this process and it may take longer than two weeks. Shareholders who hold their shares in street name will have to coordinate with their banks, brokers or other nominees to have the shares certificated or delivered electronically. There is a cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a nominal fee to the tendering broker and it would be up to the broker whether or not to pass this cost on to the redeeming shareholder. In the event the Business Combination is not completed, this may result in an additional cost to shareholders for the return of their shares.

 

If a Public Shareholder properly demands Redemption as described above, then, if the Business Combination is completed, Thunder Bridge will redeem the shares subject to the Redemptions for cash. Such amount will be paid promptly after completion of the Business Combination. If you exercise your Redemption Rights, then you will be exchanging your Thunder Bridge Shares for cash and will no longer own these shares following the Business Combination.

 

If you are a Public Shareholder and you exercise your Redemption Rights, it will not result in either the exercise or loss of any Thunder Bridge warrants that you may hold. Your Thunder Bridge warrants will continue to be outstanding following a Redemption of your Thunder Bridge Shares and will become exercisable in connection with the completion of the Business Combination.

 

If you intend to seek Redemption of your Public Shares, you will need to deliver your shares (either physically or electronically) to Thunder Bridge’s Transfer Agent prior to the meeting, as described in this proxy statement/prospectus. If you have questions regarding the certification of your position or delivery of your shares, please contact:

 

Continental Stock Transfer & Trust Company

One State Street, 30th Floor

New York, New York 10004

Tel: (212) 845-3287

Fax: (212) 616-7616

 

Q.What happens if the Business Combination is not completed?

 

A.If a Public Shareholder has tendered shares to be redeemed but the Business Combination is not completed, the Redemptions will be canceled and the tendered shares will be returned to the relevant Public Shareholders as appropriate. The current deadline set forth in the Memorandum and Articles of Association for Thunder Bridge to complete its initial Business Combination is December 21, 2019 (18 months after the closing of the IPO).

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF THUNDER BRIDGE

 

The following table sets forth selected historical financial information derived from Thunder Bridge’s unaudited condensed financial statements as of September 30, 2018 and for the nine months then ended, and the audited financial statements as of December 31, 2017 and for the period from September 18, 2017 (date of inception) to December 31, 2017, each of which is included elsewhere in this proxy statement/prospectus. Such unaudited interim financial information has been prepared on a basis consistent with Thunder Bridge’s audited financial statements and should be read in conjunction with the interim unaudited condensed financial statements and audited financial statements and related notes included elsewhere in this proxy statement/prospectus.

 

The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should carefully read the following selected financial information in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Thunder Bridge” and Thunder Bridge’s financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

 

   Nine Months
ended 
September 30,
2018
   September 18, 2017 (inception) to December 31,
2017
 
Statement of Operations Data:        
Operating expenses        
Formation costs and other operating expenses  $211,729   $5,270 
Loss from operations   (211,729)   (5,270)
Other income          
Interest income and unrealized gains on marketable securities   1,280,188    - 
Net income (loss)  $1,068,459   $(5,270)
Basic net loss per share attributable to ordinary shares  $(0.02)  $(0.00)
Diluted net loss per share attributable to ordinary shares  $(0.02)  $(0.00)
Weighted average number of ordinary shares outstanding, basic   6,953,442    4,904,762 
Weighted average number of ordinary shares outstanding, diluted   6,953,442    4,904,762 
Cash Flow Data:          
Net cash used in operating activities  $(406,509)  $(5,270)
Net cash used in investing activities  $(260,580,000)  $- 
Net cash provided by financing activities  $261,728,410   $31,087 

  

   As of
September 30,
2018
   As of December 31,
2017
 
Balance Sheet Data:        
Cash  $757,718   $25,817 
Cash and Investments held in Trust Account  $261,860,188   $- 
Total assets  $262,733,379   $176,330 
Ordinary shares subject to possible redemption  $248,028,363   $- 
Total stockholders’ equity  $5,000,010   $19,730 

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF REPAY

 

The following selected historical financial data should be read together with the consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Repay” appearing elsewhere in this proxy statement/prospectus. The selected consolidated financial data in this section is not intended to replace Repay’s consolidated financial statements and the related notes. Repay’s historical results are not necessarily indicative of its future results, and its results as of and for the nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

 

We derived the selected consolidated statements of operations data for the year ended December 31, 2017 and the period from Inception through December 31, 2016 (Successor) and the period from January 1, 2016 to August 31, 2016 (Predecessor) and the consolidated balance sheet data as of December 31, 2017 and 2016, from our audited consolidated financial statements appearing elsewhere in this proxy statement/prospectus. The selected consolidated statements of operations data for the nine months ended September 30, 2018 and 2017 and the selected consolidated balance sheet data as of September 30, 2018 are derived from our unaudited condensed consolidated financial statements appearing elsewhere in this proxy statement/prospectus. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited financial statements and include, in the opinion of Repay’s management, all adjustments, consisting of normal and recurring adjustments that management consider necessary for a fair presentation of the financial information set forth in such statements.

 

   Successor   Predecessor 
   Nine Months ended
September 30,
   Year Ended
December 31,
   From Inception to
December 31,
   From
January 1,
2016
to
August 31,
 
   2018   2017   2017   2016   2016 
   (in thousands) 
Statement of Operations Data:                    
Revenue  $96,155   $68,392   $93,951   $28,747   $53,548 
Operating expenses                         
Interchange and network fees   35,370    27,802    36,888    11,937    19,016 
Other cost of services   20,302    14,473    20,713    6,689    15,596 
Selling, general and administrative   21,009    9,824    14,604    6,301    17,273 
Depreciation and amortization   7,580    5,359    7,457    2,207    1,530 
Change in fair value of contingent consideration   (1,000)   (100)   (2,100)        
Total operating expenses   83,261    57,358    77,562    27,134    53,415 
Income from operations   12,894    11,034    16,389    1,613    133 
Interest expense   (4,501)   (4,776)   (5,706)   (1,917)   (334)
Other expenses   (1)   (1,241)   (1,235)   (7)    
Total other expenses   (4,502)   (6,017)   (6,941)   (1,924)   (334)
Net income (loss)  $8,392   $5,017   $9,448   $(311)  $(201)

 

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   Successor 
  

Nine Months
ended

September 30,
2018

   Year Ended
December 31,
2017
   From Inception to
December 31,
2016
 
   (in thousands) 
Balance Sheet Data (at period end):        
Cash and cash equivalents   $12,445   $6,138   $2,778 
Working capital(1)   $2,687   $(5,733)  $(2,556)
Total assets   $215,550   $211,598   $164,435 
Long-term debt(2)   $86,938   $90,308   $46,602 
Total members’ equity   $109,330   $104,051   $99,461 

 

 

(1)Working capital is calculated as total current assets less total current liabilities in the historical financial statements of Repay included elsewhere in this proxy statement/prospectus.
(2)Represents outstanding term loans, less current maturities and debt issuance costs. Does not include revolver borrowings.

 

   Successor   Predecessor 
   Nine Months ended
September 30,
   Year Ended
December 31,
   From Inception to
December 31,
   From January 1, 2016 to
August 31,
 
   2018   2017   2017   2016   2016 
   (in thousands) 
Key Operating and Non-GAAP Financial Data:              
Payment volume(1)   $5,463,627   $3,828,285   $5,248,172   $1,562,688   $2,791,278 
Net revenue(2)   $60,785   $40,590   $57,063   $16,810   $34,532 
Adjusted EBITDA(3)   $27,086   $18,364   $25,427   $7,405   $14,147 

 

 

(1)Represents total dollar amount of all payments processed by Repay’s clients through its services.
(2)Net revenue is a non-GAAP financial measure that represents revenue less interchange and network fees. Reconciliation of Repay’s revenues to net revenues is as follows:

 

     Successor  Predecessor 
     Nine months ended
September 30,
  Year Ended
December 31,
   From
Inception to
December 31,
   From
January 1, 2016
to
August 31,
 
     2018   2017   2017   2016   2016 
     (in thousands) 
  Revenue   $96,155   $68,392   $93,951   $28,747   $53,548 
  Interchange and network fees    35,370    27,802    36,888    11,937    19,016 
  Net revenue   $60,785   $40,590   $57,063   $16,810   $34,532 

 

(3)Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense and depreciation and amortization, as adjusted to add back certain non-cash and non-recurring charges, such as other expenses, non-cash change in fair value of contingent consideration, share-based compensation charges, transaction expenses, and other non-recurring charges.

 

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Repay discloses Adjusted EBITDA in this proxy statement/prospectus because it is a key measure used by management to evaluate Repay’s operating performance and Repay believes it is useful for investors. Adjusted EBITDA is not a financial measure calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, or any other operating performance measure calculated in accordance with GAAP. Using this non-GAAP financial measures to analyze Repay’s business would have material limitations because their calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in Repay’s industry may report measures titled Adjusted EBITDA or similar measures, such non-GAAP financial measures may be calculated differently from how Repay calculates its non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and our other financial results presented in accordance with GAAP.

 

The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated:

 

     Successor   Predecessor 
     Nine months ended
September 30,
   Year Ended
December 31,
   From
Inception to
December 31,
   From
January 1,
2016
to
August 31,
 
     2018   2017   2017   2016   2016 
     (in thousands) 
  Net income (loss)   $8,392   $5,017   $9,448   $(311)  $(201)
  Plus:                         
  Interest expense    4,501    4,776    5,706    1,917    334 
  Depreciation and amortization    7,580    5,359    7,457    2,207    1,530 
  EBITDA    20,473    15,152    22,611    3,813    1,663 
                            
  Other expenses(a)    1    1,241    1,235    7     
  Non-cash change in fair value of contingent consideration(b)    (1,000)   (100)   (2,100)        
  Share-based compensation expense(c)    630    487    622    137     
  Transaction expenses(d)    2,155    310    1,351    2,988    12,354 
  Other non-recurring charges(e)    4,827    1,274    1,708    460    130 
  Adjusted EBITDA   $27,086   $18,364   $25,427   $7,405   $14,147 

 

 

(a)Reflects write-offs of debt issuance costs relating to Repay’s term loans, prepayment penalties relating to its previous debt facility as well as write-offs relating to certain fixed assets.
(b)Reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the later of the most recent balance sheet date or the original estimates made at the closing of the applicable acquisition.
(c)Represents compensation expense associated with Repay’s equity compensation plans. Refer to Note 11 and Note 12 to Repay’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.
(d)Transaction expenses are the professional service fees and other costs in connection with the Business Combination, financing transactions and the acquisitions of Sigma Payment Solutions Inc. during the period from January 1, 2016 to August 31, 2016 (Predecessor), PaidSuite, Inc. and PaidMD, LLC during the period from Inception to December 31, 2016 (Successor) and Paymaxx Pro, LLC during the year ended December 31, 2017. For the nine months ended September 30, 2018, transaction expenses reflect professional service fees and other costs in connection with the Business Combination.
(e)Represents other non-recurring items, such as costs associated with one-time strategic initiatives, sponsor management fees, which will terminate upon the completion of the Business Combination, and one-time payrolls costs to reflect the buyout of commissions from select members of sales teams.

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The selected unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information included elsewhere in this proxy statement/prospectus.

 

The following selected unaudited pro forma condensed combined balance sheet as of September 30, 2018 combines the historical balance sheet of Thunder Bridge as of September 30, 2018 and the historical consolidated balance sheet of Repay as of September 30, 2018, giving effect to the Business Combination as described below on a pro forma basis as if it had been completed on September 30, 2018. The following selected unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2018 and for the year ended December 31, 2017 combines the historical consolidated statement of operations of Thunder Bridge for the nine months ended September 30, 2018 and for the period from September 18, 2017 (inception of Thunder Bridge) to December 31, 2017 with the historical consolidated statement of operations of Repay for the nine months ended September 30, 2018 and for the year ended December 31, 2017, giving effect to the Business Combination as described on a pro forma basis as if it had been completed on January 1, 2017. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

 

The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Thunder Bridge,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Repay,” and the following historical financial statements and accompanying notes of Thunder Bridge and Repay, which are included elsewhere in this proxy statement/prospectus:

 

Thunder Bridge’s unaudited financial statements as of and for the nine months ended September 30, 2018 and the related notes;

 

Repay’s unaudited consolidated financial statements as of and for the nine months ended September 30, 2018 and the related notes;

 

Thunder Bridge’s audited financial statements as of December 31, 2017 and for the period from September 18, 2017 (inception) through December 31, 2017 and the related notes; and

 

Repay’s audited consolidated financial statements as of and for the year ended December 31, 2017 and the related notes.

On January 21, 2019, Thunder Bridge and Repay entered into the Merger Agreement. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Closing, (a) Thunder Bridge will effect the Domestication from the Cayman Islands to become a Delaware corporation and (b) Merger Sub will merge with and into Repay, with Repay continuing as the surviving entity and becoming a subsidiary of the Company (with Thunder Bridge receiving limited liability company interests in Repay as the surviving entity and becoming the managing member of the surviving entity). In connection with the Domestication and simultaneously with the completion of the Business Combination, Thunder Bridge will change its corporate name to “Repay Holdings Corporation”. At the effective time of the Business Combination all outstanding securities of Repay will be converted into the right to receive the Merger Consideration, and all of the outstanding securities of Thunder Bridge will convert into outstanding securities of the Company.

 

The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the Company’s operating results. The adjustments presented in the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the Company upon completion of the Business Combination. The pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements and described in the notes thereto reflect, among other things, the completion of the Business Combination and the other transactions contemplated by the Merger Agreement, including estimated issuance of indebtedness to finance the completion of the Business Combination and such other transactions, issuance of cash and equity consideration as part of the Merger Consideration, transactions costs in connection with the Business Combination, impact of purchase accounting and tax effect of pro forma adjustments at the estimated effective income tax rate applicable to such adjustments.

 

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting under the provisions of Accounting Standards Codification 805, “Business Combinations” (“ASC 805”) on the basis of Thunder Bridge as the accounting acquirer. Accordingly, the purchase price is allocated to the underlying assets acquired and liabilities assumed based on their estimated fair values as of the closing of the Business Combination, with any excess purchase price allocated to goodwill. Thunder Bridge has not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed and, accordingly, the adjustments to record the assets acquired and liabilities assumed at fair value reflect the best estimates of Thunder Bridge based on the information currently available and are subject to change once additional analyses are completed.

 

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In addition, the unaudited pro forma condensed combined financial statements as presented assumes no Class A ordinary shares are redeemed. To the extent that any Class A ordinary shares are redeemed, there will be insufficient pro forma cash on hand to satisfy the Cash Consideration Condition. In the event that there are redemptions of Class A ordinary shares and Thunder Bridge fails to satisfy the Cash Consideration Condition:

 

  Thunder Bridge has the ability to raise additional equity financing of up to an amount equal to $30,000,000 plus the amount of the aggregate Redemption Price of any Redemptions for such purposes, using the amount in the Trust Account on the date of determination), subject to the reasonable consent of Repay and other terms and conditions specified in the Merger Agreement; and
     
in the event Repay exercises its option to waive the Cash Consideration Condition to a lower amount, a corresponding, larger portion of the Merger Consideration will be payable in Post-Merger Repay Units and the voting power of the Repay Equity Holders following the Business Combination will be greater relative to the Thunder Bridge shareholders than is currently contemplated. Thunder Bridge believes that if more than 5,516,968 Class A ordinary shares are redeemed and the Repay Equity Holders receive more than 5,516,968 additional Post-Merger Repay Units than is currently assumed, Repay would be deemed the accounting acquirer as opposed to Thunder Bridge. Thus, the Business Combination would be accounted for as a reverse merger; thus, eliminating the step up in basis for acquired assets and liabilities. Rather, the transaction would be accounted for as a contribution of equity.

 

Furthermore, the final purchase price of the Business Combination is subject to the settlement of certain Closing Adjustment Items pursuant to the Merger Agreement, including, among others, transaction expenses and working capital adjustments.

 

The unaudited pro forma condensed combined financial information is for illustrative purposes only. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the Business Combination occurred on the dates indicated or the future results that the Company will experience. Repay and Thunder Bridge have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of results as of or for periods after December 31, 2017 and September 30, 2018, as applicable. In particular, the components comprising the Cash Consideration have fluctuated since September 30, 2018 and are expected to continue to do so. Thunder Bridge and Repay currently expect that the components of the Cash Consideration will be sufficient as of the Closing of the Merger to permit Thunder Bridge to satisfy the Cash Consideration Condition as of the Closing Date.

  

In addition, the pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial statements. The Company will incur additional costs after the Business Combination in order to satisfy its obligations as a reporting public company. In addition, we anticipate the adoption of the 2019 Equity Incentive Plan for employees, officers and directors. No adjustment to the unaudited pro forma statement of operations has been made for these items as they are not directly related to the Business Combination and/or such amounts are not yet known.

  

   For the nine months ended
September 30, 2018
 
   Thunder Bridge (Historical)   Repay (Historical)   Combined Pro Forma 
Statements of Operations Data:            
Revenue  $-   $96,154,759   $96,154,759 
Total operating expenses   211,729    83,260,940    109,878,693 
(Loss) income from operations   (211,729)   12,893,819    (13,723,934)
Net (loss) income   1,068,459    8,391,763    (19,285,148)
Net (loss) income attributable to noncontrolling interests   -    -    (9,263,501)
Net (loss) income attributable to the Company  $1,068,459   $8,391,763   $(10,021,647)
Weighted average shares outstanding, basic   6,953,442         27,950,000 
Basic net loss per share  $(0.02)       $(0.36)

   

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   For the period from September 18, 2017 (Inception) to
December 31,
2017
   For the year ended
December 31,
2017
   For the year ended
December 31,
2017
 
   Thunder Bridge (Historical)   Repay (Historical)   Combined Pro Forma 
Statement of Operations Data:            
Revenue  $-   $93,951,121   $93,951,121 
Total operating expenses   5,270    77,562,035    114,523,229 
(Loss) income from operations   (5,270)   16,389,086    (20,572,108)
Net (loss) income   (5,270)   9,448,244    (27,781,777)
Net (loss) income attributable to noncontrolling interests   -    -    (12,800,550)
Net (loss) income attributable to the Company  $(5,270)  $9,448,244   $(14,981,227)
Weighted average shares outstanding, basic   4,904,762         27,950,000 
Basic net loss per share  $(0.00)       $(0.54)

  

  

As of September 30,2018

 
   Thunder Bridge (Historical)   Repay (Historical)   Combined Pro Forma 
             
Balance Sheet Data:            
Cash and cash equivalents  $767,718   $12,444,648   $7,246,554 
Restricted cash  $-   $6,728,061   $6,728,061 
Total assets  $262,733,379   $215,549,785   $702,482,605 
Current maturities of long-term debt  $-   $4,900,000   $1,700,000 
Current portion of Tax Receivable Agreement  $-   $-   $4,366,513 
Long-term debt, net of current maturities  $-   $86,938,353   $162,600,000 
Total liabilities  $9,705,006   $106,219,743   $240,290,232 
Total shareholders’ equity  $5,000,010   $109,330,042   $222,431,726 

  

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COMPARATIVE PER SHARE INFORMATION

 

The following table sets forth historical comparative per share information of Thunder Bridge, on a stand-alone basis, and the unaudited pro forma condensed combined per share information after giving effect to the Business Combination, assuming that no Public Shareholders exercise their Redemption Rights in respect of their outstanding Public Shares.

 

The historical information should be read in conjunction with the information in the sections entitled “Selected Historical Financial Information of Thunder Bridge” and “Selected Historical Consolidated Financial and Other Data of Repay” and the historical financial statements of Repay and Thunder Bridge included elsewhere in this proxy statement/prospectus. The unaudited pro forma condensed combined per share information is derived from, and should be read in conjunction with, the information contained in the section of this proxy statement/prospectus entitled “Selected Unaudited Pro Forma Condensed Combined Financial Information.”

 

The unaudited pro forma combined share information does not purport to represent what the actual results of operations of the Company would have been had the Business Combination been completed or to project Thunder Bridge’s and the Company’s results of operations that may be achieved after the Business Combination. The unaudited pro forma shareholders’ equity per share information below does not purport to represent what the value of Repay and Thunder Bridge would have been had the Business Combination been completed nor the shareholders’ equity per share for any future date or period.

 

   Thunder Bridge
(Historical)
  

Repay(1)

(Historical)

   Combined Pro Forma 
As of and for the nine months ended September 30, 2018            
             
Net (loss) income  $1,068,459   $8,391,763   $(19,285,148)
Net (loss) income attributable to the Company  $1,068,459   $8,391,763   $(10,021,647)
Shareholders’ equity  $5,000,010   $109,330,042   $222,431,726 
Weighted average ordinary shares outstanding (basic and diluted)(2)   6,953,442     n/a    27,950,000 
Number of shares outstanding (basic and diluted) at period end   7,813,708    n/a    27,950,000 
Net (loss) income per share attributable to ordinary shares (basic and diluted)(2)  $(0.02)  $ n/a   $(0.36)
Shareholders’ equity per share (basic and diluted) at period end(2)  $0.72   $ n/a   $8.02 
Cash dividends per ordinary share  $-   $ n/a   $- 
                
As of and for the fiscal year ended December 31, 2017 or (for Thunder Bridge) the period from inception to December 31, 2017               
                
Net (loss) income  $(5,270)  $9,448,244   $(27,781,777)
Net (loss) income attributable to the Company  $(5,270)  $9,448,244   $(14,981,227)
Shareholders’ equity(3)  $19,730   $104,051,883   $ n/a 
Weighted average ordinary shares outstanding (basic and diluted)   4,904,762     n/a    27,950,000 
Number of shares outstanding (basic and diluted) at period end   5,750,000    n/a    27,950,000 
Net (loss) income per share  attributable to ordinary shares (basic and diluted)(2)  $(0.00)  $ n/a   $(0.54)
Shareholders’ equity per share (basic and diluted) at period end(2)  $-   $ n/a   $ n/a(3)
Cash dividends per ordinary share  $-   $ n/a   $- 

 

 

(1)Repay historically has not calculated these amounts. See Note 1 to Repay’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

 

(2)Basic and diluted weighted average shares outstanding are the same in a net loss position.

 

(3)Pro forma combined financial information is not available as of December 31, 2017.

 

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RISK FACTORS

 

You should carefully consider all the following risk factors, together with all of the other information in this proxy statement/prospectus, including the financial information, before deciding how to vote or instruct your vote to be cast to approve the proposals described in this proxy statement/prospectus.

 

The value of your investment following the completion of the Business Combination will be subject to significant risks affecting, among other things, the Company’s business, financial condition and results of operations. If any of the events described below occur, the Company’s post-Business Combination business and financial results could be adversely affected in material respects. This could result in a decline, which may be significant, in the trading price of the Company’s securities and you therefore may lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to the businesses of Thunder Bridge and Repay.

 

Throughout this section, references to the “Company” refer to the Company and its consolidated subsidiaries as the context so requires.

 

Risks Related to the Domestication and the Business Combination

 

Thunder Bridge’s shareholders will experience dilution due to the issuance of securities convertible into the shares of Class A common stock of the Company to the Repay Equity Holders as consideration in the Merger and the issuance of securities entitling the Repay Equity Holders to a significant voting stake in the Company.

 

Based on Repay’s and Thunder Bridge’s current capitalization (and the assumptions regarding the Merger Consideration paid at Closing described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”), we anticipate issuing to the Repay Equity Holders an aggregate of 21,376,000 Post-Merger Repay Units that will be exchangeable into an identical number of shares of the Class A common stock pursuant to the Exchange Agreement, to the current Repay Equity Holders as partial consideration in the Merger. Additionally, each current member of Repay will be issued a share of Class V common stock of the Company, entitling such member to a number of votes on matters subject to the vote of the Company common stockholders equal to the number of Post-Merger Repay Units held by such Repay Equity Holder. Furthermore, if the 2019 Equity Incentive Plan Proposal is approved, a number of shares equal to 10% of the sum of (i) the number of issued and outstanding shares of Class A common stock immediately after the Closing, (ii) the number of issued and outstanding Post-Merger Repay Units immediately after the Closing, excluding those held by the Company, (iii) the maximum number of Earn-Out Units and (iv) the number of shares reserved under the 2019 Equity Incentive Plan will be authorized for issuance under the 2019 Equity Incentive Plan, which using the assumptions described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages” would be 6,747,333 shares of Class A common stock, and it is currently expected that shortly after the Closing, the Company will issue 2,047,851 restricted shares of Class A common stock to executives of the Company following the Merger (see the section entitled “Proposal 4: The 2019 Equity Incentive Plan Proposal”). Assuming the foregoing and the other assumptions described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”, Thunder Bridge’s current shareholders would hold in the aggregate approximately 56.7% of the outstanding Class A common stock (52.3% held by the Public Shareholders and 4.4% held by the Sponsor), and the current Repay Equity Holders holding approximately 43.3% of the outstanding Class A common stock. Without limiting the other assumptions described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”, these ownership percentages do not take into account:

 

any warrants or options to purchase the Class A common stock that will be outstanding following the Merger;

 

any equity awards that may be issued under the proposed 2019 Equity Incentive Plan following the Merger, including 2,047,851 shares of restricted Class A common stock currently expected to be issued to Company executives shortly after the Closing, which number of restricted shares issued represents approximately 30% of the total number of shares currently expected to be authorized for issuance under the 2019 Equity Incentive Plan using the assumptions described under the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages” Inventive Plan (See the section entitled “Proposal 3: The 2019 Equity Incentive Plan Proposal” for more information and the section entitled “Executive Compensation of Repay—Key Compensation Actions in 2019—Equity Grants”); or

 

The Earn-Out Units or any adjustments to the Merger Consideration pursuant to the Merger Agreement not reflected in our assumptions described above and in the section entitled “Frequently Used Terms—Share Calculations and Ownership Percentages”.

 

If any of the Public Shares are redeemed in connection with the Merger, the percentage of the outstanding Class A ordinary shares held by the Public Shareholders will decrease and the percentages of the outstanding Class A common stock held immediately following the Business Combination by the Sponsor and the percentage of voting power of Class A common stock issuable to the Repay Equity Holders upon exchange of Post-Merger Repay Units will increase. To the extent that any of the outstanding warrants are exercised for shares of Class A common stock, or additional awards are issued under the proposed 2019 Equity Incentive Plan, Thunder Bridge’s existing shareholders may experience substantial dilution. Such dilution could, among other things, limit the ability of Thunder Bridge’s current shareholders to influence the Company’s management through the election of directors following the Business Combination.

 

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The ability of Thunder Bridge’s shareholders to exercise Redemption Rights with respect to Thunder Bridge’s Public Shares may prevent Thunder Bridge from completing the Business Combination or optimize its capital structure.

 

Thunder Bridge does not know how many shareholders will ultimately exercise their Redemption Rights in connection with the Business Combination. As such, the Business Combination is structured based on Thunder Bridge’s expectations (and those of the other parties to the Merger Agreement) as to the number of shares that will be submitted for Redemption. In addition, if a larger number of shares are submitted for Redemption than Thunder Bridge initially expected, Thunder Bridge may need to seek to arrange for third party financing to be able to deliver the Required Cash Consideration Amount to Repay at Closing (or such lower cash amount designated by Repay if Repay waives the condition).

 

Although Thunder Bridge has obtained the Debt Commitment Letter in respect of the Debt Financing, if too many Public Shareholders elect to redeem their shares, the Debt Financing alone may be insufficient to complete the Merger, and additional third-party financing may not be available to Thunder Bridge. Even if such third-party financing is available, Thunder Bridge’s ability to obtain such financing is subject to restrictions set forth in the Merger Agreement, including the consent of Repay. For information regarding the parameters of such restrictions, please see the sections of this proxy statement/prospectus entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Covenants of the Parties” and “Proposal 2: The Business Combination Proposal—The Merger Agreement—Closing Conditions.

 

Furthermore, raising such additional financing, or increasing the equity portion of the Merger Consideration, in either case if so authorized by Repay, may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. For information on the consequences if the Business Combination is not completed or must be restructured, please see the section of this proxy statement/prospectus entitled “Risk Factors—Risks Related to Thunder Bridge.

 

Subsequent to the completion of the Business Combination, the Company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition and its share price, which could cause you to lose some or all of your investment.

 

Thunder Bridge cannot assure you that the due diligence Thunder Bridge has conducted on Repay will reveal all material issues that may be present with regard to Repay, or that factors outside of Thunder Bridge’s or Repay’s control will not later arise. As a result of unidentified issues or factors outside of Thunder Bridge’s or Repay’s control, the Company may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reporting losses. Even if Thunder Bridge’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with the preliminary risk analysis conducted by Thunder Bridge. Even though these charges may be non-cash items that would not have an immediate impact on the Company’s liquidity, the fact that the Company reports charges of this nature could contribute to negative market perceptions about the Company or its securities. In addition, charges of this nature may cause the Company to violate leverage or other covenants to which it may be subject. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares from any such write-down or write-downs.

  

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The Company’s ability to be successful following the Business Combination will depend upon the efforts of the Company Board and Repay’s key personnel and the loss of such persons could negatively impact the operations and profitability of the Company’s business following the Business Combination.

 

The Company’s ability to be successful following the Business Combination will be dependent upon the efforts of the Company Board and key personnel. Thunder Bridge cannot assure you that, following the Business Combination, the Company Board and the Company’s key personnel will be effective or successful or remain with the Company. In addition to the other challenges they will face, such individuals may be unfamiliar with the requirements of operating a public company, which could cause the Company’s management to expend time and resources becoming familiar with such requirements.

 

The Company will be a holding company and its only material asset after completion of the Business Combination will be its interest in Repay, and it is accordingly dependent upon distributions made by its subsidiaries to pay taxes, make payments under the Tax Receivable Agreement and pay dividends.

 

Upon completion of the Business Combination, the Company will be a holding company with no material assets other than its ownership of Post-Merger Repay Units and its managing member interest in Repay. As a result, the Company will have no independent means of generating revenue or cash flow. The Company’s ability to pay taxes, make payments under the Tax Receivable Agreement and pay dividends will depend on the financial results and cash flows of Repay and its subsidiaries and the distributions it receives from Repay. Deterioration in the financial condition, earnings or cash flow of Repay and its subsidiaries, including its operating subsidiaries such as M & A Ventures, LLC, for any reason could limit or impair Repay’s ability to pay such distributions. Additionally, to the extent that the Company needs funds and Repay and/or any of its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or Repay is otherwise unable to provide such funds, it could materially adversely affect the Company’s liquidity and financial condition.

 

Repay will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to holders of Post-Merger Repay Units. Accordingly, the Company will be required to pay income taxes on its allocable share of any net taxable income of Repay. Under the terms of the Amended Operating Agreement, Repay is obligated to make tax distributions to holders of Post-Merger Repay Units (including the Company) calculated at certain assumed tax rates. In addition to tax expenses, the Company will also incur expenses related to its operations, including payment obligations under the Tax Receivable Agreement (and the cost of administering such payment obligations), which could be significant. See the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Tax Receivable Agreement.” The Company intends to cause Repay to make distributions to holders of Post-Merger Repay Units in amounts sufficient to cover all applicable taxes (calculated at assumed tax rates), relevant operating expenses, payments under the Tax Receivable Agreement and dividends, if any, declared by Repay. However, as discussed below, Repay’s ability to make such distributions may be subject to various limitations and restrictions including, but not limited to, restrictions on distributions that would either violate any contract or agreement to which Repay is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Repay insolvent. If the Company’s cash resources are insufficient to meet its obligations under the Tax Receivable Agreement and to fund its obligations, the Company may be required to incur additional indebtedness to provide the liquidity needed to make such payments, which could materially adversely affect its liquidity and financial condition and subject the Company to various restrictions imposed by any such lenders. To the extent that the Company is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement.

 

Additionally, although Repay generally will not be subject to any entity-level U.S. federal income tax, it may be liable under recent federal tax legislation for adjustments to its tax return, absent an election to the contrary. In the event Repay’s calculations of taxable income are incorrect, its members, including the Company, in later years may be subject to material liabilities pursuant to this federal legislation and its related guidance.

 

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The Company anticipates that the distributions it will receive from Repay may, in certain periods, exceed the Company’s actual tax liabilities and obligations to make payments under the Tax Receivable Agreement. The Company Board, in its sole discretion, will make any determination from time to time with respect to the use of any such excess cash so accumulated, which may include, among other uses, to acquire additional newly issued Post-Merger Repay Units from Repay at a per unit price determined by reference to the market value of the Class A common stock; to pay dividends, which may include special dividends, on the Company’s Class A common stock; to fund repurchases of Class A common stock; or any combination of the foregoing. The Company will have no obligation to distribute such cash (or other available cash other than any declared dividend) to its stockholders. To the extent that the Company does not distribute such excess cash as dividends on Class A common stock or otherwise undertake ameliorative actions between Post-Merger Repay Units and shares of Class A common stock and instead, for example, holds such cash balances, holders of Post-Merger Repay Units that hold interests in Repay pre-Business Combination may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following an exchange of their Post-Merger Repay Units, notwithstanding that such holders may previously have participated as holders of Post-Merger Repay Units in distributions by Repay that resulted in such excess cash balances at the Company. See the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Amended Operating Agreement.”

 

Dividends on the Company’s common stock, if any, will be paid at the discretion of the Company Board, which will consider, among other things, the Company’s business, operating results, financial condition, current and expected cash needs, plans for expansion and any legal or contractual limitations on its ability to pay such dividends. Financing arrangements may include restrictive covenants that restrict the Company’s ability to pay dividends or make other distributions to its stockholders. In addition, Repay is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Repay (with certain exceptions) exceed the fair value of its assets. Repay’s subsidiaries are generally subject to similar legal limitations on their ability to make distributions to Repay. If Repay does not have sufficient funds to make distributions, the Company’s ability to declare and pay cash dividends may also be restricted or impaired.

 

Under the Tax Receivable Agreement, the Company will be required to pay 100% of the tax benefits relating to tax depreciation or amortization deductions as a result of the tax basis step-up the Company receives in connection with the exchanges of Post-Merger Repay Units into the Company’s Class A common stock and related transactions, and those payments may be substantial.

 

The Repay Equity Holders may exchange their Post-Merger Repay Units for shares of Class A common stock pursuant to the Exchange Agreement, subject to certain conditions and transfer restrictions as set forth therein and in the Amended Operating Agreement. These exchanges are expected to result in increases in the Company’s allocable share of the tax basis of the tangible and intangible assets of Repay. These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income or franchise tax that the Company would otherwise be required to pay in the future had such exchanges never occurred.

 

In connection with the Business Combination, the Company will enter into the Tax Receivable Agreement, which generally provides for the payment by it of 100% of certain tax benefits, if any, that the Company realizes (or in certain cases is deemed to realize) as a result of these increases in tax basis and certain other tax attributes of Repay and tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. These payments are the obligation of the Company and not of Repay. The actual increase in the Company’s allocable share of Repay’s tax basis in its assets, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges, the market price of the Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of the recognition of the Company’s income. While many of the factors that will determine the amount of payments that the Company will make under the Tax Receivable Agreement are outside of its control, the Company expects that the payments we will make under the Tax Receivable Agreement will be substantial and could have a material adverse effect on the Company’s financial condition. Any payments made by the Company under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to the Company. To the extent that the Company is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. Furthermore, the Company’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement. See the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—Tax Receivable Agreement.”

 

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In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits the Company realizes or be accelerated.

 

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that the Company determines, and the Internal Revenue Service (the “IRS”) or another taxing authority may challenge all or any part of the tax basis increases, as well as other tax positions that the Company takes, and a court may sustain such a challenge. In the event any tax benefits initially claimed by the Company are disallowed, the current Repay Equity Holders will not be required to reimburse the Company for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities. Rather, excess payments made to such holders will be netted against any future cash payments otherwise required to be made by the Company, if any, after the determination of such excess. However, a challenge to any tax benefits initially claimed by the Company may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that the Company might otherwise be required to make under the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments from which to net against. As a result, in certain circumstances the Company could make payments under the Tax Receivable Agreement in excess of the Company’s actual income or franchise tax savings, which could materially impair the Company’s financial condition.

 

Moreover, the Tax Receivable Agreement provides that, in the event that (i) the Company exercise its early termination rights under the Tax Receivable Agreement, (ii) the Company becomes bankrupt or undergoes a similar insolvency event, (iii) certain changes of control of the Company occur (as described in the Tax Receivable Agreement) or (iv) the Company is more than three months late in making of a payment due under the Tax Receivable Agreement (unless the Company in good faith determines that it has insufficient funds to make such payment), the Company’s obligations under the Tax Receivable Agreement will accelerate and the Company will be required to make an immediate lump-sum cash payment to the Repay Equity Holders equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to the Company’s future taxable income. The lump-sum payment to the Repay Equity Holders could be substantial and could exceed the actual tax benefits that the Company realizes subsequent to such payment because such payment would be calculated assuming, among other things, that the Company would be able to use the assumed potential tax benefits in future years, and that tax rates applicable to the Company would be the same as they were in the year of the termination.

 

There may be a material negative effect on the Company’s liquidity if the payments under the Tax Receivable Agreement exceed the actual income or franchise tax savings that the Company realizes. Furthermore, the Company’s obligations to make payments under the Tax Receivable Agreement could also have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. The Company may need to incur additional indebtedness to finance payments under the Tax Receivable Agreement to the extent its cash resources are insufficient to meet its obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. Such indebtedness may have a material adverse effect on the Company’s financial condition.

 

Some of Thunder Bridge’s officers and directors may have conflicts of interest that may influence or have influenced them to support or approve the Business Combination without regard to your interests or in determining whether Repay is appropriate for Thunder Bridge’s initial business combination.

 

The personal and financial interests of Thunder Bridge’s Sponsor, officers and directors may influence or have influenced their motivation in identifying and selecting a target for the Business Combination, their support for completing the Business Combination and the operation of the Company following the Business Combination.

 

Thunder Bridge’s Sponsor owns 6,450,000 Class B ordinary shares, which were initially acquired prior to Thunder Bridge’s IPO for an aggregate purchase price of $25,000 and Thunder Bridge’s directors and officers have pecuniary interests in such ordinary shares through their ownership interest in the Sponsor. Such shares had an aggregate market value of approximately $64.7 million based on the last sale price of $10.03 per share on Nasdaq on February 6, 2019. In addition, the Sponsor and Cantor purchased an aggregate of 8,830,000 Private Placement Warrants, each exercisable for one ordinary share of Thunder Bridge at $11.50 per share, for a purchase price of $8,830,000, or $1.00 per warrant.

 

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Thunder Bridge’s Memorandum and Articles of Association require Thunder Bridge to complete an initial business combination prior to December 21, 2019 (unless Thunder Bridge submits and its shareholders approve an extension of such date). If the Business Combination is not completed and Thunder Bridge is forced to wind up, dissolve and liquidate in accordance with the Memorandum and Articles of Association, the 6,450,000 ordinary shares currently held by Thunder Bridge’s Sponsor and the Private Placement Warrants purchased by Sponsor and Cantor will be worthless (as the holders have waived liquidation rights with respect to such ordinary shares).

 

Thunder Bridge’s Sponsor, directors and officers, and their respective affiliates have incurred significant out-of-pocket expenses incurred in connection with performing due diligence on suitable targets for business combinations and the negotiation of the Business Combination. At the Closing of the Business Combination, Thunder Bridge’s Sponsor, directors and officers, and their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on Thunder Bridge’s behalf such as identifying potential target businesses and performing due diligence on suitable targets for business combinations, subject to the forfeiture provisions described under the section entitled “Proposal 2: The Business Combination Proposal—Related Agreements—The Sponsor Letter Agreement” in the event such expenses exceed $20 million). If a business combination is not completed prior to December 21, 2019, Thunder Bridge’s Sponsor, directors and officers, or any of their respective affiliates will not be eligible for any such reimbursement.

 

Certain officers and directors of Thunder Bridge also participate in arrangements that may be argued to provide them with other interests in the Business Combination that are different from yours, including, among others, arrangements for the continued service as directors of the Company.

 

Further, Thunder Bridge’s Sponsor, officers and directors have, pursuant to the Insider Letter Agreement, each agreed (A) to vote any Thunder Bridge shares owned by them in favor of the Business Combination and (B) not to redeem any shares in connection with a shareholder vote to approve the Business Combination.

 

These interests, among others, may influence or have influenced the Sponsor and the officers and directors of Thunder Bridge and Repay to support or approve the Business Combination. For more information concerning the interests of Thunder Bridge’s officers and directors, see the section entitled “Proposal 2: The Business Combination Proposal—Interests of Thunder Bridge’s Directors and Officers and Others in the Business Combination” and the risk factor entitled “—Risks Related to Thunder Bridge—Thunder Bridge’s founder and chief executive officer controls a substantial interest in Thunder Bridge and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support” in this proxy statement/prospectus.

 

Thunder Bridge has not obtained an opinion from an independent investment banking firm or another independent firm, and consequently, you may have no assurance from an independent source that the terms of the Business Combination are fair to Thunder Bridge from a financial point of view.

 

The Thunder Bridge Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. Thunder Bridge is not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from another independent firm that the price it is paying is fair to Thunder Bridge from a financial point of view. In analyzing the Business Combination, the Thunder Bridge Board and Thunder Bridge’s management conducted due diligence on Repay and researched the industry in which Repay operates and concluded that the Business Combination was in the best interest of its shareholders. Accordingly, Thunder Bridge’s shareholders will be relying solely on the judgment of the Thunder Bridge Board in determining the value of the Business Combination, and the Thunder Bridge Board may not have properly valued such business. The lack of third-party valuation or fairness opinion may also lead an increased number of shareholders to vote against the Business Combination or demand Redemption of their shares, which could potentially impact our ability to consummate the Business Combination. For more information about our decision-making process, see the section entitled “Proposal 2: The Business Combination Proposal—Thunder Bridge Board’s Reasons for the Approval of the Business Combination.”

 

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Thunder Bridge does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible to complete a Business Combination in which a substantial majority of Thunder Bridge’s shareholders do not intend to retain their investment.

 

The Memorandum and Articles of Association does not provide a specified maximum Redemption threshold, except that in no event will Thunder Bridge redeem its Public Shares in an amount that would cause its net tangible assets, without regard to any assets or liabilities of the Target Companies, to be less than $5,000,001 immediately prior to the completion of the Business Combination (such that Thunder Bridge is not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement contained in the Merger Agreement. This minimum net tangible asset condition is a condition to the obligations of both Repay and Thunder Bridge to complete the Merger under the Merger Agreement.

 

The Merger Agreement requires Thunder Bridge to deliver an amount of Cash Consideration to the Repay Equity Holders at Closing equal to $290,000,000 minus the Repay Securityholder Representative Amount, which it is required to deliver to the Repay Securityholder Representative, minus the NCP Escrow Amount and the Additional Escrow Amount, each of which it is required to deliver to the Escrow Agent, referred to as the Required Cash Consideration Amount (such condition, the “Cash Consideration Condition”). As currently contemplated under the Merger Agreement, the Required Cash Consideration Amount is $273,801,405. Under the Merger Agreement, in the event Thunder Bridge fails to satisfy the Cash Consideration Condition, Repay may, but is not required to, waive the condition with respect to a portion of the Cash Consideration, and in lieu thereof, require that Thunder Bridge issue a commensurately increased amount of equity consideration to Repay. In the event that Repay waives the Cash Consideration Condition, as a result of the corresponding increase to the amount of equity consideration to be issued, the voting power in the Company of the Repay members following the Business Combination will be greater relative to the Thunder Bridge shareholders than is currently contemplated. Additionally, because the Post-Merger Repay Units constituting the Unit Consideration are exchangeable for shares of Class A common stock of the Company, in the event of such a waiver, the resulting dilution of the Thunder Bridge shareholders would be greater following the Business Combination than is currently contemplated.

 

As a result of these conditions, Thunder Bridge may be able to complete the Business Combination even if a substantial majority of Thunder Bridge’s Public Shareholders do not agree with the Business Combination and have redeemed their shares.

 

Nasdaq may delist the Company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in the Company’s securities and subject the Company to additional trading restrictions.

 

Thunder Bridge’s Public Shares and public warrants are currently listed on Nasdaq and it is a condition to Repay’s obligations to complete the Business Combination, that the Company’s Class A common stock shall have been listed on Nasdaq and will be eligible for continued listing on Nasdaq immediately following the Business Combination after giving effect to the Redemptions (as if it were a new initial listing by an issuer that had never been listed prior to Closing).

 

However, Thunder Bridge cannot assure you that the Company’s securities will continue to be listed on Nasdaq in the future. In addition, in connection with the Business Combination and as a condition to Repay’s obligations to complete the Business Combination, the Company is required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of the Company’s securities on Nasdaq. For instance, the Company’s stock price would generally be required to be at least $4 per share and its stockholders’ equity would generally be required to be at least $5 million and the Company would be required to have a minimum of 300 public holders of “round lots” of 100 shares. In addition to the listing requirements for the Company’s Class A common stock, Nasdaq imposes listing standards on warrants. Thunder Bridge cannot assure you that the Company will be able to meet those initial listing requirements, in which case Repay will not be obligated to complete the Business Combination. In addition, it is possible that the Company’s Class A common stock and public warrants will cease to meet the Nasdaq listing requirements following the Business Combination.

 

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If Nasdaq delists the Company’s securities from trading on its exchange and the Company is not able to list its securities on another national securities exchange, Thunder Bridge expects the Company’s securities could be quoted on an over-the-counter market. If this were to occur, the Company could face significant material adverse consequences, including:

 

a limited availability of market quotations for its securities;

 

reduced liquidity for its securities;

 

a determination that the Company’s Class A common stock is a “penny stock” which will require brokers trading in the common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company’s securities;

 

a limited amount of news and analyst coverage; and

 

a decreased ability to issue additional securities or obtain additional financing in the future.

 

The unaudited pro forma financial information included in the section entitled Unaudited Pro Forma Condensed Combined Financial Informationmay not be representative of the Company’s results if the Business Combination is completed.

 

Thunder Bridge and Repay currently operate as separate companies and have had no prior history as a combined entity, and Repay’s and the Company’s operations have not previously been managed on a combined basis. The pro forma financial information included in this proxy statement/prospectus is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the Business Combination been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of the Company. The pro forma statement of operations does not reflect future nonrecurring charges resulting from the Business Combination. The unaudited pro forma financial information does not reflect future events that may occur after the Business Combination and does not consider potential impacts of future market conditions on revenues or expenses. The pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” has been derived from Thunder Bridge’s and Repay’s historical financial statements and certain adjustments and assumptions have been made regarding the Company after giving effect to the Business Combination. There may be differences between preliminary estimates in the pro forma financial information and the final acquisition accounting, which could result in material differences from the pro forma information presented in this proxy statement/prospectus in respect of the estimated financial position and results of operations of the Company.

 

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect the Company’s financial condition or results of operations following the Closing. Any potential decline in the Company’s financial condition or results of operations may cause significant variations in the stock price of the Company.

 

During the pendency of the Business Combination, Thunder Bridge will not be able to enter into a business combination with another party because of restrictions in the Merger Agreement. Furthermore, certain provisions of the Merger Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

 

Covenants in the Merger Agreement impede the ability of Thunder Bridge to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the Business Combination. As a result, Thunder Bridge may be at a disadvantage to its competitors during that period. In addition, while the Merger Agreement is in effect, neither Thunder Bridge nor Repay may solicit, assist, facilitate the making, submission or announcement of, or intentionally encourage any alternative acquisition proposal, such as a merger, material sale of assets or equity interests or other business combination, with any third party, even though any such alternative acquisition could be favorable to Thunder Bridge’s shareholders than the Business Combination. In addition, if the Business Combination is not completed, these provisions will make it more difficult to complete an alternative business combination following the termination of the Merger Agreement due to the passage of time during which these provisions have remained in effect.

 

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If the conditions to the Merger Agreement are not met, the Business Combination may not occur.

 

Even if the Merger Agreement is approved by the shareholders and members of Thunder Bridge and Repay, specified conditions must be satisfied or waived before the parties to the Merger Agreement are obligated to complete the Business Combination. For a list of the material closing conditions contained in the Merger Agreement, see the section entitled “Proposal 2: The Business Combination Proposal—The Merger Agreement—Closing Conditions.” Thunder Bridge and Repay may not satisfy all of the closing conditions in the Merger Agreement. If the closing conditions are not satisfied or waived, the Business Combination will not occur, or will be delayed pending later satisfaction or waiver, and such delay may cause Thunder Bridge and Repay to each lose some or all of the intended benefits of the Business Combination.

 

Because Thunder Bridge is incorporated under the laws of the Cayman Islands, in the event the Business Combination is not completed, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.

 

Because Thunder Bridge is currently incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests and your ability to protect your rights through the U.S. Federal courts may be limited prior to the Domestication. Thunder Bridge is currently an exempted company under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon Thunder Bridge’s directors or officers, or enforce judgments obtained in the United States courts against Thunder Bridge’s directors or officers.

 

Until the Domestication is effected, Thunder Bridge’s corporate affairs are governed by the Memorandum and Articles of Association, the Companies Law and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of its directors to Thunder Bridge under the laws of the Cayman Islands are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of Thunder Bridge’s shareholders and the fiduciary responsibilities of its directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.

 

Thunder Bridge has been advised by its Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against Thunder Bridge judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Thunder Bridge predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

 

The Public Shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the Thunder Bridge Board or controlling shareholders than they would as public shareholders of a United States company.

 

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There is a risk that a U.S. Holder may recognize taxable gain with respect to its Thunder Bridge Shares at the effective time of the Domestication.

 

The Thunder Bridge Board believes the Domestication should qualify as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. However, due to the absence of guidance directly on how the provisions of Section 368(a) of the Code apply in the case of a statutory conversion of a corporation with no active business and only investment-type assets such as Thunder Bridge, this result is subject to some uncertainty. Accordingly, due to the absence of such guidance, it is not possible to predict whether the IRS or a court considering the issue would take a contrary position. If the Domestication should fail to qualify as a reorganization under Section 368(a) of the Code, a U.S. Holder (as that term is defined in the section entitled “Proposal 2: The Business Combination Proposal—Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders”) of Thunder Bridge Shares generally would recognize a gain or loss with respect to its Thunder Bridge Shares in an amount equal to the difference, if any, between the fair market value of the corresponding common stock of the Delaware corporation received in the Domestication and the U.S. Holder’s adjusted tax basis in its Thunder Bridge Shares surrendered.

 

As discussed more fully under the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders” below, it is intended that the Domestication will constitute a tax-free reorganization within the meaning of Section 368(a)(l)(F) of the Code. Assuming that the Domestication so qualifies, U.S. Holders (as defined in such section) of Thunder Bridge Shares will be subject to Section 367(b) of the Code and, as a result:

 

  A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of Thunder Bridge’s earnings in income;

 

  A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally recognize gain (but not loss) on the exchange of Thunder Bridge Shares for shares in the Company (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend the “all earnings and profits amounts,” (as defined in Treasury Regulation Section 1.367(b)-2(d)) attributable to its Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication; and

 

  A U.S. Holder of Thunder Bridge Shares whose Thunder Bridge Shares have a fair market value of $50,000 or more, and who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Thunder Bridge Shares entitled to vote will generally be required to include in income as a dividend the “all earnings and profits amount,” (as defined in Treasury Regulation Section 1.367(b)-2(d))) attributable to its Thunder Bridge Shares, provided certain other requirements are satisfied. Thunder Bridge does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

 

Furthermore, even if the Domestication qualifies as a reorganization under Section 368(a) of the Code, a U.S. Holder of Thunder Bridge Shares may still recognize gain (but not loss) upon the exchange of its Thunder Bridge Shares for the common stock of the Delaware corporation pursuant to the Domestication under the “passive foreign investment company,” or PFIC, rules of the Code equal to the excess, if any, of the fair market value of the common stock of the Delaware corporation received in the Domestication and the U.S. Holder’s adjusted tax basis in the corresponding Thunder Bridge Shares surrendered in exchange therefor. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply. In such event, the U.S. Holder’s aggregate tax basis in the common stock of the Delaware corporation received in connection with the Domestication should be the same as the aggregate tax basis of Thunder Bridge Shares surrendered in the transaction, increased by any amount included in the income of such U.S. Holder under the PFIC rules. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the discussion in the section entitled “Proposal 2: The Business Combination Proposal—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders—U.S. Holders—PFIC Considerations.

 

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Upon completion of the Business Combination, the rights of holders of the Company’s common stock arising under the DGCL will differ from and may be less favorable to the rights of holders of Thunder Bridge’s ordinary shares arising under the Cayman Islands Companies Law.

 

Upon completion of the Business Combination, the rights of holders of the Company’s common stock will arise under the DGCL. The DGCL contains provisions that differ in some respects from those in the Companies Law, and, therefore, some rights of holders of the Company’s common stock could differ from the rights that holders of Thunder Bridge ordinary shares currently possess. For instance, while class actions are generally not available to shareholders under Cayman Islands law, such actions are generally available under Delaware law. This change could increase the likelihood that the Company becomes involved in costly litigation, which could have a material adverse effect on the Company.

 

For a more detailed description of the rights of holders of the Company’s common stock under the DGCL and how they may differ from the rights of holders of Thunder Bridge ordinary shares under the Companies Law, please see the section entitled “Proposal 1: The Domestication ProposalComparison of Shareholder Rights under the Applicable Corporate Law Before and After the Domestication.

 

Delaware law and the Certificate of Incorporation and Bylaws will contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

 

The Certificate of Incorporation and Bylaws that will be in effect upon completion of the Business Combination differ from the Memorandum and Articles of Association. Among other differences, the Certificate of Incorporation, and the DGCL, contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the Company Board and therefore depress the trading price of the Company’s Class A common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the Company Board or taking other corporate actions, including effecting changes in management. Among other things, the Certificate of Incorporation and Bylaws include provisions regarding:

 

  a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Company Board;

 

  the ability of the Company Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 

  the limitation of the liability of, and the indemnification of, the Company’s directors and officers;

 

  the right of the Company Board to elect a director to fill a vacancy created by the expansion of the Company Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on the Company Board;

 

  the requirement that directors may only be removed from the Company Board for cause;

 

  a prohibition on stockholder action by written consent (except for actions by the holders of Class V common stock or as required for holders of future series of preferred stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors;

 

  the requirement that a special meeting of stockholders may be called only by the Company Board, the chairman of the Company Board or the Company’s chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;

 

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  controlling the procedures for the conduct and scheduling of the Company Board and stockholder meetings;

 

  the requirement for the affirmative vote of holders of (i) at least 80% and (ii) 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal any provision of the Company’s Bylaws and certain provisions in the Certificate of Incorporation, respectively, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Company Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;

 

  the ability of the Company Board to amend the Bylaws, which may allow the Company Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and

 

  advance notice procedures with which stockholders must comply to nominate candidates to the Company Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Company Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Company.

 

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Company Board or management.

 

In addition, as a Delaware corporation, the Company will generally be subject to provisions of Delaware law, including the DGCL. Although the Company will elect not to be governed by Section 203 of the DGCL, certain provisions of the Certificate of Incorporation will, in a manner substantially similar to Section 203 of the DGCL, prohibit certain Company stockholders (other than those stockholders who are party to a stockholders’ agreement with the Company) who hold 15% or more of the Company’s outstanding capital stock from engaging in certain business combination transactions with the Company for a specified period of time unless certain conditions are met. See the section entitled “Description of Thunder Bridge’s and the Company’s Securities—Capital Stock of the Company after the Business Combination—Anti-Takeover Effects of the Certificate of Incorporation, the Bylaws and Certain Provisions of Delaware Law—Business Combinations.”

 

Any provision of the Certificate of Incorporation, Bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares of the Company’s capital stock and could also affect the price that some investors are willing to pay for the Company’s common stock.

 

The form of the Certificate of Incorporation is attached as Annex A to this proxy statement/prospectus and we urge you to read it.

 

In addition, the provisions of the Stockholders Agreements, as described below, provide the stockholders party thereto with certain board rights which could also have the effect of delaying or preventing a change in control.

 

The Certificate of Incorporation will designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between the Company and its stockholders, which could limit the Company’s stockholders’ ability to choose the judicial forum for disputes with the Company or its directors, officers, or employees.

 

The Certificate of Incorporation will provide that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, or if such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company or its officers or directors arising pursuant to any provision of the Delaware General Corporate Law or the Certificate of Incorporation or Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine of the law of the State of Delaware.

 

Any person or entity purchasing or otherwise acquiring any interest in any of the securities of the Company will be deemed to have notice of and consented to this provision. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the Company or its directors, officers, or other employees, which may discourage lawsuits against the Company and its directors, officers, and other employees. If a court were to find these exclusive-forum provisions to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm its results of operations.

 

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Following the completion of the Merger, certain significant Company stockholders and Repay members whose interests may differ from those of Company public stockholders following the Business Combination will have the ability to significantly influence the Company’s business and management.

 

Pursuant to the stockholders agreements (each, a “Stockholders Agreement,” and collectively the “Stockholders Agreements”) that the Company will enter into with Corsair, Gary A. Simanson (“Simanson”) and John Morris and Shaler Alias (together, the “Repay Founders”) at the Closing in connection with the Merger, the Company will agree to nominate Corsair’s designees and Simanson to the Company Board for so long as each of them and their respective affiliates beneficially own certain specified percentages of the Company’s Class A common stock. In addition, John Morris, who will serve, as Chief Executive Officer of the Company, and Shaler Alias, who will serve as President of the Company will have the right to be designated or nominated as directors of the Company Board so long as they serve the Company in those respective positions pursuant to their Stockholders Agreement, and will have the right to designate one separate director (subject to Corsair approval) if they do not continue to serve, as long as they together beneficially own a certain specified percentage of the Company’s common stock (including Post-Merger Repay Units exchangeable for shares of the Company’s Class A common stock pursuant to the Exchange Agreement). Accordingly, the persons party to these Stockholders Agreements will be able to significantly influence the approval of actions requiring Company Board approval through their voting power. Such stockholders will retain significant influence with respect to the Company’s management, business plans and policies, including the appointment and removal of its officers. In particular, the persons party to these stockholder agreements could influence whether acquisitions, dispositions and other change of control transactions are approved.

 

The Certificate of Incorporation will not limit the ability of the Sponsor or Corsair to compete with us.

 

The Sponsor, Corsair and their respective affiliates engage in a broad spectrum of activities, including investments in the financial services and technology industries. In the ordinary course of their business activities, the Sponsor, Corsair and their respective affiliates may engage in activities where their interests conflict with the Company’s interests or those of its stockholders. The Certificate of Incorporation will provide that none of the Sponsor, Corsair, any of their respective affiliates or any director who is not employed by the Company (including any non-employee director who serves as one of its officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which the Company operates. The Sponsor and Corsair also may pursue, in their capacities other than as directors of the Company Board, acquisition opportunities that may be complementary to the Company’s business, and, as a result, those acquisition opportunities may not be available to the Company. In addition, each of the Sponsor and Corsair may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

 

Thunder Bridge has waived its rights to sell 5,000,000 units of Thunder Bridge for gross proceeds of $50,000,000 in connection with the Business Combination and to potentially place up to 51% of any debt financing to be used to complete the Business Combination.

 

In connection with the IPO, Thunder Bridge entered into a Contingent Forward Purchase Contract (“Forward Contract”) with Monroe Capital, LLC (“Monroe Capital”), a member of the Sponsor, granting Monroe Capital the right to purchase, at its option exercised by consenting to Thunder Bridge’s initial business combination, 5,000,000 units of Thunder Bridge at $10.00 per unit, for aggregate gross proceeds of $50,000,000 in a private placement to occur concurrently with the completion of Thunder Bridge’s initial business combination. The Forward Contract also provided that, if Monroe Capital consented to a business combination, Monroe Capital would obtain a right of first refusal to participate in up-to 51% of any debt financing in such initial business combination and to act as lead arranger and agent in the debt financing.

 

On January 21, 2019, Monroe Capital, the Sponsor and Thunder Bridge executed a letter agreement (the “Forward Contract Waiver”) relating to the Forward Contract pursuant to which Monroe Capital consented to the Business Combination. However, in order to facilitate the Debt Financing arrangements, Monroe agreed to waive its right of first refusal on debt financings of the Company in connection with the Transactions and both the Company and Monroe agreed that Monroe will not purchase any Units under the Forward Contract.

 

The Forward Contract Waiver does not terminate the Forward Contract in the event the Business Combination is terminated and Thunder Bridge pursues an alternative initial business combination. However, in connection with the Business Combination, it will not have access to equity or debt financing from Monroe Capital pursuant to the Forward Contract as a potential source of capital investment to complete the Business Combination.

 

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Thunder Bridge’s officers and directors and/or their affiliates may enter into agreements concerning Thunder Bridge’s securities prior to the General Meeting, which may have the effect of increasing the likelihood of completion of the Business Combination, decreasing the value of the Thunder Bridge Shares.

 

At any time prior to the General Meeting, during a period when they are not then aware of any material nonpublic information regarding Thunder Bridge or its securities, Thunder Bridge’s officers and directors and/or their affiliates may enter into a written plan to purchase Thunder Bridge’s securities pursuant to Rule 10b5-1 of the Exchange Act, and may engage in other public market purchases, as well as private purchases, of securities. In addition, at any time prior to the General Meeting, during a period when they are not then aware of any material nonpublic information regarding Thunder Bridge or its securities, Thunder Bridge’s officers and directors and/or their respective affiliates may (i) purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal or the other Proposals, (ii) execute agreements to purchase such shares from institutional and other investors in the future, and/or (iii) enter into transactions with institutional and other investors to provide such persons with incentives to acquire Public Shares or vote their Public Shares in favor of the Business Combination Proposal or the other Proposals. Such an agreement may include a contractual acknowledgement that such shareholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that Thunder Bridge’s officers and directors or their affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling Public Shareholders would be required to revoke their prior elections to redeem their shares. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer of shares or Warrants owned by the Sponsor for nominal value to such investors or holders.

 

The purpose of such share purchases and other transactions by Thunder Bridge’s officers and directors and/or their respective affiliates would be to increase the likelihood of satisfaction of the requirements that (x) the holders of the requisite number of Thunder Bridge Shares present and voting at the General Meeting vote in favor of the Business Combination Proposal and the other Proposals and/or (y) that Thunder Bridge will (without regard to any assets or liabilities of the Target Companies) have at least $5,000,001 in net tangible assets immediately prior to the Closing or satisfy the Required Cash Condition after taking into account holders of Public Shares that properly demanded Redemption of their shares into cash, when, in each case, it appears that such requirements would otherwise not be met.

 

Entering into any such arrangements may have a depressive effect on the Thunder Bridge Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the General Meeting.

 

As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Thunder Bridge will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or the Redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

The Company’s business and operations could be negatively affected if it becomes subject to any securities litigation or shareholder activism, which could cause the Company to incur significant expense, hinder execution of business and growth strategy and impact its stock price.

 

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the stock price of the Company’s Class A common stock or other reasons may in the future cause it to become the target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in substantial costs and divert management’s and board of directors’ attention and resources from the Company’s business. Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to the Company’s future, adversely affect its relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, the Company may be required to incur significant legal fees and other expenses related to any securities litigation and activist shareholder matters. Further, its stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism.

 

Risks Related to Repay’s Business

 

Following the Business Combination the Company will be a holding company with no direct operations that relies on dividends, distributions, loans and other payments, advances and transfers of funds from Repay and its subsidiaries to pay dividends, pay expenses and meet its other obligations. Accordingly, the Company’s stockholders will be subject to all of the risks of Repay’s business following the Business Combination.

 

Throughout this section, unless otherwise noted, “Repay” refers to Hawk Parent Holdings LLC and its consolidated subsidiaries.

 

The payment processing industry is highly competitive. Such competition could adversely affect the fees Repay receives, and as a result, its margins, business, financial condition and results of operations.

 

The market for payment processing services is highly competitive. There are other payment processing service providers that have established a sizable market share in the merchant acquiring sector and service more clients than Repay does. Repay’s growth will depend, in part, on a combination of the continued growth of the electronic payment market and its ability to increase its market share.

 

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Repay’s payment and software solutions compete against many forms of financial services and payment systems, including electronic, mobile and integrated payment platforms as well as cash and checks. Its competitors include Open Edge (a division of Global Payments), ACI Worldwide, Inc. and Electronic Payment Providers, Inc. (d.b.a. BillingTree). There are also many traditional merchant acquirers, such as financial institutions, affiliates of financial institutions and well-established payment processing companies, in the payment processing industry, including Bank of America Merchant Services, Elavon, Inc. (a subsidiary of U.S. Bancorp), Wells Fargo Merchant Services, Global Payments, Inc., WorldPay, Inc. and Total Systems Services, Inc. These institutions have established, or may establish in the future, payment processing businesses that could target Repay’s existing and potential clients.

 

Many of Repay’s competitors have substantially greater financial, technological, management and marketing resources than it has. Accordingly, if these competitors target Repay’s business model and, in particular, the vertical markets that it serves, they may be able to offer more attractive fees or payment terms and advances to Repay’s clients and more attractive compensation to its software integration partners. They also may be able to offer and provide services and solutions that Repay does not offer. There are also a large number of small providers of processing services, including emerging technology and non-traditional payment processing companies, that provide various ranges of services to Repay’s existing and potential clients. This competition may effectively limit the prices Repay can charge, cause it to increase the compensation it pays to its software integration partners and require Repay to control costs aggressively in order to maintain acceptable profit margins. Further, if the use of payment cards other than Visa, MasterCard or Discover grows, or if there is an overall decrease in use of debit cards as compared to other payment methods, Repay’s profitability could be reduced. Competition could also result in a loss of existing clients and greater difficulty attracting new clients, and could impact Repay’s relationships with software integration partners that integrate its services into the software used by its clients. Although Repay carefully monitors attrition levels of its existing clients, it cannot predict such attrition rates in the future. One or more of these factors could have a material adverse effect on Repay’s business, financial condition and results of operations.

 

Unauthorized disclosure of merchant or consumer data, whether through breach of its computer systems, computer viruses, or otherwise, could expose Repay to liability and protracted and costly litigation, and damage its reputation.

 

Repay is responsible for data security for itself and for third parties with whom it partners, including with respect to rules and regulations established by the payment networks, such as Visa, MasterCard and Discover, and debit card networks. These third parties include clients, Repay’s software integration partners and other third-party service providers and agents. Repay and other third parties collect, process, store and/or transmit sensitive data, such as names, addresses, social security numbers, credit or debit card numbers, expiration dates, driver’s license numbers and bank account numbers. Repay has ultimate liability to the payment networks and its sponsor banks that register Repay with the Visa, MasterCard or Discover networks for its failure or the failure of other third parties with whom it contracts to protect this data in accordance with payment network requirements. The loss, destruction or unauthorized modification of merchant or consumer data by Repay or its contracted third parties could result in significant fines, sanctions, proceedings or actions against Repay by the payment networks, governmental bodies, consumers or others.

 

Threats may result from human error, fraud or malice on the part of employees or third parties, or from accidental technological failure. For example, certain of Repay’s employees have access to sensitive data that could be used to commit identity theft or fraud. Concerns about security increase when Repay transmits information electronically because such transmissions can be subject to attack, interception or loss. Also, computer viruses can be distributed and spread rapidly over the Internet and could infiltrate Repay’s systems or those of its contracted third parties. Denial of service or other attacks could be launched against Repay for a variety of purposes, including interfering with its services or to create a diversion for other malicious activities. These types of actions and attacks and others could disrupt Repay’s delivery of services or make them unavailable.

 

Repay and its contracted third parties could be subject to breaches of security by hackers. Repay’s encryption of data and other protective measures may not prevent unauthorized access to or use of sensitive data. A systems breach may subject Repay to material losses or liability, including payment network fines, assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation or other similar fraud claims. A misuse of such data or a cybersecurity breach could harm Repay’s reputation and deter merchants from using electronic payments generally and its services specifically, thus reducing its revenue. In addition, any such misuse or breach could cause Repay to incur costs to correct the breaches or failures, expose Repay to uninsured liability, increase its risk of regulatory scrutiny, subject it to lawsuits, and result in the imposition of material penalties and fines under state and federal laws or by the payment networks or limitations on its ability to process payment transactions on such payment networks. While Repay maintains cyber insurance coverage (which, in certain cases, is required pursuant to certain of its contractual commitments) that may, subject to policy terms and conditions, cover certain aspects of these risks, its insurance coverage may be insufficient to cover all losses. Additionally, Repay may be required to increase its cyber insurance coverage pursuant to its contractual commitments entered into in the future. The costs to maintain or increase its cyber insurance coverage could have a material adverse effect on Repay’s business, financial condition and results of operations.

 

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Any human error, fraud, malice, accidental technological failure or attacks against Repay or its contracted third parties could hurt its reputation, force it to incur significant expenses in remediating the resulting impacts, expose it to uninsured liability, result in the loss of its sponsor banks or its ability to participate in the payment networks, subject it to lawsuits, fines or sanctions, distract its management, increase its costs of doing business and/or materially impede its ability to conduct business.

 

Although Repay generally requires that its agreements with its software integration partners or service providers include confidentiality obligations that restrict these parties from using or disclosing any merchant or consumer data except as necessary to perform their services under the applicable agreements, it cannot guarantee that these contractual measures will prevent the unauthorized use, modification, destruction or disclosure of data or allow Repay to seek reimbursement from the contracted party. In addition, many of Repay’s clients are small and medium-sized businesses that may have limited competency regarding data security and handling requirements and may thus experience data breaches. Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation, and Repay’s incurring significant losses.

 

In addition, Repay’s agreements with its sponsor banks and its third-party payment processors (as well as payment network requirements) require Repay to take certain protective measures to ensure the confidentiality of merchant and consumer data. Any failure to adequately comply with these protective measures could result in fees, penalties, litigation or termination of its sponsor bank agreements.

 

Security breaches may be subject to scrutiny from governmental agencies such as the Consumer Financial Protection Bureau. See the risk factor entitled “—Compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and other federal and state regulations may increase Repay’s compliance costs, limit its revenues and otherwise negatively affect its business.”

 

If Repay cannot keep pace with rapid developments and changes in its industry, the use of its products and services could decline, causing a reduction in its revenues.

 

The electronic payments market is subject to constant and significant changes. This market is characterized by rapid technological evolution, new product and service introductions, evolving industry standards, changing client needs and the entrance of new competitors, including products and services that enable card networks and banks to transact with consumers directly. To remain competitive, Repay continually pursues initiatives to develop new products and services to compete with these new market entrants. These projects carry risks, such as difficulty in determining market demand and timing for delivery, cost overruns, delays in delivery, performance problems and lack of client acceptance, and some projects may require investment in non-revenue generating products or services that Repay’s software integration partners and clients expect to be included in its offerings. In addition, new products and offerings may not perform as intended or generate the business or revenue growth expected.

 

Additionally, Repay looks for acquisition opportunities, investments and alliance relationships with other businesses that will increase its market penetration and enhance its technological capabilities, product offerings and distribution capabilities. Any delay in the delivery of new products and services or the failure to differentiate its products and services or to accurately predict and address market demand could increase the costs of Repay’s development efforts and render its products and services less desirable or even obsolete to its clients and to its software integration partners. Any defects in Repay’s products and errors or delays in Repay’s processing of transactions could also increase costs of development efforts and result in harm to its reputation or liability claims against it. Furthermore, even though the market for integrated payment processing products and services is evolving, it may develop too rapidly or not rapidly enough for Repay to recover the costs it has incurred in developing new products and services targeted at this market. Any of the foregoing could have a material and adverse effect on Repay’s operating results and financial condition.

 

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The continued growth and development of Repay’s payment processing services and solutions will depend on its ability to anticipate and adapt to changes in consumer behavior. For example, consumer behavior may change regarding the use of payment card transactions, including the relative increased use of cash, crypto-currencies, other emerging or alternative payment methods and payment card systems that Repay or its processing partners do not adequately support or that do not provide adequate commissions to parties like Repay. Any failure to timely integrate emerging payment methods into its software, to anticipate consumer behavior changes or to contract with processing partners that support such emerging payment technologies could cause Repay to lose traction among its customers or referral sources, including industry associations, resulting in a corresponding loss of revenue, if those methods become popular among end-users of their services.

 

The products and services Repay delivers are designed to process complex transactions and provide reports and other information on those transactions, all at very high volumes and processing speeds. Repay’s technology offerings must also integrate with a variety of network, hardware, mobile and software platforms and technologies, and Repay needs to continuously modify and enhance its products and services to adapt to changes and innovation in these technologies. Any failure to deliver an effective, reliable and secure service or any performance issue that arises with a new product or service could result in significant processing or reporting errors or other losses. If Repay does not deliver a promised new product or service to its clients or software integration partners in a timely manner or the product or service does not perform as anticipated, its development efforts could result in increased costs and a loss in business, reducing its earnings and causing a loss of revenue. Repay also relies in part on third parties, including some of its competitors and potential competitors, for the development of and access to, or production of, new technologies, including software and hardware. For example, Repay relies on its software integration partners to integrate its services and products into the software platforms being used by its clients. Repay’s future success will depend in part on its ability to develop or adapt to technological changes and evolving industry standards. If Repay is unable to develop, adapt to or access technological changes or evolving industry standards on a timely and cost-effective basis, its business, financial condition and results of operations could be materially adversely affected.

 

Potential changes in the competitive landscape, including disintermediation from other participants in the payments value chain, could harm Repay’s business.

 

Repay expects that the competitive landscape will continue to change and challenge it to respond to developments such as:

 

  Rapid and significant changes in technology and new and innovative payment methods and programs;

 

  Competitors, software integration partners, and other industry participants developing products that compete with or replace Repay’s value-added services and solutions;

 

  Participants in the financial services payments and technology industries creating new payment services that compete with Repay or merging, creating joint ventures or forming other business combinations that strengthen their existing business services; and

 

  New services and technologies that Repay develops being impacted by industry-wide solutions and standards related to migration to tokenization or other security-related technologies.

 

Failure to compete effectively against or otherwise address any of these and other competitive threats could have a material adverse effect on Repay’s business, financial condition and results of operations.

 

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If Repay’s vertical markets do not increase their acceptance of electronic payments or if there are adverse developments in the electronic payment industry in general, Repay’s business, financial condition and results of operations may be adversely affected.

 

The vertical markets Repay primarily serves have traditionally not utilized electronic payments. If consumers and businesses in these vertical markets do not increase their use of cards as payment methods for their transactions or if the mix of payment methods changes in a way that is adverse to Repay, such developments may have a material adverse effect on Repay’s business, financial condition and results of operations. Regulatory changes may also result in Repay’s clients seeking to charge their customers additional fees for use of credit or debit cards which may result in such customers using other payment methods. Additionally, in recent years, increased incidents of security breaches have caused some consumers to lose confidence in the ability of businesses to protect their information, causing certain consumers to discontinue use of electronic payment methods. Security breaches could result in financial institutions canceling large numbers of credit and debit cards, or consumers or businesses electing to cancel their cards following such incidents.

 

Potential clients or software integration partners may be reluctant to switch to, or develop a relationship with, a new merchant acquirer, which may adversely affect Repay’s growth.

 

Many potential clients and software integration partners worry about potential disadvantages associated with switching merchant acquirers, such as a loss of accustomed functionality, increased costs and business disruption. For merchants that are potential clients and software providers that are potential software integration partners, switching to Repay from another merchant acquirer or integrating with Repay may be a significant undertaking. There can be no assurance that Repay’s strategies for overcoming potential reluctance to change merchant acquirers or to initiate a relationship with Repay will be successful, and this resistance may adversely affect Repay’s growth and its business overall.

 

If Repay fails to comply with the applicable requirements of payment networks and industry self-regulatory organizations, those payment networks or organizations could seek to fine it, suspend it or terminate its registrations through its sponsor banks.

 

Repay does not directly access the payment card networks, such as Visa, MasterCard and Discover, that enable its acceptance of credit cards and debit cards. Instead, it relies on sponsor banks and third-party processors to access such networks and settle transactions, and Repay must pay fees for such services. To provide its merchant acquiring services, Repay is registered through its sponsor banks with the Visa, MasterCard and Discover networks as a service provider for member institutions. For example, for payments processed through TriSource, which represents $4.2 billion in payment volume during the nine months ended September 30, 2018, approximately 71% and 28% of such payment volume was attributable to transactions processed on the Visa and MasterCard networks, respectively. As such, Repay, its sponsor banks and many of its clients are subject to complex and evolving payment network rules. The payment networks routinely update and modify requirements applicable to merchant acquirers, including rules regulating data integrity, third-party relationships (such as those with respect to sponsor banks and ISOs), merchant chargeback standards and Payment Card Industry Data Security Standards (“PCI DSS”). The rules of the card networks are set by their boards, which may be influenced by card issuers, some of which offer competing transaction processing services.

 

If Repay or its sponsor banks fail to comply with the applicable rules and requirements of any of the payment networks, such payment network could suspend or terminate Repay’s registration. Further, Repay’s transaction processing capabilities, including with respect to settlement processes, could be delayed or otherwise disrupted, and recurring non-compliance could result in the payment networks seeking to fine Repay or suspend or terminate Repay’s registrations that allow it to process transactions on their networks, which would make it impossible for Repay to conduct its business on its current scale.

 

Under certain circumstances specified in the payment network rules, Repay may be required to submit to periodic audits, self-assessments or other assessments with regard to its compliance with the PCI DSS. Such audits or assessments may reveal that it has failed to comply with the PCI DSS. In addition, even if it complies with the PCI DSS, there is no assurance that Repay will be protected from a security breach. The termination of its registrations with the payment networks, or any changes in payment network or issuer rules that limit Repay’s ability to provide merchant acquiring services, could have an adverse effect on Repay’s payment processing volumes, revenues and operating costs. If Repay is unable to comply with the requirements applicable to its payment processing activities, the payment networks could no longer allow it to provide these solutions, which would render Repay unable to conduct its business. If Repay were precluded from processing Visa and MasterCard electronic payments, it would lose a substantial portion of its revenues.

 

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Repay is also subject to the operating rules of the National Automated Clearing House Association (“NACHA”). NACHA is a self-regulatory organization which administers and facilitates private-sector operating rules for ACH payments and defines the roles and responsibilities of financial institutions and other ACH network participants. The NACHA Rules and Operating Guidelines impose obligations on Repay and Repay’s partner financial institutions. These obligations include audit and oversight by the financial institutions and the imposition of mandatory corrective action, including termination, for serious violations. If an audit or self-assessment under PCI DSS or NACHA identifies any deficiencies that Repay needs to remediate, the remediation efforts may distract its management team and be expensive and time consuming.

 

Changes in payment network rules or standards could adversely affect Repay’s business, financial condition and results of operations.

 

Payment network rules are established and changed from time to time by each payment network as they may determine in their sole discretion and with or without advance notice to their participants. The timelines imposed by the payment networks for expected compliance with new rules have historically been, and may continue to be, highly compressed, requiring Repay to quickly implement changes to its systems which increases the risk of non-compliance with new standards. In addition, the payment networks could make changes to interchange or other elements of the pricing structure of the merchant acquiring industry that would have a negative impact on Repay’s results of operations.

 

For example, “EMV” is a credit and debit authentication methodology mandated by Visa, MasterCard, American Express and Discover and was required to be supported by payment processors beginning April 2013 and by merchants beginning October 2015. This standard set new requirements, including requiring point of sale systems to be capable of accepting the more secure “chip” cards that utilize the EMV standard, and set new rules for data handling and security. Historically, Repay has not experienced EMV-related liabilities because substantially all of the card payment transactions it processes are card-not-present transactions and therefore not impacted by the EMV technology; however, if its business evolves to include more card present transactions in the future, it will need to reevaluate its compliance efforts.

 

Repay relies on sponsor banks in order to process electronic payment transactions, and such sponsor banks have substantial discretion with respect to certain elements of Repay’s business practices. If these sponsorships are terminated and Repay is not able to secure new sponsor banks, it will not be able to conduct its business.

 

Because Repay is not a bank, it is not eligible for membership in the Visa, MasterCard and other payment networks, and is, therefore, unable to directly access these payment networks, which are required to process transactions. These networks’ operating regulations require Repay to be sponsored by a member bank in order to process electronic payment transactions. Repay is currently registered with Visa, MasterCard and Discover through its sponsor banks. Repay primarily works with such sponsor banks directly to settle transactions, whereas many of its competitors are generally more dependent on third party super-ISOs (Independent Sales Organizations).

 

In general, Repay’s sponsor banks may terminate their agreements with Repay if it materially breaches the agreements and does not cure the breach within an established cure period, if it enters bankruptcy or files for bankruptcy, or if applicable laws or regulations, including Visa and/or MasterCard regulations, change to prevent either the applicable bank or Repay from performing services under the agreement. If these sponsorships are terminated and Repay is unable to secure a replacement sponsor bank within the applicable wind down period, it will not be able to process electronic payment transactions. While Repay maintains relationships with multiple sponsor banks for flexibility in the processing of payment volume and in the pricing of its clients’ solutions, the loss of or termination of a relationship with a sponsor bank or a significant decrease in the amount of payment volume that a sponsor bank processes for Repay could reduce such flexibility and negatively affect Repay’s business. As a result, Repay may be unable to obtain favorable pricing for its clients, which could negatively impact its ability to attract and retain clients. To the extent the number of its sponsor banks decreases, Repay will become increasingly reliant on its remaining sponsor banks, which would materially adversely affect its business should its relationship with any of such remaining banks be terminated or otherwise disrupted.

 

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Furthermore, Repay’s agreements with its sponsor banks provide the sponsor banks with substantial discretion in approving certain elements of Repay’s business practices, including its solicitation, application and underwriting procedures for merchants. Repay cannot guarantee that its sponsor banks’ actions under these agreements will not be detrimental to Repay, nor can it provide assurance that any of its sponsor banks will not terminate their sponsorship of Repay in the future. Repay’s sponsor banks have broad discretion to impose new business or operational requirements on Repay for purposes of compliance with payment network rules, which may materially adversely affect Repay’s business. If Repay’s sponsorship agreements are terminated and it is unable to secure another sponsor bank, it will not be able to offer Visa or MasterCard transactions or settle transactions which would likely cause Repay to terminate its operations.

 

Repay’s sponsor banks also provide or supplement funding and settlement services in connection with Repay’s card processing services. If Repay’s sponsorship agreements are terminated and it is unable to secure another sponsor bank or maintain relationships with other existing sponsor banks, Repay will not be able to process Visa and MasterCard transactions which would have a material adverse effect on its business, financial condition and results of operations.

 

To acquire and retain clients, Repay depends on its software integration partners that integrate Repay’s services and solutions into software used by Repay’s clients.

 

Repay relies heavily on the efforts of its software integration partners to ensure its services and solutions are properly integrated into the software that its clients use. Generally, its agreements with software integration partners are not exclusive and these partners retain the right to refer potential clients to other merchant acquirers.

 

Repay may need to provide financial concessions to maintain relationships with current software integration partners and clients or to attract potential software integration partners and clients from Repay’s competitors. Repay has been required, and expects to be required in the future, to make concessions when renewing contracts with its software integration partners, and such concessions can have a material impact on its financial condition or operating performance.

 

If Repay’s software integration partners focus more heavily on working with other merchant acquirers, cease operations or become insolvent, Repay may be at risk of losing existing clients with whom these software integration partners have relationships. If Repay is unable to maintain its existing base of software integration partners or develop relationships with new software integration partners, its business, financial condition and results of operations would be materially adversely affected. In addition, Repay’s efforts to form relationships with new software integration partners may be hindered to the extent they perceive that integrating with a new merchant acquirer or switching to Repay from another merchant acquirer is too costly or time-consuming. Many software providers choose to integrate with only a small number of payments processors due to the requisite time and cost of integrating their systems with a payment processor’s solutions. To the extent that a potential software integration partner has already integrated with several payments processors, it may be difficult for Repay to convince them to expand the number of payments processors they are integrated with and incur the expense and potential business disruption needed to successfully integrate its software with their systems.

 

Further, to the extent Repay’s software integration partners engage in, or are alleged to have engaged in, behavior that involves intentional or negligent misrepresentation of pricing or other contractual terms to clients or potential clients related to Repay’s processing services or solutions, Repay may be named in legal proceedings in connection with such actions of its software integration partners. Repay’s software integration partners are independent businesses and Repay has no control over their day-to-day business activities, including their client marketing and solicitation practices. While in some cases Repay may have indemnification rights against its software integration partners for these activities, there is no guarantee that it will be able to successfully enforce those indemnification rights or that its software integration partners are adequately capitalized in a manner necessary to satisfy their indemnification obligations to Repay. If one or more judgments or settlements in any litigation or other investigation, or related defense and investigation costs, significantly exceed Repay’s insurance coverage and Repay is unable to enforce its indemnification rights against a software integration partner or partners, its business, financial condition and results of operations could materially suffer.

 

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Failure to effectively manage risk and prevent fraud could increase Repay’s chargeback liability and other liability.

 

Repay is potentially liable for losses caused by fraudulent card transactions or business fraud. Card fraud occurs when a client’s customer uses a stolen card (or a stolen card number in a card-not-present transaction) to purchase merchandise or services. In a traditional card-present transaction, if the merchant swipes the card, receives authorization for the transaction from the card issuing bank and verifies the signature on the back of the card against the paper receipt signed by its customer, the card issuing bank remains liable for any loss. In a fraudulent card-not-present transaction, even if the merchant receives authorization for the transaction, the merchant is liable for any loss arising from the transaction.

 

Business fraud occurs when a business or organization, rather than a cardholder, opens a fraudulent merchant account and conducts fraudulent transactions or when a business, rather than a customer (though sometimes working together with a customer engaged in fraudulent activities), knowingly uses a stolen or counterfeit card or card number to record a false sales transaction, intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction, or provides services in violation of applicable law. In addition, consumers may dispute repayments on a loan by claiming it was unlawful under applicable law. Business fraud also occurs when employees of businesses change the business demand deposit accounts to their personal bank account numbers, so that payments are improperly credited to the employee’s personal account.

 

These types of fraud present potential liability for chargebacks associated with Repay’s clients’ processing transactions. If a billing dispute between a client and a consumer is not ultimately resolved in favor of Repay’s client, the disputed transaction is “charged back” to the client’s bank and credited to the account of the cardholder. Anytime Repay’s client is unable to satisfy a chargeback, Repay is responsible for that chargeback. Repay has a number of contractual protections and other means of recourse to mitigate those risks, including collateral or reserve accounts that it may require its clients to maintain for these types of contingencies. Nonetheless, if Repay is unable to collect the chargeback from the client’s account or reserve account (if applicable), or if the client refuses or is financially unable due to bankruptcy or other reasons to reimburse Repay for the chargeback, Repay bears the loss for the amount of the refund paid to the cardholder’s bank. Repay has established systems and procedures to detect and reduce the impact of business fraud, but these measures may not be effective, and incidents of fraud could increase in the future. During the nine months ended September 30, 2018, Repay believes its chargeback rate was less than 1% of payment volume. Any increase in chargebacks not paid by its clients could have a material adverse effect on Repay’s business, financial condition and results of operations.

 

Repay’s processes to reduce fraud losses depend in part on its ability to restrict the deposit of processing funds while it investigates suspicious transactions. Repay could be sued by parties alleging that its restriction and investigation processes violate federal and state laws on consumer protection and unfair business practice. If Repay is unable to defend itself successfully, it could be required to restructure its anti-fraud processes in ways that would harm its business or pay substantial fines.

 

As part of its program to reduce fraud losses, Repay may temporarily restrict the ability of customers to access processing deposits if those transactions or their account activity are identified by Repay’s anti-fraud models as suspicious. Repay could be sued by parties alleging that its restriction and investigation processes violate federal and state laws on consumer protection and unfair business practice. If Repay is unable to defend itself successfully, it could be required to restructure its anti-fraud processes in ways that could harm its business, and to pay substantial fines. Even if Repay is able to defend itself successfully, the litigation could damage its reputation, consume substantial amounts of its management’s time and attention, and require it to change its customer service and operations in ways that could increase its costs and decrease the effectiveness of its anti-fraud program.

 

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Repay receives savings related to favorable pricing on interchange and other payment network fees. To the extent it cannot maintain such savings and cannot pass along any corresponding increases in such fees to its clients, its operating results and financial condition may be materially adversely affected.

 

Repay bears interchange, assessment, transaction and other fees set by the payment networks to the card issuing banks and the payment networks for each transaction it processes. Under certain circumstances, the payment networks afford Repay preferential rates with respect to such fees, which helps Repay to control its operating costs. From time to time, the payment networks increase the interchange fees and other fees that they charge payment processors and the sponsor banks. At their sole discretion, Repay’s sponsor banks have the right to pass any increases in interchange and other fees on to Repay, and they have consistently done so in the past. Repay is generally permitted under the contracts into which it enters with its clients, and in the past has been able to, pass these fee increases along to its clients through corresponding increases in its processing fees. However, if Repay is unable to pass through these and other fees in the future, or if the payment networks decline to offer Repay preferential rates on such fees as compared to those charged to other payment processors, Repay’s business, financial condition and results of operations could be materially adversely affected. In addition, the various card associations and networks prescribe certain capital requirements on Repay, such as reserves in respect of certain clients for chargeback liabilities. Any increase in the capital level required would further limit Repay’s use of capital for other purposes.

 

Repay’s systems and those of its third-party providers may fail due to factors beyond Repay’s control, which could interrupt its service, resulting in Repay’s inability to process payments, loss of business, increase in costs and exposure to liability.

 

Repay depends on the efficient and uninterrupted operation of numerous systems, including its computer network systems, software, data centers and telecommunication networks, as well as the systems and services of its sponsor banks, the payment networks, third-party providers of processing services and other third parties. Repay’s systems and operations, or those of its third-party providers, such as its provider of dial-up authorization services, or the payment networks themselves, could be exposed to damage or interruption from, among other things, hardware and software defects or malfunctions, telecommunications failure, computer denial-of-service and other cyberattacks, unauthorized entry, computer viruses or other malware, human error, natural disaster, power loss, acts of terrorism or sabotage, financial insolvency of such providers and similar events. These threats, and errors or delays in the processing of payment transactions, system outages or other difficulties, could result in failure to process transactions, additional operating and development costs, diversion of technical and other resources, loss of revenue, clients and software integration partners, loss of merchant and cardholder data, harm to Repay’s business or reputation, exposure to fraud losses or other liabilities and fines and other sanctions imposed by payment networks. Repay’s property and business interruption insurance may not be adequate to compensate Repay for all losses or failures that may occur.

 

At present, Repay’s critical operational systems, such as its payment gateway, are fully redundant, while certain of its less critical systems are not. Therefore, certain aspects of Repay’s operations may be subject to interruption. Also, while Repay has disaster recovery policies and arrangements in place, they have not been tested under actual disasters or similar events. Maintaining and upgrading Repay’s system is costly and time-consuming, involves significant technical risk and may divert Repay’s resources from new features and products, and there can be no assurances that such systems will be effective. Frequent or persistent site interruptions could lead to regulatory scrutiny, significant fines and penalties, and mandatory and costly changes to Repay’s business practices.

 

In addition, Repay is continually improving and upgrading its information systems and technologies. Implementation of new systems and technologies is complex, expensive and time-consuming. If Repay fails to timely and successfully implement new information systems and technologies or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, this could have an adverse impact on Repay’s business, internal controls (including internal controls over financial reporting), results of operations and financial condition.

 

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Repay relies on other service and technology providers. If such providers fail in or discontinue providing their services or technology to Repay, Repay’s ability to provide services to clients may be interrupted, and, as a result, its business, financial condition and results of operations could be adversely impacted.

 

Repay relies on third parties to provide or supplement card processing services and for infrastructure hosting services. It also relies on third parties for specific software and hardware used in providing its products and services. The termination by Repay’s service or technology providers of their arrangements with Repay or their failure to perform their services efficiently and effectively may adversely affect Repay’s relationships with its clients and, if Repay cannot find alternate providers quickly, may cause those clients to terminate their relationships with Repay.

 

Repay’s third-party processors, which provide Repay with front-end authorization and back-end settlement services, compete with Repay or may compete with it in the future in the vertical markets that it serves. There can be no assurance that these processors will maintain their relationships with Repay in the future or that they will refrain from competing directly with the solutions that Repay offers.

 

If Repay is unable to renew its existing contracts with its most significant vendors, it might not be able to replace the related products or services at the same cost, which would negatively impact its profitability. Additionally, while Repay believes it would be able to locate alternative vendors to provide substantially similar services at comparable rates, or otherwise replicate such services internally, no assurance can be made that a change would not be disruptive to its business, which could potentially lead to a material adverse impact on its revenue and profitability until resolved.

 

Repay also relies in part on third parties for the development of and access to new technologies, and updates to existing products and services for which third parties provide ongoing support, which reliance increases the cost associated with new and existing product and service offerings. Failure by these third-party providers to devote an appropriate level of attention to Repay’s products and services could result in delays in introducing new products or services, or delays in resolving any issues with existing products or services for which third-party providers provide ongoing support.

 

Repay is subject to economic and political risk, the business cycles of its clients and software integration partners and the overall level of consumer and commercial spending, which could negatively impact its business, financial condition and results of operations.

 

The electronic payment industry depends heavily on the overall level of consumer and commercial spending. Repay is exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income and changes in consumer purchasing habits. A sustained deterioration in general economic conditions, particularly in the United States, or increases in interest rates, could adversely affect Repay’s financial performance by reducing the number or aggregate volume of transactions made using electronic payments. Reductions in the amount of consumer spending and lending could result in a decrease in Repay’s revenue and profits. If Repay’s clients make fewer sales of products and services using electronic payments, or consumers spend less money through electronic payments, Repay will have fewer transactions to process at lower dollar amounts, resulting in lower revenue.

 

A weakening in the economy could have a negative impact on Repay’s clients, as well as their customers who purchase products and services using the payment processing systems to which Repay provides access, which could, in turn, negatively affect Repay’s business, financial condition and results of operations. For example, in the vertical markets that Repay serves, merchants are affected by macroeconomic conditions such as employment, personal income and consumer sentiment. If economic conditions deteriorate and its clients experience decreased demand for consumer lending (particularly in the automobile finance market as consumers cut down on discretionary spending), Repay would experience a decrease both in volume and number of transactions processed. In addition, a weakening in the economy could force merchants to close at higher than historical rates in part because many of them are not as well capitalized as larger organizations, which could expose Repay to potential credit losses and future transaction declines. Further, credit card issuers may reduce credit limits and become more selective in their card issuance practices. Repay also has a certain amount of fixed and semi-fixed costs, including rent, debt service and salaries, which could limit its ability to quickly adjust costs and respond to changes in its business and the economy.

 

In addition, nearly all of Repay’s clients are consumer lenders that provide personal loans and automotive loans to consumers that have varying degrees of credit risk. The regulatory environment that these clients operate in is very complex because applicable regulations are often enacted by multiple agencies in the state and federal governments. For example, the Consumer Financial Protection Bureau promulgated new rules applicable to such loans that could have an adverse effect on Repay’s clients’ businesses, and numerous state laws impose similar requirements. Such merchants are also subject to negative public perceptions that their consumer lending activities constitute predatory or abusive lending to consumers, and concerns raised by consumer advocacy groups and government officials may lead to efforts to further regulate the industry in which many of Repay’s clients operate. The combination of these factors, and in particular the uncertainties associated with the regulatory environments in the various jurisdictions in which Repay’s clients operate, could materially adversely affect the business of Repay’s clients and may force its consumer lender clients to change their business models. As a result, Repay may need to be nimble and quickly respond to the evolving needs of the vertical markets that it serves. If the business of Repay’s clients is materially adversely affected by the uncertainties described above and if it or its clients fail to respond to such changes in the industry in a timely manner, or if there are significant changes in such vertical markets that Repay does not anticipate, its business, financial condition and results of operations would be materially adversely affected.

 

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Repay’s risk management policies and procedures may not be fully effective in mitigating its risk exposure in all market environments or against all types of risks.

 

Repay operates in a rapidly changing industry. Accordingly, its risk management policies and procedures may not be fully effective to identify, monitor, manage and remediate its risks. Some of Repay’s risk evaluation methods depend upon information provided by others and public information regarding markets, merchants or other matters that are otherwise inaccessible by Repay. In some cases, that information may not be accurate, complete or up-to-date. Additionally, Repay’s risk detection system is subject to a high degree of “false positive” risks being detected, which makes it difficult for Repay to identify real risks in a timely manner. If its policies and procedures are not fully effective or it is not always successful in capturing all risks to which it is or may be exposed, Repay may suffer harm to its reputation or be subject to litigation or regulatory actions that materially increase its costs and limit its ability to grow and may cause Repay to lose existing clients.

 

Repay may not be able to continue to expand its share in its existing vertical markets or expand into new vertical markets, which would inhibit its ability to grow and increase its profitability.

 

Repay’s future growth and profitability depend, in part, upon its continued expansion within the vertical markets in which it currently operates, the emergence of other vertical markets for electronic payments and Repay’s integrated solutions, and its ability to penetrate new vertical markets and its current software integration partners’ customer bases. As part of its strategy to expand into new vertical markets and increase its share in its existing vertical markets, Repay looks for acquisition opportunities and partnerships with other businesses that will allow it to increase its market penetration, technological capabilities, product offerings and distribution capabilities. Repay may not be able to successfully identify suitable acquisition or partnership candidates in the future, and if it does identify them, they may not provide Repay with the benefits it anticipated.

 

Repay’s expansion into new vertical markets also depends on its ability to adapt its existing technology or to develop new technologies to meet the particular needs of each new vertical market. Repay may not have adequate financial or technological resources to develop effective and secure services or distribution channels that will satisfy the demands of these new vertical markets. Penetrating these new vertical markets may also prove to be more challenging or costly or may take longer than Repay may anticipate. If Repay fails to expand into new vertical markets and increase its penetration into existing vertical markets, Repay may not be able to continue to grow its revenues and earnings.

 

Repay may not be able to successfully execute its strategy of growth through acquisitions.

 

A significant part of Repay’s growth strategy is to enter into new vertical markets through platform acquisitions of vertically-focused integrated payment and software solutions providers, to expand within its existing vertical markets through selective tuck-in acquisitions and to otherwise increase its presence in the payments processing market. Since 2016, Repay has completed a total of three platform acquisitions that enabled it to enter new, or expand within existing, vertical markets.

 

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Although Repay expects to continue to execute its acquisition strategy:

 

  it may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms;

 

  it may compete with others to acquire assets, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates;

 

  competing bidders for such acquisitions may be larger, better-funded organizations with more resources and easier access to capital;

 

  it may experience difficulty in anticipating the timing and availability of acquisition candidates;

 

  it may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of its potential acquisitions;

 

  potential acquisitions may be subject to regulatory approvals, which may cause delays and uncertainties; and

 

  it may not be able to generate cash necessary to execute its acquisition strategy.

 

The occurrence of any of these factors could adversely affect Repay’s growth strategy.

 

Repay’s acquisitions subject it to a variety of risks that could harm its business.

 

Repay reviews and completes selective acquisition opportunities. There can be no assurances that it will be able to complete suitable acquisitions for a variety of reasons, including the difficulties associated with the identification of and competition for acquisition targets, the need for regulatory approvals, the inability of the parties to agree to the structure or purchase price of the transaction and Repay’s inability to finance the transaction on commercially acceptable terms. In addition, any completed acquisition will subject Repay to a variety of other risks:

 

  it may need to allocate substantial operational, financial and management resources in integrating new businesses, technologies and products, and management may encounter difficulties in integrating the operations, personnel or systems of the acquired business;

 

  the acquisition may have a material adverse effect on its business relationships with existing or future clients or software integration partners;

 

  it may assume substantial actual or contingent liabilities, known and unknown;

 

  the acquisition may not meet its expectations of future financial performance;

 

  it may experience delays or reductions in realizing expected synergies or benefits;

 

  it may incur substantial unanticipated costs or encounter other problems associated with the acquired business, including challenges associated with transfer of various data processing functions and connections to its systems and those of its third-party service providers;

 

  it may be unable to achieve its intended objectives for the transaction; and

 

  it may not be able to retain the key personnel, customers and suppliers of the acquired business.

 

These challenges and costs and expenses may adversely affect Repay’s business, financial condition and results of operations.

 

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Changes in tax laws or their judicial or administrative interpretations, or becoming subject to additional U.S., state or local taxes that cannot be passed through to Repay’s clients, could negatively affect Repay’s business, financial condition and results of operations.

 

Repay’s operations are subject to extensive tax liabilities, including federal and state and transactional taxes such as excise, sales/use, payroll, franchise, withholding, and ad valorem taxes. Changes in tax laws or their judicial or administrative interpretations could decrease the amount of revenues Repay receives, the value of any tax loss carryforwards and tax credits recorded on its balance sheet and the amount of its cash flow, and may have a material adverse impact on its business, financial condition and results of operations. Some of Repay’s tax liabilities are subject to periodic audits by the applicable taxing authority which could increase its tax liabilities. Furthermore, companies in the payment processing industry, including Repay, may become subject to incremental taxation in various taxing jurisdictions. Taxing jurisdictions have not yet adopted uniform positions on this topic. If Repay is required to pay additional taxes and is unable to pass the tax expense through to its clients, its costs would increase and its net income would be reduced, which could have a material adverse effect on its business, financial condition and results of operations.

 

On December 22, 2017, President Trump signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act,” which includes significant changes to the taxation of business entities. This new legislation, among other things, reduces the U.S. corporate income tax rate, imposes significant additional limitations on the deductibility of interest and allows the expensing of certain capital expenditures. Repay continues to examine the impact this tax reform legislation may have on its business. Notwithstanding the reduction in the corporate income tax rate, the overall impact of this tax reform or of any future administrative guidance interpreting provisions thereof is uncertain, and Repay’s business and financial condition could be adversely affected. This proxy statement/prospectus does not discuss such tax legislation or the manner in which it might affect holders of the Company’s common stock. Thunder Bridge urges its shareholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of this legislation on their investment.

 

Repay may not be able to successfully manage its intellectual property and may be subject to infringement claims.

 

Repay relies on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect its proprietary technology, which is critical to its success, particularly in its strategic verticals where it may offer proprietary software solutions to its clients. Third parties may challenge, circumvent, infringe or misappropriate Repay’s intellectual property, or such intellectual property may not be sufficient to permit Repay to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of service offerings or other competitive harm. Other parties, including Repay’s competitors, may independently develop similar technology and duplicate Repay’s services or design around its intellectual property and, in such cases, Repay could not assert its intellectual property rights against such parties. Further, Repay’s contractual arrangements may be subject to termination or renegotiation with unfavorable terms to Repay, and its third-party licensors may be subject to bankruptcy, insolvency and other adverse business dynamics, any of which might affect Repay’s ability to use and exploit the products licensed to it by such third-party licensors. Additionally, Repay’s contractual arrangements may not effectively prevent disclosure of its confidential information or provide an adequate remedy in the event of unauthorized disclosure of its confidential information. Repay may have to litigate to enforce or determine the scope and enforceability of its intellectual property rights and know-how, which is expensive, could cause a diversion of resources and may not prove successful. Also, because of the rapid pace of technological change in its industry, aspects of Repay’s business and its services rely on technologies developed or licensed by third parties, and Repay may not be able to obtain or retain licenses and technologies from these third parties on reasonable terms or at all. The loss of intellectual property protection or the inability to license or otherwise use third-party intellectual property could harm Repay’s business and ability to compete.

 

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Repay may also be subject to costly litigation if its services and technology are alleged to infringe upon or otherwise violate a third party’s proprietary rights. Third parties may have, or may eventually be issued, patents that could be infringed by Repay’s products, services or technology. Any of these third parties could make a claim of infringement, breach or other violation of third-party intellectual property rights against Repay with respect to its products, services or technology. Any claim from third parties may result in a limitation on Repay’s ability to use the intellectual property subject to these claims. Additionally, in recent years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement or other violations and attempting to extract settlements from companies like Repay. Even if Repay believes that intellectual property related claims are without merit, defending against such claims is time consuming and expensive and could result in the diversion of time and attention of Repay’s management and employees. Claims of intellectual property infringement or violation also may require Repay to redesign affected products or services, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting Repay from marketing or selling certain of its products or services. Even if Repay has an agreement for indemnification against such costs, the indemnifying party, if any in such circumstance, may be unable to uphold its contractual obligations. If Repay cannot or does not license the infringed technology on reasonable terms or substitute similar technology from another source, its revenue and earnings could be adversely impacted.

 

If Repay is unable to develop and maintain effective internal controls over financial reporting, it may not be able to produce timely and accurate financial statements, which could have a material adverse effect on its business.

 

In connection with the audit of its consolidated financial statements for the years ended December 31, 2017 and 2016, Repay identified control deficiencies that constituted material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Repay’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses identified in its internal control over financial reporting related to (i) insufficient segregation of duties, (ii) lack of formal documentation and the development of policies and procedures, and (iii) insufficient evidential matter to support the implementation of control activities.

 

As a private company not subject to the internal control provisions of the Sarbanes-Oxley Act, Repay has had limited accounting and finance personnel and other resources with which to address its internal controls and procedures consistent with PCAOB standards. In response to the identified material weaknesses, Repay is in the process of taking remedial actions to improve its internal control over financial reporting, including by performing a comprehensive review of its internal controls over financial reporting and enhancing its process to retain evidential matters that support the design and implementation of its controls. However, the steps Repay is taking may not be sufficient to remediate its material weaknesses or prevent future material weaknesses or significant deficiencies from occurring. Repay was not required to perform an evaluation of internal control over financial reporting as of December 31, 2017 and 2016 in accordance with the provisions of the Sarbanes-Oxley Act. Had such an evaluation been performed, additional control deficiencies may have been identified, and those control deficiencies could have also represented one or more material weaknesses. There is no assurance that Repay will not identify additional material weaknesses or other control deficiencies in its internal controls over financial reporting in the future.

 

If Repay fails to remediate any of the previously identified material weaknesses or if it identifies future material weaknesses in its internal controls over financial reporting or fails to meet the demands that will be placed upon it as a public company, including the requirements of the Sarbanes-Oxley Act, it may be unable to accurately report its financial results or report them within the timeframes required by law or stock exchange regulations. Failure to comply with Section 404 of the Sarbanes-Oxley Act could also potentially subject Repay to sanctions or investigations by the SEC or other regulatory authorities. If additional material weaknesses exist or are discovered in the future, and Repay is unable to remediate any such material weaknesses, its reputation, financial condition and operating results could suffer.

 

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Repay’s clients and their respective businesses are subject to extensive government regulation, and any new laws and regulations, industry standards or revisions made to existing laws, regulations or industry standards affecting its clients’ businesses or the electronic payments industry, or Repay’s or its clients’ actual or perceived failure to comply with such obligations, may have an unfavorable impact on Repay’s business, financial condition and results of operations.

 

The clients Repay serves are subject to numerous federal and state regulations that affect the electronic payments industry. While payment processors like Repay are not subject to examination by government agencies, they are subject to laws and regulations prohibiting unfair, deceptive acts and practices (“UDAAP”). Because of the rules and regulations enacted at the state and federal level that affect its clients, Repay has developed compliance mechanisms that limit both its and its sponsor banks’ exposure to such regulations and risks associated with Repay’s clients’ industries.

 

Regulation of the consumer finance industry has increased significantly in the past several years and is continually evolving. In order to manage its exposure to such laws and regulations, Repay employs a substantial compliance management system designed to identify and mitigate risks associated with its merchant relationships. Repay’s system is audited annually by a third-party and compared against industry standards, including System and Organization Controls (“SOC”) and the PCI DSS described above, and Repay evaluates and updates its compliance models to improve its performance and keep up with the rapid evolution of the legal and regulatory regime its clients face. However, changes to statutes, regulations or industry standards, including interpretations and implementation of such statutes, regulations or standards, could increase Repay’s cost of doing business or affect Repay’s competitive advantage. Repay’s clients are also subject to U.S. financial services regulations, numerous consumer protection laws, escheat regulations and privacy and information security regulations, among other laws, rules and regulations. Failure of Repay’s clients to comply with regulations may have an adverse effect on Repay’s business, including the limitation, suspension or termination of services provided to, or by, third parties, and the imposition of penalties or fines. To the extent these regulations negatively impact the business, operations or financial condition of its clients, Repay’s business and results of operations could be materially and adversely affected because, among other matters, its clients may experience decreases in payment transactions processed, could decide to avoid or abandon certain lines of business, or could seek to pass on increased costs to Repay by negotiating price reductions. Repay could be required to invest a significant amount of time and resources to comply with additional regulations or oversight or to modify the manner in which it contracts with or provides services and solutions to its clients and regulations could directly or indirectly limit how much Repay can charge for its services. In addition, Repay may not be able to update its existing products and services or develop new ones in a timely manner to address the evolving compliance needs of its clients. Any of these events, if realized, could have a material adverse effect on Repay’s business, results of operations and financial condition.

 

Laws and regulations, even if not directed at Repay, may require Repay to take significant efforts to change its services and solutions and may require that it incur additional compliance costs and change how it prices its products and services to its clients and software integration partners. Implementing new compliance efforts is difficult because of the complexity of new regulatory requirements, and Repay is devoting and will continue to devote significant resources to ensure compliance. Furthermore, regulatory actions may precipitate changes in business practices by Repay and other industry participants which could affect how Repay markets, prices and distributes its products and services, and which could materially adversely affect its business, financial condition and results of operations. In addition, even an inadvertent failure to comply with laws and regulations or evolving public perceptions of its business could damage Repay’s business or its reputation.

 

The businesses of Repay’s clients are strictly regulated in every jurisdiction in which they operate, and such regulations, and its clients’ failure to comply with them, could have an adverse effect on its clients’ businesses and, as a result, Repay’s results of operations.

 

Repay’s clients are subject to a variety of statutes and regulations enacted by government entities at the federal, state and local levels, which include regulations relating to: the amount they may charge in interest rates and fees; the terms of their loans (such as maximum and minimum durations), repayment requirements and limitations, number and frequency of loans, maximum loan amounts, renewals and extensions, required repayment plans and reporting and use of state-wide databases; collection and servicing activity; the establishment and operation of their businesses; licensing, disclosure and reporting requirements; restrictions on advertising and marketing; and requirements governing electronic payments and money transmission.

 

Repay provides a more detailed description of the regulations to which its clients are subject and that Repay monitors for merchant compliance and risk assessment under “Business—Government Regulation.”

 

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These regulations affect Repay’s clients’ businesses in many ways, including their loan volume, revenues, delinquencies of their borrowers and results of operations. These changes to Repay’s clients’ businesses may affect the payment volume Repay processes, including the number and size of scheduled repayments and the number of originated loans subject to repayment. To the extent these laws and regulations curtail consumer lending activity, Repay’s results of operations and financial condition could be adversely affected.

 

Compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and other federal and state regulations may increase Repay’s compliance costs, limit its revenues and otherwise negatively affect its business.

 

Since the enactment of the Dodd-Frank Act, there have been substantial reforms to the supervision and operation of the financial services industry, including numerous new regulations that have imposed compliance costs on Repay and its financial institution partners and clients. Among other things, the Dodd-Frank Act established the Consumer Financial Protection Bureau (the “CFPB”), which is empowered to conduct rule-making and supervision related to, and enforcement of, federal consumer financial protection laws. The CFPB has issued guidance that applies to “supervised service providers,” which the CFPB has defined to include service providers, like Repay, to CFPB supervised banks and nonbanks. The Dodd-Frank Act also established the Financial Stability Oversight Council, which has the authority to determine whether any non-bank financial company should be supervised by the Board of Governors of the Federal Reserve System, or the Federal Reserve, because it is systemically important to the U.S. financial system. In addition, federal and state agencies have recently proposed or enacted cybersecurity regulations, such as the Cybersecurity Requirements for Financial Services Companies issued by the New York State Department of Financial Services and the Advance Notice of Proposed Rulemaking on Enhanced Cyber Risk Management Standards issued by The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in October 2016. Such cybersecurity regulations are applicable to large bank holding companies and their subsidiaries, as well as to service providers to those organizations. Any new rules and regulations implemented by the CFPB or state or other authorities or in connection with the Dodd-Frank Act could, among other things, slow Repay’s ability to adapt to a rapidly changing industry, require Repay to make significant additional investments to comply with them, redirect time and resources to compliance obligations, modify Repay’s products or services or the manner in which they are provided, or limit or change the amount or types of revenue Repay is able to generate.

 

Interchange fees, which the payment processor typically pays to the card issuer in connection with credit and debit card transactions, are subject to increasingly intense legal, regulatory and legislative scrutiny. In particular, the Dodd-Frank Act regulates and limits debit card fees charged by certain card issuers and allows businesses and organizations to set minimum dollar amounts for the acceptance of credit cards. Specifically, under the so-called “Durbin Amendment” to the Dodd-Frank Act, the interchange fees that certain issuers charge businesses and organizations for debit transactions are regulated by the Federal Reserve and must be “reasonable and proportional” to the cost incurred by the issuer in authorizing, clearing and settling the transactions. Rules released by the Federal Reserve in July 2011 to implement the Durbin Amendment mandate a cap on debit transaction interchange fees for card issuers with assets of $10 billion or greater. Since October 2011, a payment network may not prohibit a card issuer from contracting with any other payment network for the processing of electronic debit transactions involving the card issuer’s debit cards, and card issuers and payment networks may not inhibit the ability of businesses and organizations to direct the routing of debit card transactions over any payment networks that can process the transactions. These restrictions could negatively affect the number of debit transactions, and prices charged per transaction, which would negatively affect Repay’s business.

 

Repay must comply with laws and regulations prohibiting unfair or deceptive acts or practices, and any failure to do so could materially and adversely affect its business.

 

Repay and many of its clients are subject to Section 5 of the Federal Trade Commission Act prohibiting unfair or deceptive acts or practices and various state laws similar in scope and subject matter thereto. In addition, provisions of the Dodd-Frank Act that prohibit unfair, deceptive or abusive acts or practices, the Telemarketing Sales Act and other laws, rules and/or regulations, may directly impact the activities of certain of Repay’s clients, and in some cases may subject Repay, as the electronic payment processor or provider of payment settlement services, to investigations, fees, fines and disgorgement of funds if it is found to have improperly aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal or improper activities of a client through its services. Various federal and state regulatory enforcement agencies, including the Federal Trade Commission and state attorneys general have authority to take action against non-banks that engage in UDAAP, or violate other laws, rules and regulations. To the extent Repay is processing payments or providing products and services for a client suspected of violating such laws, rules and regulations, it may face enforcement actions and incur losses and liabilities that may adversely affect its business.

 

Numerous other federal or state laws affect Repay’s business, and any failure to comply with those laws could harm its business.

 

Currently, Repay is not deemed a money transmitter and has no expectation that it would be deemed as such in the foreseeable future. Repay, along with its third-party service providers, uses structural arrangements designed to prevent Repay from receiving or controlling its client’s funds and therefore remove its activities from the scope of money transmitter regulation. There can be no assurance that these structural arrangements will remain effective as money transmitter laws continue to evolve or that the applicable regulatory bodies, particularly state agencies, will view Repay’s payment processing activities as compliant.

 

Repay’s business may also be subject to the Fair Credit Reporting Act (the “FCRA”), which regulates the use and reporting of consumer credit information and also imposes disclosure requirements on entities that take adverse action based on information obtained from credit reporting agencies. Repay could be liable if its practices do not comply with the FCRA or regulations under it.

 

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The Housing Assistance Tax Act of 2008 included an amendment to the Code, that requires information returns to be made for each calendar year by payment processing entities and third-party settlement organizations with respect to payments made in settlement of electronic payment transactions and third-party payment network transactions occurring in that calendar year. Reportable transactions are also subject to backup withholding requirements. Repay could be liable for penalties if its information returns are not in compliance with these regulations.

 

Repay’s solutions may be required to conform, in certain circumstances, to requirements set forth in the Health Insurance Portability and Accountability Act of 1996, which governs the privacy and security of “protected health information.”

 

Additionally, Repay is required to comply with certain anti-money laundering regulations in connection with its payment processing activities and is subject to certain economic and trade sanctions programs, which prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. These regulations are generally governed by the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”) and the Office of Foreign Assets Control (“OFAC”).

 

Depending on how its products and services evolve, Repay may be subject to a variety of additional laws and regulations, including those governing money transmission, gift cards and other prepaid access instruments, electronic funds transfers, anti-money laundering, counter-terrorist financing, restrictions on foreign assets, gambling, banking and lending, and import and export restrictions.

 

Repay’s efforts to comply with these laws and regulations could be costly and result in diversion of management time and effort and may still not guarantee compliance. Additionally, as its products and services evolve, and as regulators continue to increase their scrutiny of compliance with these obligations, Repay may be subject to a variety of additional laws and regulations, or it may be required to further revise or expand its compliance management system, including the procedures it uses to verify the identity of its clients, their customers, and to monitor transactions. If Repay is found to be in violation of any such legal or regulatory requirements, it may be subject to monetary fines or other penalties, such as a cease and desist order, or it may be required to alter the nature or packaging of its services and solutions, any of which could adversely affect its business or operating results.

 

Governmental regulations designed to protect or limit access to or use of consumer information could adversely affect Repay’s ability to effectively provide its products and services.

 

In addition to those regulations discussed previously that are imposed by the card networks and NACHA, governmental bodies in the United States have adopted, or are considering the adoption of, laws and regulations restricting the use, collection, storage, transfer and disposal of, and requiring safeguarding of, non-public personal information. Repay’s operations are subject to certain provisions of these laws. Relevant federal privacy laws include the Family Educational Rights and Privacy Act of 1974, the Protection of Pupil Rights Amendment and the Gramm-Leach-Bliley Act of 1999, which applies directly to a broad range of financial institutions and indirectly, or in some instances directly, to companies that provide services to financial institutions. The U.S. Children’s Online Privacy Protection Act (“COPPA”) also regulates the collection of information by operators of websites and other electronic solutions that are directed to children under 13 years of age. These laws and regulations restrict Repay’s collection, processing, storage, use and disclosure of personal information, may require it to notify individuals of its privacy practices and provide individuals with certain rights to prevent the use and disclosure of protected information, and mandate certain procedures with respect to safeguarding and proper description of stored information. These laws also impose requirements for safeguarding and proper destruction of personal information through the issuance of data security standards or guidelines. In addition, there are state laws restricting the ability to collect and utilize certain types of information such as Social Security and driver’s license numbers. Certain state laws impose similar privacy obligations as well as obligations to provide notification of security breaches of personal information to affected individuals, state officers, consumer reporting agencies and businesses and governmental agencies.

 

Further, Repay is obligated by its clients, sponsor banks and software integration partners to maintain the confidentiality and security of non-public consumer information that Repay’s clients and their customers share with it. Its contracts may require periodic audits by independent parties regarding its compliance with applicable standards, and may permit its counterparties to audit its compliance with best practices established by regulatory guidelines with respect to confidentiality and security of non-public personal information. Repay’s ability to maintain compliance with these standards and satisfy these audits will affect its ability to attract, grow and maintain business in the future, and any failure to do so could subject Repay to contractual liability, each of which could have a material effect on its business and results of operations.

 

If Repay fails to comply with these laws, regulations or contractual terms, or if it experiences security breaches, it could face regulatory enforcement proceedings, suits for breach of contract and monetary liabilities. Additionally, any such failure could harm the relationships and reputation it depends on to retain existing clients and software integration partners and obtain new clients and software integration partners. If federal and state governmental bodies adopt more restrictive privacy laws in the future, Repay’s compliance costs could increase, and it could make Repay’s due diligence reviews and monitoring regarding the risk of its clients more difficult, complex and expensive. As Repay’s business grows, it may also be required to invest in a more substantive and complex compliance management system than the one it currently employs.

 

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The loss of key personnel or the loss of Repay’s ability to attract, recruit, retain and develop qualified employees, could adversely affect Repay’s business, financial condition and results of operations.

 

Repay depends on the ability and experience of a number of its key personnel who have substantial experience with its operations, the rapidly changing payment processing industry and the vertical markets in which it offers its products and services. Many of Repay’s key personnel have worked for Repay for a significant amount of time or were recruited by Repay specifically due to their experience. Repay’s success depends in part upon the reputation and influence within the industry of its senior managers who have, over the years, developed long standing and favorable relationships with its software integration partners, vendors, card associations, sponsor banks and other payment processing and service providers. It is possible that the loss of the services of one or a combination of its senior executives or key managers could have a material adverse effect on Repay’s business, financial condition and results of operations. In addition, contractual obligations related to confidentiality and assignment of intellectual property rights may be ineffective or unenforceable, and departing employees may share Repay’s proprietary information with competitors or seek to solicit its software integration partners or clients or recruit its key personnel to competing businesses in ways that could adversely impact Repay.

 

Further, in order for Repay to continue to successfully compete and grow, it must attract, recruit, develop and retain personnel who will provide Repay with the expertise it needs. Repay’s success also depends on the skill and experience of its sales force, which it must continuously work to maintain. While it has a number of key personnel who have substantial experience with its operations, Repay must also develop its personnel so that its personnel is capable of maintaining the continuity of its operations, supporting the development of new services and solutions, and expanding Repay’s client base. The market for qualified personnel is competitive, and Repay may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors.

 

Repay has been the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations which could have a material adverse effect on its business, financial condition or results of operations.

 

In the ordinary course of business, Repay is the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination, immigration violations or other local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigations or similar matters arising out of its current or future business. Any claims asserted against Repay or its management, regardless of merit or eventual outcome, could harm Repay’s reputation and have an adverse impact on its relationship with its clients, software integration partners and other third parties and could lead to additional related claims. In light of the potential cost and uncertainty involved in litigation, Repay has in the past and may in the future settle matters even when it believes it has a meritorious defense. Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of Repay’s business and operations or increase its cost of doing business. Repay’s insurance or indemnities may not cover all claims that may be asserted against it. Furthermore, there is no guarantee that Repay will be successful in defending itself in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending or future claims, litigation or investigations could have a material adverse effect on Repay’s business, financial condition and results of operations.

 

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Risks Related to Thunder Bridge

 

You have limited rights or interests in funds in the Trust Account. To liquidate your investment, therefore, you may be forced to sell your Public Shares or warrants, potentially at a loss.

 

Public Shareholders will be entitled to receive funds from the Trust Account only upon (i) such shareholder’s exercise of Redemption Rights in connection with Thunder Bridge’s initial business combination (which will be the Business Combination should it occur) and then only in connection with those ordinary shares of Thunder Bridge that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the Redemption of any Public Shares properly tendered in connection with a shareholder vote to amend the Memorandum and Articles of Association to (A) modify the substance or timing of Thunder Bridge’s obligation to redeem 100% of the Public Shares if Thunder Bridge does not complete an initial business combination by December 21, 2019 or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity and (iii) the Redemption of Public Shares if Thunder Bridge is unable to complete an initial business combination by December 21, 2019, subject to applicable law and as further described herein. In addition, if Thunder Bridge’s plan to redeem its Public Shares if it is unable to complete an initial Business Combination by December 21, 2019 is not completed for any reason, compliance with applicable law and the Memorandum and Articles of Association may require that Thunder Bridge submit a plan of dissolution to its then-existing shareholders for approval prior to the distribution of the proceeds held in Thunder Bridge’s Trust Account. In that case, Public Shareholders may be forced to wait beyond December 21, 2019 before they receive funds from the Trust Account. In no other circumstances will a Public Shareholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or warrants, potentially at a loss.

 

If you or a “group” of shareholders are deemed to hold in excess of 15% of Thunder Bridge’s ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of Thunder Bridge’s ordinary shares.

 

The Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking Redemption Rights with respect to more than an aggregate of 15% of the shares sold in Thunder Bridge’s IPO, which is referred to as the “Excess Shares.” However, such shareholders may vote all their shares (including Excess Shares) for or against the Business Combination. Your inability to redeem the Excess Shares will reduce your influence over Thunder Bridge’s ability to complete the Business Combination and you could suffer a material loss on your investment in Thunder Bridge if you sell Excess Shares in open market transactions. Additionally, you will not receive Redemption distributions with respect to the Excess Shares if Thunder Bridge completes the Business Combination. As a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.

 

Thunder Bridge’s shareholders may be held liable for claims by third parties against Thunder Bridge to the extent of distributions received by them upon Redemption of their shares.

 

If Thunder Bridge is forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, Thunder Bridge was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Thunder Bridge’s shareholders. Furthermore, Thunder Bridge’s directors may be viewed as having breached their fiduciary duties to Thunder Bridge or Thunder Bridge’s creditors and/or having acted in bad faith, and thereby exposing themselves and Thunder Bridge to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. There is no assurance that claims will not be brought against Thunder Bridge for these reasons. Thunder Bridge and its directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of the Trust Account while Thunder Bridge was unable to pay its debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of approximately $18,292.68 and to imprisonment for five years in the Cayman Islands.

 

Although Thunder Bridge seeks to have all vendors, service providers (other than its independent auditors), prospective target businesses or other entities with which it does business execute agreements with Thunder Bridge waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of Thunder Bridge’s Public Shareholders, as well as distributions to Public Shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Public Shareholders or claims challenging the enforceability of the waiver.

 

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If third parties bring claims against Thunder Bridge, the proceeds held in the Trust Account could be reduced and the Redemption Price received by Public Shareholders may be less than $10.10 per share.

 

Thunder Bridge’s placing of funds in the Trust Account may not protect those funds from third-party claims against Thunder Bridge. Although Thunder Bridge seeks to have all vendors, service providers (other than its independent auditors), prospective target businesses or other entities with which it does business execute agreements with Thunder Bridge waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of Thunder Bridge’s Public Shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Thunder Bridge’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, Thunder Bridge’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to Thunder Bridge than any alternative.

 

Examples of possible instances where Thunder Bridge may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Thunder Bridge and will not seek recourse against the Trust Account for any reason. Upon Redemption of Thunder Bridge’s Public Shares, if Thunder Bridge is unable to complete its initial business combination within the prescribed time frame, or upon the exercise of a Redemption Right in connection with the Business Combination, Thunder Bridge will be required to provide for payment of claims of creditors that were not waived that may be brought against Thunder Bridge within the ten years following Redemption. Accordingly, the Redemption Price received by Public Shareholders could be less than the $10.10 per share initially held in the Trust Account, due to claims of such creditors.

 

Pursuant to the Insider Letter Agreement, the Sponsor has agreed that it will be liable to Thunder Bridge if and to the extent any claims by a vendor (other than the independent auditors) for services rendered or products sold to Thunder Bridge, or a prospective target business with which Thunder Bridge has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.10 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under Thunder Bridge’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. Thunder Bridge believes that the Sponsor’s only assets are securities of Thunder Bridge, and Thunder Bridge has neither undertaken any efforts to independently verify whether the Sponsor has sufficient funds available to satisfy its indemnification obligations, nor asked the Sponsor to reserve for such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for an initial business combination and Redemptions could be reduced to less than $10.10 per Public Share without any meaningful recourse against the Sponsor. In such event, Thunder Bridge may not be able to complete an initial business combination, and you would receive such lesser amount per share in connection with any Redemption of your Public Shares.

 

None of Thunder Bridge’s officers or directors will indemnify Thunder Bridge for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

 

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Thunder Bridge’s directors may decide not to enforce the indemnification obligations of the Sponsor under the Insider Letter Agreement, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Thunder Bridge’s Public Shareholders.

 

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.10 per Public Share or (ii) such lesser amount per share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, Thunder Bridge’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While Thunder Bridge currently expects that its independent directors would take legal action on behalf of Thunder Bridge against the Sponsor to enforce their indemnification obligations to Thunder Bridge, it is possible that Thunder Bridge’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If Thunder Bridge’s independent directors choose not to enforce these indemnification obligations, there may be less funds in the Trust Account available for distribution to Thunder Bridge’s Public Shareholders.

 

If, after Thunder Bridge distributes the proceeds in the Trust Account to its Public Shareholders, Thunder Bridge files a bankruptcy petition or an involuntary bankruptcy petition is filed against Thunder Bridge that is not dismissed, a bankruptcy court may seek to recover such proceeds and the members of the Thunder Bridge Board may be viewed as having breached their fiduciary duties to Thunder Bridge’s creditors, thereby exposing the members of the Thunder Bridge Board and Thunder Bridge to claims of punitive damages.

 

If, after Thunder Bridge distributes the proceeds in the Trust Account to its Public Shareholders, Thunder Bridge files a bankruptcy petition or an involuntary bankruptcy petition is filed against Thunder Bridge that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Thunder Bridge’s shareholders. In addition, the Thunder Bridge Board may be viewed as having breached its fiduciary duty to Thunder Bridge’s creditors and/or having acted in bad faith, thereby exposing itself and Thunder Bridge to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors.

 

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect the business, investments and results of operations of Thunder Bridge.

 

Thunder Bridge is subject to laws and regulations enacted by national, regional and local governments. In particular, Thunder Bridge is required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on the business, investments and results of operations of Thunder Bridge. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on Thunder Bridge’s business and results of operations.

 

The exercise price for the public warrants is higher than in many similar blank check company offerings, and, accordingly, the Warrants are more likely to expire worthless.

 

The exercise price of the public warrants is higher than is typical in many similar blank check company offerings. Historically, the exercise price of a Warrant was generally a fraction of the purchase price of the units in the IPO. The exercise price for Thunder Bridge’s public warrants is $11.50 per share. As a result, the Warrants are less likely to ever be in the money and more likely to expire worthless.

 

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The Insider Letter Agreement may be amended without shareholder approval.

 

The Insider Letter Agreement with Thunder Bridge’s Sponsor, directors and officers contains provisions relating to transfer restrictions of Thunder Bridge’s Founder Shares and Private Placement Warrants, indemnification of the Trust Account, waiver of Redemption Rights and participation in liquidation distributions from the Trust Account. The Insider Letter Agreement may be amended without shareholder approval. While Thunder Bridge does not expect the Thunder Bridge Board to approve any amendment to this agreement prior to the Business Combination, it may be possible that the Thunder Bridge Board, in exercising its business judgment and subject to its fiduciary duties and any restrictions under the Merger Agreement, chooses to approve one or more amendments to such agreement. Any such amendment may have an adverse effect on the value of an investment in Thunder Bridge’s securities.

 

Thunder Bridge’s founder and chief executive officer controls a substantial interest in Thunder Bridge and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.

 

Thunder Bridge’s founder and chief executive officer controls the Sponsor and has the ability to vote the Sponsor’s Founder Shares, constituting 20% of Thunder Bridge’s issued and outstanding ordinary shares. Control of the Founder Shares entitles the Sponsor to elect all of Thunder Bridge’s directors prior to an initial business combination, including in the Director Election Proposal in connection with the Business Combination. Holders of Public Shares will have no right to vote on the election of directors during such time. The provisions of the Memorandum and Articles of Association that grant the holders of the Founder Shares the ability to elect directors may only be amended by a special resolution passed by at least 90% of Thunder Bridge’s ordinary shares voting in a general meeting. Accordingly, the Sponsor (and through his control of the Sponsor, Thunder Bridge’s founder and chief executive officer) may exert a substantial influence on actions requiring a shareholder vote, including the matters to be considered at the General Meeting, potentially in a manner that you do not support. If Thunder Bridge’s Sponsor, its founder and chief executive officer, and any other Thunder Bridge directors or officers (or their affiliates) purchase any additional ordinary shares in the aftermarket or in privately negotiated transactions, this would increase their control of Thunder Bridge. Neither Thunder Bridge’s Sponsor nor, to Thunder Bridge’s knowledge, any of Thunder Bridge’s officers or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of Thunder Bridge’s Class A ordinary shares. Thunder Bridge will not hold an annual general meeting to elect new directors prior to the completion of the Business Combination, in which case all of the current directors will continue in office until at least the completion of the Business Combination. Accordingly, Thunder Bridge’s Sponsor will continue to exert control at least until the completion of the Business Combination. For more information, see the risk factor entitled “—Risks Related to the Business Combination—Some of Thunder Bridge’s officers and directors may have conflicts of interest that may influence or have influenced them to support or approve the Business Combination without regard to your interests or in determining whether Repay is appropriate for Thunder Bridge’s initial business combination.”

 

The terms of the Warrants may be amended in a manner that may be adverse to holders with the approval by the holders of at least 65% of the then-outstanding public warrants.

 

The Warrants were issued in registered form under a warrant agreement (the “warrant agreement”) between Continental Stock Transfer & Trust Company, as warrant agent, and Thunder Bridge. The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of the public warrants. Accordingly, the terms of the public warrants may be amended in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although Thunder Bridge or the Company may amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants to effect any change thereto, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of shares of Thunder Bridge or the Company purchasable upon exercise of a Warrant.

 

Thunder Bridge’s Warrants may have an adverse effect on the market price of the Company’s Class A common stock.

 

Thunder Bridge issued Warrants to purchase 25,800,000 ordinary shares as part of the Units offered in its IPO, and, simultaneously with the closing of the IPO, Thunder Bridge issued in a private placement an aggregate of 8,830,000 Private Placement Warrants to the Sponsor and Cantor, each exercisable to purchase one Thunder Bridge Class A ordinary share at $11.50 per share. Upon the Domestication, the Class A ordinary shares and Class B ordinary shares will become shares of Class A common stock of the Company, and the Warrants will entitle the holders to purchase shares of Class A common stock of the Company. Such Warrants, when exercised, will increase the number of issued and outstanding shares and may reduce the market price of the Company’s Class A common stock.

 

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Your unexpired Warrants may be redeemed prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.

 

Outstanding Warrants may be redeemed at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date the Company sends the notice of Redemption to the Warrant holders. If and when the warrants become redeemable by the Company, the Company may not exercise its Redemption Rights if the issuance of shares of Class A common stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or Thunder Bridge is unable to effect such registration or qualification, subject to the Company’s obligation in such case to use its best efforts to register or qualify the shares of Class A common stock under the blue sky laws of the state of residence in those states in which the Warrants were initially offered by Thunder Bridge in its IPO. Redemption of the outstanding Warrants could force you (i) to exercise your Warrants and pay the exercise price at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal Redemption Price which, at the time the outstanding warrants are called for Redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by the Company so long as they are held by their initial purchasers—the Sponsor and Cantor—or their permitted transferees.

 

Thunder Bridge is an emerging growth company within the meaning of the Securities Act and Thunder Bridge has taken advantage of certain exemptions from disclosure requirements available to emerging growth companies; this could make the Company’s securities less attractive to investors and may make it more difficult to compare the Company’s performance with other public companies.

 

Thunder Bridge (and the Company following the Business Combination) is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act and has taken advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in Thunder Bridge’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on certain executive compensation matters. As a result, Thunder Bridge’s shareholders may not have access to certain information they may deem important. Thunder Bridge and the Company may be an emerging growth company for up to five years from the IPO, although circumstances could cause the loss of that status earlier, including if the market value of the common stock of the Company held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case the Company would no longer be an emerging growth company as of the following December 31. Thunder Bridge cannot predict whether investors will find its (or the Company’s) securities less attractive because Thunder Bridge (or the Company) rely on these exemptions. If some investors find the securities less attractive as a result of reliance on these exemptions, the trading prices of the Company’s securities may be lower than they otherwise would be, there may be a less active trading market for the Company’s securities and the trading prices of the securities may be more volatile.

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Thunder Bridge has elected not to opt out of such extended transition period. Accordingly, when a standard is issued or revised and it has different application dates for public or private companies, Thunder Bridge (or the Company following the Business Combination), as an emerging growth company, will adopt the new or revised standard at the time private companies adopt the new or revised standard, unless early adoption is permitted by the standard. This may make comparison of Thunder Bridge’s and the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for Thunder Bridge to effectuate the Business Combination, require substantial financial and management resources and increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley Act requires that Thunder Bridge evaluate and report on its system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2019. Following the initial Business Combination, if the Company is deemed to be a large accelerated filer or an accelerated filer, it will be required to comply with the independent registered public accounting firm attestation requirement on its internal control over financial reporting. Further, for as long as the Company remains an emerging growth company, it will not be required to comply with the independent registered public accounting firm attestation requirement on its internal control over financial reporting. Following the Business Combination, the Company will be required to assure that it is in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The need to develop the internal control system to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete the Business Combination as well as impose obligations of the Company following the Business Combination.

 

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EXTRAORDINARY GENERAL MEETING

 

Date, Time and Place of the General Meeting

 

The General Meeting of Thunder Bridge shareholders will be held at 10:00 a.m. Eastern Time on                   , 2019, at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105.

 

Purpose of the General Meeting

 

At the General Meeting, Thunder Bridge is asking holders of its ordinary shares:

 

  To consider and vote upon the Domestication Proposal. The form of the proposed Certificate of Incorporation of the Company to become effective upon the Domestication, is attached to this proxy statement/prospectus as Annex A;

 

  To consider and vote upon a proposal to adopt and approve the Business Combination. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex B;

 

  To consider and vote upon the approval of the 2019 Equity Incentive Plan. A copy of the 2019 Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C;

 

  To consider and vote upon the proposal to elect nine directors to serve staggered terms on the Company Board until the 2020, 2021 and 2022 annual meeting of stockholders, respectively and until their respective successors are duly elected and qualified;

 

  To consider and vote upon the Articles Amendment Proposal. The full text of the resolutions to amend the Memorandum and Articles of Association is attached to this proxy statement/prospectus as Annex F; and

 

  To consider and vote upon the Adjournment Proposal, if it is presented at the General Meeting.

 

Recommendation of the Thunder Bridge Board with Respect to the Proposals

 

The Thunder Bridge Board has unanimously determined that each of the proposals is fair to and in the best interests of Thunder Bridge and its shareholders and has unanimously approved such proposals. The Board unanimously recommends that shareholders:

 

  Vote “FOR” the Domestication Proposal;

 

  Vote “FOR” the Business Combination Proposal;

 

  Vote “FOR” the 2019 Equity Incentive Plan Proposal;

 

  Vote “FOR” the election of each of the directors pursuant to the Director Election Proposal;

 

  Vote “FOR” the Articles Amendment Proposal; and

 

  Vote “FOR” the Adjournment Proposal, if it is presented at the General Meeting.

 

Record Date; Outstanding Shares; Shareholders Entitled to Vote

 

Thunder Bridge has fixed the close of business on                   , 2019, as the Record Date for determining the Thunder Bridge shareholders entitled to notice of and to attend and vote at the General Meeting. As of the close of business on such date, there were 25,800,000 Class A ordinary shares and 6,450,000 Founder Shares of the Company outstanding and entitled to vote. The Class A ordinary shares and the Founder Shares vote together as a single class, except in the election of directors as to which only the Founder Shares vote, and each share is entitled to one vote per share at the General Meeting.

 

Quorum and Vote of Shareholders

 

A quorum of shareholders is necessary to transact business at a general meeting. The presence in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative, of the holders of a majority of the Thunder Bridge Shares constitutes a quorum. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on the Proposals. The proposals presented at the General Meeting will require the following votes:

 

  The approval of the Domestication Proposal and the Articles Amendment Proposal will require a special resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the Thunder Bridge Shares as of the Record Date that are present and vote at the General Meeting.

 

  The approval of the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal and the Adjournment Proposal (if presented) will require an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Shares that are present and vote at the General Meeting.

 

  The election of directors pursuant to the Director Election Proposal will require an ordinary resolution of the holders of the Thunder Bridge Class B ordinary shares as a matter of Cayman Islands law, being the affirmative vote of the holders of a majority of the Thunder Bridge Class B ordinary shares that are present and vote at the General Meeting.

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Voting Your Shares

 

Each Thunder Bridge Share that you own in your name entitles you to one vote. If you are a record owner of your shares, there are two ways to vote your Thunder Bridge Shares at the General Meeting:

 

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Thunder Bridge Board “FOR” the Domestication Proposal, the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal, the election of each of the director nominees pursuant to the Director Election Proposal, the Articles Amendment Proposal and the Adjournment Proposal (if presented). Votes received after a matter has been voted upon at the General Meeting will not be counted.

 

You Can Attend the General Meeting and Vote in Person. When you arrive, you will receive a ballot that you may use to cast your vote.

 

If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the General Meeting and vote in person and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way Thunder Bridge can be sure that the broker, bank or nominee has not already voted your shares.

 

Abstentions and Broker Non-Votes

 

Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, are not treated as votes cast and will have no effect on the Domestication Proposal, the Business Combination Proposal, the 2019 Equity Incentive Plan Proposal, the Director Election Proposal, the Articles Amendment Proposal or the Adjournment Proposal (if presented).

 

Stock Ownership of and Voting by Thunder Bridge Sponsor, Directors and Officers

 

The Sponsor owns 6,450,000 Founder Shares, which are Class B ordinary shares of Thunder Bridge. Pursuant to the Insider Letter Agreement among Thunder Bridge, the Sponsor and Thunder Bridge’s directors and officers, (i) the 6,450,000 Founder Shares owned by the Sponsor and (ii) any other ordinary shares of Thunder Bridge owned by the Sponsor or Thunder Bridge’s officers and directors, will be voted in favor of the Business Combination Proposal at the General Meeting. Under the Merger Agreement, Thunder Bridge agreed to enforce the voting obligations contained in the Insider Letter Agreement against the Sponsor and the Thunder Bridge officers and directors.

 

Revoking Your Proxy; Changing Your Vote

 

If you are a record owner of your shares and you give a proxy, you may change or revoke it at any time before it is exercised by doing any one of the following:

 

  you may send another proxy card with a later date;

 

  you may notify Thunder Bridge’s secretary in writing before the General Meeting that you have revoked your proxy; or

 

  You may attend the General Meeting, revoke your proxy and vote in person as described above.

 

If your shares are held in “street name” or are in a margin or similar account, you should contact your broker for information on how to change or revoke your voting instructions.

 

Redemption Rights

 

Public Shareholders may seek to have their shares redeemed by Thunder Bridge, regardless of whether they vote for or against the Business Combination or any other Proposal and whether they held Thunder Bridge ordinary shares as of the Record Date or acquired them after the Record Date. Any Public Shareholder who holds ordinary shares of Thunder Bridge on or before                   , 2019 (two (2) business days before the General Meeting) will have the right to demand that his or her shares be redeemed for a full pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid (which is approximately $                  , or approximately $                   per share, as of the date of this proxy statement/prospectus). A Public Shareholder that has properly tendered his or her shares for Redemption will be entitled to receive his or her pro rata portion of the aggregate amount then on deposit in the Trust Account in cash for such shares only if the Business Combination is completed. If the Business Combination is not completed, the Redemptions will be canceled and the tendered shares will be returned to the relevant Public Shareholders as appropriate.

 

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Thunder Bridge shareholders who seek to redeem their Public Shares must demand Redemption no later than 5:00 p.m., Eastern time on                   , 2019 (two (2) business days before the General Meeting) by (A) submitting a written request to the Transfer Agent that Thunder Bridge redeem such holder’s Public Shares for cash; (B) affirmatively certifying in such request to the Transfer Agent for Redemption if such holder is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to ordinary shares of Thunder Bridge and (C) delivering their ordinary shares, either physically or electronically using The Depository Trust Company’s DWAC System, at the holder’s option, to the Transfer Agent prior to the General Meeting. If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered to the Transfer Agent (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge the tendering broker a nominal fee and it would be up to the broker whether or not to pass this cost on to the redeeming shareholder. In the event the Business Combination is not completed, this may result in an additional cost to shareholders for the return of their shares.

 

Any demand to redeem such shares once made may be withdrawn at any time up to the vote on the Business Combination. Furthermore, if a Public Shareholder demands Redemption of such shares and subsequently decides prior to the applicable date not to elect to exercise such rights, he or she may simply request that the Transfer Agent return the shares (physically or electronically).

 

A Public Shareholder will be entitled to receive cash for these shares only if the shareholder properly demands Redemption as described above and the Business Combination is completed. If a Public Shareholder properly seeks Redemption and the Business Combination is completed, Thunder Bridge will redeem these shares for cash and the holder will no longer own these shares following the Business Combination. If the Business Combination is not completed for any reason, then the Public Shareholders who exercised their Redemption Rights will not be entitled to receive cash for their shares. In such case, Thunder Bridge will promptly return any shares delivered by the Public Shareholders. Thunder Bridge and Repay will not complete the Business Combination if, immediately prior to the Closing and after payment of all transaction and other expenses payable by Thunder Bridge and payments for Redemptions (but without regard to any assets or liabilities of the Target Companies), Thunder Bridge does not have net tangible assets of at least $5,000,001. It is also a condition to Repay’s obligations to complete the Merger that Thunder Bridge is able to deliver the Required Cash Consideration Amount to Repay at the Closing. However, Repay may waive this condition in whole or in part. For more information, see the section entitled “Proposal 2: The Business Combination Proposal–The Merger Agreement–Closing Conditions.

 

The closing price of Thunder Bridge Class A ordinary shares on February 6, 2019 was $10.03. The cash held in the Trust Account as of December 31, 2018 was approximately $10.20 per Public Share. Prior to exercising Redemption Rights, shareholders should verify the market price of Thunder Bridge Shares as they may receive higher proceeds from the sale of their shares in the public market than from exercising their Redemption Rights if the market price per share is higher than the Redemption price. Thunder Bridge cannot assure its shareholders that they will be able to sell their Thunder Bridge Shares in the open market, even if the market price per share is higher than the Redemption price stated above, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares. A Public Shareholder who properly exercises its Redemption Rights pursuant to the procedures set forth herein will be entitled to receive a full pro rata portion of the aggregate amount then on deposit in the Trust Account, less any amounts necessary to pay Thunder Bridge’s taxes.

 

Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of his, her, its or any other person with whom he, she or it is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking Redemption Rights with respect to 15% or more of Thunder Bridge Shares. Accordingly, any shares held by a Public Shareholder or “group” in excess of such 15% cap will not be redeemed by Thunder Bridge.

 

Pursuant to the Insider Letter Agreement, the Thunder Bridge Sponsor, officers or directors have waived all of their Redemption Rights and will not have Redemption Rights with respect to any Thunder Bridge Shares owned by them, directly or indirectly.

 

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Appraisal Rights

 

Thunder Bridge’s shareholders do not have appraisal rights under the Companies Law in connection with the Business Combination or the other Proposals.

 

Proxy Solicitation

 

Thunder Bridge is soliciting proxies on behalf of the Thunder Bridge Board. This solicitation is being made by mail but also may be made by telephone or in person. Thunder Bridge and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Thunder Bridge will bear all of the costs of the solicitation, which Thunder Bridge estimates will be approximately $                   in the aggregate. Thunder Bridge has engaged                   as proxy solicitor to assist in the solicitation of proxies.

 

Thunder Bridge will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Thunder Bridge will reimburse them for their reasonable expenses.

 

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the General Meeting. A shareholder may also change its vote by submitting a later-dated proxy as described in the section entitled “—Revoking Your Proxy.”

 

Householding

 

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits Thunder Bridge, with your permission, to send a single notice of meeting and, to the extent requested, a single copy of this proxy statement/prospectus to any household at which two or more Thunder Bridge shareholders reside if they appear to be members of the same family. This rule is called “householding,” and its purpose is to help reduce printing and mailing costs of proxy materials.

 

A number of brokerage firms have instituted householding for shares held in “street name.” If you and members of your household have multiple accounts holding ordinary shares of Thunder Bridge, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

 

Who Can Answer Your Questions About Voting Your Shares?

 

If you are a shareholder of Thunder Bridge and have any questions about how to vote or direct a vote in respect of your Thunder Bridge Shares, you may call                   , Thunder Bridge’s proxy solicitor, at (toll free);                   (collect) or email at                   .

 

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PROPOSAL 1: THE DOMESTICATION PROPOSAL

 

Summary of the Proposal

 

General

 

Thunder Bridge is proposing to change its corporate structure and domicile from an exempted company incorporated under the laws of the Cayman Islands to a corporation incorporated under the laws of the State of Delaware. This change will be implemented as a legal continuation of Thunder Bridge under the applicable laws of Cayman Islands and the State of Delaware as described under “—Manner of Effecting the Domestication and the Legal Effect of the Domestication.”

 

The Domestication will be effected by the filing of a Certificate of Corporate Domestication and the Certificate of Incorporation with the Delaware Secretary of State and filing an application to de-register Thunder Bridge with the Registrar of Companies of the Cayman Islands. In connection with the Domestication, all outstanding securities of Thunder Bridge will convert to outstanding securities of the continuing Delaware corporation. The Domestication will become effective simultaneously with the completion of the Business Combination. The proposed Certificate of Incorporation, which will become effective upon the Domestication, is attached to this proxy statement/prospectus as Annex A.

 

At the effective time of the Domestication, which will be the effective time of the Business Combination, the separate existence of Thunder Bridge will cease as a Cayman Islands exempted company and will become and continue as a Delaware corporation. The Memorandum and Articles of Association will be replaced by the Certificate of Incorporation and Bylaws and your rights as a shareholder will cease to be governed by the laws of the Cayman Islands and you will become a stockholder of the Company with all rights as such governed by Delaware law.

 

Change of Thunder Bridge’s Corporate Name

 

In connection with the Domestication and simultaneously with the Business Combination, the corporate name of Thunder Bridge will change to “Repay Holdings Corporation.”

 

Reasons for the Domestication

 

The Thunder Bridge Board believes that it would be in the best interests of Thunder Bridge, simultaneously with the completion of the Business Combination, to effect the Domestication. The primary reason for the Domestication is to enable the Company to avoid certain taxes that would be imposed on the Company if the Company were to conduct an operating business in the United States as a foreign corporation following the Business Combination.

 

In addition, because the Company will operate within the United States following the Business Combination, it was the view of the Thunder Bridge Board that the Company should also be structured as a corporation organized in the United States. In addition, the Thunder Bridge Board believes Delaware provides a recognized body of corporate law that will facilitate corporate governance by the Company’s officers and directors. Delaware maintains a favorable legal and regulatory environment in which to operate. For many years, Delaware has followed a policy of encouraging companies to incorporate there and, in furtherance of that policy, has adopted comprehensive, modern and flexible corporate laws that are regularly updated and revised to meet changing business needs. As a result, many corporations have initially chosen Delaware as their domicile or have subsequently reincorporated in Delaware in a manner similar to the procedures Thunder Bridge is proposing. Due to Delaware’s longstanding policy of encouraging incorporation in that state and consequently its popularity as the state of incorporation, the Delaware courts have developed a considerable expertise in dealing with corporate issues and a substantial body of case law has developed construing the DGCL and establishing public policies with respect to Delaware corporations. It is anticipated that the DGCL will continue to be interpreted and explained in a number of significant court decisions that may provide greater predictability with respect to the Company’s corporate legal affairs.

 

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Reasons for the Name Change

 

The Thunder Bridge Board believes that it would be in the best interests of Thunder Bridge to, in connection with the Domestication and simultaneously with the Business Combination, change the corporate name to “Repay Holdings Corporation” in order to more accurately reflect the business purpose and activities of the Company.

 

Regulatory Approvals; Third Party Consents

 

Thunder Bridge is not required to make any filings or to obtain any approvals or clearances from any antitrust regulatory authorities in the United States or other countries in order to complete the Domestication; however, because the Domestication must occur simultaneously with the Merger, it will not occur unless the Merger can be completed, which will require the approvals as described below under the section entitled “Proposal 2: The Business Combination Proposal.” Thunder Bridge must comply with applicable United States federal and state securities laws in connection with the Domestication, including the filing with Nasdaq of a press release disclosing the Domestication, among other things.

 

The Domestication will not breach any covenants or agreements binding upon Thunder Bridge and will not be subject to any additional federal or state regulatory requirements, except compliance with the laws of the Cayman Islands and Delaware necessary to effect the Domestication.

 

Certificate of Incorporation and Bylaws

 

Commencing with the effective time of the Domestication, which will be the effective time of the Business Combination, the Certificate of Incorporation and Bylaws will govern the rights of stockholders in the Company.

 

A chart comparing your rights as a holder of ordinary shares of Thunder Bridge as a Cayman Islands exempted company with your rights as a holder of the Company’s Class A common stock as a Delaware corporation can be found below in “—Comparison of Shareholder Rights under the Applicable Corporate Law Before and After the Domestication.”

 

Directors and Officers Following the Domestication and the Business Combination

 

The directors and the Company following the simultaneous completion of the Domestication and the Business Combination will be the nine directors approved by the Thunder Bridge shareholders pursuant to the Director Election Proposal. The officers of the Company following the simultaneous completion of the Domestication and the Business Combination will be the officers of Repay who held such positions immediately prior to the completion of the Business Combination and the Domestication. See the section entitled “Information about Officers, Directors and Nominees.”

 

Tax Consequences to Holders of Thunder Bridge Shares Who Receive Company Common Stock as a Result of the Domestication

 

If the Proposals described in this proxy statement/prospectus are approved, then holders of Thunder Bridge Shares who do not elect to exercise their Redemption Rights will receive shares of Company common stock as a result of the Domestication. For a discussion of the material U.S. federal income tax consequences of the Domestication, see the section entitled “—Material U.S. Federal Income Tax Consequences of the Domestication to Thunder Bridge Shareholders.

 

Manner of Effecting the Domestication and the Legal Effect of the Domestication

 

Delaware Law

 

Pursuant to Section 388 of the DGCL, a non-United States entity may become domesticated as a Delaware corporation by filing with the Delaware Secretary of State a Certificate of Corporate Domestication and a Certificate of Incorporation, certifying to the matters set forth in Section 388 of the Code. The Domestication must be approved in the manner provided for by the instrument or other writing governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-Delaware law, as appropriate and the Certificate of Incorporation must be approved by the same authorization required to approve the Domestication.

 

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When a non-United States entity has become domesticated as a Delaware corporation, for all purposes of Delaware law, the corporation will be deemed to be the same entity as the domesticating non-United States entity and the domestication will constitute a continuation of the existence of the domesticating non-United States entity in the form of a Delaware corporation. When any domestication will have become effective, for all purposes of Delaware laws, all of the rights, privileges and powers of the non-United States entity that has been domesticated and all property, real, personal and mixed and all debts due to such non-United States entity, as well as all other things and causes of action belonging to such non-United States entity, will remain vested in the corporation to which such non-United States entity has been domesticated (and also in the non-United States entity, if and for so long as the non-United States entity continues its existence in the foreign jurisdiction in which it was existing immediately prior to the domestication) and will be the property of such corporation (and also of the non-United States entity, if and for so long as the non-United States entity continues its existence in the foreign jurisdiction in which it was existing immediately prior to the domestication); but all rights of creditors and all liens upon any property of such non-United States entity will be preserved unimpaired and all debts, liabilities and duties of the non-United States entity that has been domesticated will remain attached to the corporation to which such non-United States entity has been domesticated (and also to the non-United States entity, if and for so long as the non-United States entity continues its existence in the foreign jurisdiction in which it was existing immediately prior to the domestication) and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as such corporation. The rights, privileges, powers and interests in property of the non-United States entity, as well as the debts, liabilities and duties of the non-United States entity, will not be deemed, as a consequence of the domestication, to have been transferred to the corporation to which such non-United States entity has domesticated for any purpose of the laws of the State of Delaware.

 

Cayman Islands Law

 

If the Domestication Proposal is approved, Thunder Bridge will also apply to deregister as a Cayman Islands exempted company pursuant to Section 206 of the Companies Law. Upon the deregistration, Thunder Bridge will no longer be subject to the provisions of the Companies Law. Except as provided in the Companies Law, the deregistration will not affect the rights, powers, authorities, functions and liabilities or obligations of Thunder Ridge or any other person.

 

Comparison of Shareholder Rights under Applicable Corporate Law Before and After the Domestication

 

When the Domestication is completed, the rights of stockholders will be governed by Delaware law, including the DGCL, rather than by the laws of the Cayman Islands. Certain differences exist between the DGCL and the Cayman Islands Companies Law that will alter certain of the rights of shareholders and affect the powers of the Company Board and management following the Domestication.

 

Shareholders should consider the following summary comparison of the laws of the Cayman Islands, on the one hand, and the DGCL, on the other. This comparison is not intended to be complete and is qualified in its entirety by reference to the DGCL and the Companies Law.

 

The owners of a Delaware corporation’s shares are referred to as “stockholders.” For purposes of language consistency, in certain sections of this proxy statement/prospectus, we may continue to refer to the share owners of the Company as “shareholders.”

 

Provision   Delaware   Cayman Islands
         
Applicable legislation   General Corporation Law of the State of Delaware   The Companies Law ((2018) Revision)
         
General Vote Required for Combinations with Interested Stockholders / Shareholders   Generally a corporation may not engage in a business combination with an interested stockholder for a period of three years after the time of the transaction in which the person became an interested stockholder, unless the corporation opts out of the statutory provision.   No Similar Provision

 

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Provision   Delaware   Cayman Islands
         
Appraisal Rights   Generally a stockholder of a publicly traded corporation does not have appraisal rights in connection with a merger.  Stockholders of a publicly traded corporation do, however, generally have appraisal rights in connection with a merger if they are required by the terms of a merger agreement to accept for their shares anything except: (a) shares or depository receipts of the corporation surviving or resulting from such merger; (b) shares of stock or depository receipts that will be either listed on a national securities exchange or held of record by more than 2,000 holders; (c) cash in lieu of fractional shares or fractional depository receipts described in (a) and (b) above; or (d) any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in (a), (b) and (c) above.   Shareholders that dissent from a merger are entitled to be paid the fair market value of their shares, which if necessary may ultimately be determined by the court.
         
Requirements for Stockholder / Shareholder  Approval   Subject to the certificate of incorporation, stockholder approval of mergers, a sale of all or substantially all the assets of the corporation, dissolution and amendments of constitutional documents require a majority of outstanding shares; most other stockholder approvals require a majority of those present and voting, provided a quorum is present.   Subject to the articles of association, matters which require shareholder approval, whether under Cayman Islands statute or the company’s articles of association, are determined (subject to quorum requirements) by simple majority of the shares present and voting at a meeting of shareholders.  Where the proposed action requires approval by “Special Resolution” (such as the amendment of the company’s constitutional documents) the approval of not less than two-thirds of the shares present and voting at a meeting of shareholders is required.
         
Requirement for Quorum   Quorum is a majority of shares entitled to vote at the meeting unless otherwise set in the constitutional documents, but cannot be less than one-third of shares entitled to vote at the meeting.  

Quorum is set in the company’s memorandum and articles of association.

         
Stockholder / Shareholder Consent to Action Without Meeting   Unless otherwise provided in the certificate of incorporation, stockholders may act by written consent.   Shareholder action by written resolutions (whether unanimous or otherwise) may be permitted by the articles of association.  The articles of association may provide that shareholders may not act by written resolutions.

 

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Provision   Delaware   Cayman Islands
         
Inspection of Books and Records   Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business.   Shareholders generally do not have any rights to inspect or obtain copies of the register of shareholders or other corporate records of a company.
         
Stockholder / Shareholder Lawsuits   A stockholder may bring a derivative suit subject to procedural requirements.   In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company only in certain limited circumstances.
         
Removal of Directors;  

Any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except as follows: (1) unless the charter otherwise provides, in the case of a corporation with a classified board, stockholders may effect such removal only for cause; or (2) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board. Because the corporation board will be classified after the closing of the Business Combination, a director may be removed from office only for cause and only by the affirmative vote of at least a majority of the total voting power of the outstanding shares of capital stock of the corporation entitled to vote in any annual election of directors or class of directors, voting together as a single class.

  A company’s memorandum and articles of association may provide that a director may be removed for any or no reason and that, in addition to shareholders, boards may be granted the power to remove a director.
         
Number of Directors   The number of directors is fixed by the Bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate of incorporation.  The Bylaws may provide that the board may increase the size of the board and fill any vacancies.   Subject to the memorandum and articles of association, the board may increase the size of the board and fill any vacancies.

 

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Provision   Delaware   Cayman Islands
         
Classified or Staggered Boards   Classified boards are permitted.   Classified boards are permitted.
         
Fiduciary Duties of Directors   Directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders.   A director owes a fiduciary duty to exercise loyalty, honesty and good faith to the company as a whole.
        In addition to fiduciary duties, directors owe a duty of care, diligence and skill.
         
        Such duties are owed to the company but may be owed directly to creditors or shareholders in certain limited circumstances.
         
Indemnification of Directors and Officers   A corporation shall have the power to indemnify any person who was or is a party to any proceeding because such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe their conduct was unlawful. If the action was brought by or on behalf of the corporation, no indemnification is made when a person is adjudged liable to the corporation unless a court determines such person is fairly and reasonably entitled to indemnity for expenses the court deems proper.   A Cayman Islands exempted company generally may indemnify its directors or officers, except with regard to fraud or willful default.
         
Limited Liability of Directors   Permits the limiting or eliminating of the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful stock repurchases or dividends, or improper personal benefit.   Liability of directors may be limited, except with regard to their own fraud or willful default.

 

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Comparison of Shareholder Rights under the Applicable Organizational Documents Before and After the Domestication

 

When the Domestication is completed, certain rights of shareholders will be governed by the Certificate of Incorporation and Bylaws, rather than the Memorandum and Articles of Association (which will cease to be effective) and certain rights of shareholders and the scope of the powers of the Company Board and management will be altered as a result.

 

Shareholders should consider the following summary comparison of the Certificate of Incorporation and Bylaws, on the one hand, and the Memorandum and Articles of Association, on the other. This comparison is not intended to be complete and is qualified in its entirety by reference to the Memorandum and Articles of Association and the proposed Certificate of Incorporation and Bylaws of the Company. You should read the Certificate of Incorporation attached to this proxy statement/prospectus as Annex A carefully and in its entirety.

 

Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Corporate Purpose
 
The purpose shall be to engage in any lawful act or activity for which corporations may be organized under the DGCL.   The objects for which Thunder Bridge was established are unrestricted and it shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.
     
Capital Stock
 
The total number of shares of all classes of capital stock which the Company shall have authority to issue is 2,200,001,000 of which 2,000,000,000 shares shall be Class A common stock, par value $0.0001 per share, 1,000 shares shall be Class V common stock, par value $0.0001 per share, and 200,000,000 shall be Preferred Stock, par value $0.0001 per share.   Thunder Bridge’s authorized share capital consists of 221,000,000 shares, consisting of 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share and 1,000,000 preference shares, par value $0.0001 per share.
 
Preferred Stock. The Board of Directors is expressly granted authority to issue shares of Preferred Stock, in one or more series, and to fix for each such series the number of shares constituting such series and the designation, the voting powers (if any), and the powers, preferences and relative, participating, optional, or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the DGCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Company entitled to vote thereon, without a separate vote of the holders of the Class A common stock, Class V common stock or Preferred Stock, unless a vote of any such holders is required pursuant to the Certificate of Incorporation or any Preferred Stock Designation.   Preferred Shares. The Directors may allot, issue, grant options over or otherwise dispose of Preferred Shares (including fractions of a Preferred Share) with or without preferred, deferred or other rights or restrictions, whether in regard to dividends or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Companies Law and the articles of association) vary such rights.

 

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Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Common Stock. Each holder of Class A common stock is entitled to one vote for each share of Class A common stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Each holder of Class V common stock is entitled to a number of votes that is equal to the product of (x) the total number of units held by such holder as set forth in the books and records of Hawk Parent Holdings LLC multiplied by (y) the Exchange Rate (as defined in the Exchange Agreement), on all matters on which stockholders generally or holders of Class V common stock as a separate class are entitled to vote (whether voting separately as a class or together with one or more classes of the capital stock).   Ordinary Shares. The Directors may allot, issue, grant options over or otherwise dispose of Ordinary Shares (including fractions of an Ordinary Share) with or without preferred, deferred or other rights or restrictions, whether in regard to dividends or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Companies Law and the articles of association) vary such rights.
     
Directors; Classes
 
The Board of Directors will determine the number of directors who will serve on the board, provided that no more than fifteen directors may serve on the board at any time. The exact number of directors will be fixed from time to time by a majority of the Board of Directors. The Board of Directors will be divided into three classes designated as Class I, Class II and Class III. Class I directors will initially serve for a term expiring at the first annual meeting of stockholders following the closing of the Business Combination. Class II and Class III directors shall initially serve for a term expiring at the second and third annual meeting of stockholders following the closing of the Business Combination, respectively. At each succeeding annual meeting, successors to the class of directors whose term expires at that annual meeting will be elected for a term expiring at the third succeeding annual meeting of stockholders. There will be no limit on the number of terms a director may serve on the Board of Directors.   The Directors are of a single class. Commencing at the first annual general meeting, and at each annual general meeting thereafter, Directors shall be elected for a term of office to expire at the annual general meeting after their election.  All Directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified.
     
Board Vacancies; Removal
 

Any vacancy on the Board of Directors, including a vacancy that results from an increase in the number of directors or a vacancy that results from the removal of a director with cause, may be filled only by a majority of the directors then in office.

  Except as the Companies Law or other applicable law may otherwise require, in the interim between annual general meetings or extraordinary general meetings called for the election of Directors and/or the removal of one or more Directors and the filling of any vacancy in that connection, additional Directors and any vacancies in the board of Directors, including unfilled vacancies resulting from the removal of Directors for cause, may be filled by the vote of a majority of the remaining Directors then in office, although less than a quorum (as defined in the charter documents), or by the sole remaining Director. A Director elected to fill a vacancy resulting from the death, resignation or removal of a Director shall serve for the remainder of the full term of the Director whose death, resignation or removal shall have created such vacancy and until his successor shall have been elected and qualified.

 

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Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Stockholder/Shareholder Voting
 

Election of directors need not be by ballot unless the Bylaws so provide.

 

Subject to the rights of holders of any series of Preferred Stock, special meetings of the stockholders of the Company may be called only by or at the direction of the board, the chairman of the board or the chief executive officer of the Company.

 

Stockholders must comply with certain advance notice procedures to nominate candidates to the Company Board or to propose matters to be acted upon at a stockholders’ meeting.

 

Except with respect to any action required or permitted to be taken by the holders of Class V common stock, voting separately as a class, or pursuant to a certificate of designation by the holders of one or more series of Preferred stock, voting separately as a series or separately as a class with one or more other such series, any action required or permitted to be taken by the holders of stock of the Company must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders unless such action is recommended by all directors of the Company then in office.

  Votes of shareholders shall be decided on a poll.
     
Amendments to the Governing Documents
 

The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to, or repeal the Bylaws.

 

The affirmative vote of the holders of at least 80% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class, shall be required in order for the stockholders of the Company to alter, amend, repeal or rescind, in whole or in part, any provision of the Bylaws of the Company.

 

Certain provisions of the Certificate of Incorporation may only be amended, altered, repealed, or rescinded by the affirmative vote of the holders of at least 66 2/3% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class.

  The Memorandum and Articles of Association may only be amended by a special resolution of the shareholders.

 

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Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Authority of the Directors
 
The directors are empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Company; subject, nevertheless, to the provisions of the statutes of Delaware, of the Certificate of Incorporation, and to any Bylaws from time to time made by the stockholders; provided, however, that no Bylaw so made shall invalidate any prior act of the directors which would have been valid if such Bylaw had not been made.   The business shall be managed by the Directors who may exercise all the powers of the company
     
Liability of Directors
 
A director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this provision by the stockholders of the Company shall not adversely affect any right or protection of a director of the Company with respect to events occurring prior to the time of such repeal or modification.   Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against wilful default, fraud or the consequences of committing a crime. The Memorandum and Articles of Association provides for indemnification of officers and directors, including for any liability incurred in their capacities as such, except through their own actual fraud or willful default.

 

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Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Indemnification of Directors, Officers, Employees and Others
 
Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of the Company or, while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the Company to the fullest extent permitted by  the DGCL against all expense, liability and loss reasonably incurred or suffered by such indemnitee in connection therewith, provided, however, that, except in certain circumstances, the Company shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the board. An indemnitee shall also have the right to be paid by the Company the expenses (including attorney’s fees) incurred in appearing at, participating in or defending any such proceeding in advance of its final disposition or in connection with a proceeding brought to establish or enforce a right to indemnification or advancement of expenses under the Bylaws.   See “Liability of Directors” above
     
Exclusive Forum
 
Unless the Company consents in writing to the selection of an alternative forum,  (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the Certificate of Incorporation or Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or, (iv) any action asserting a claim governed by the internal affairs doctrine shall, to the fullest extent permitted by law, be solely and exclusively brought in the Court of Chancery of the State of Delaware, or if the Court of Chancery does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction.  

No Similar Provision

 

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Delaware Certificate of Incorporation
and Bylaws
  Cayman Islands Memorandum
and Articles of Association
     
Business Opportunities
 
The Corporation renounces any interest or expectancy that it has in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to its officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are our or our subsidiaries’ employees. Non-employee directors or his or her affiliates have no duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which the Company or its affiliates now engage or propose to engage or (ii) otherwise competing with the Company or its affiliates. In the event that any non-employee director or any of his or her affiliates acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or herself or its or his or her affiliates or for the Company or its affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to the Company or any of its affiliates and they may take any such opportunity for themselves or offer it to another person or entity. The Company does not renounce its interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the Company. A business opportunity will be deemed to be a potential corporate opportunity for the Company if it is a business opportunity that (i) the Company is neither financially or legally, nor contractually permitted to undertake, (ii) from its nature, is not in the line of the Company’s business or is of no practical advantage to the Company or (iii) is one in which the Company has no interest or expectancy.  

No Similar Provision

     
Transactions with Certain Stockholders/Shareholders
 
The Company has elected not to be subject to provisions Section 203 of the DGCL, which generally prohibits “interested stockholders” (stockholders holding 15% or more of the outstanding stock) from engaging in business combinations with the Company for a period of time unless certain conditions are met.  However, the Certificate of Incorporation includes a provision that is substantially similar to Section 203 of the DGCL, but excludes certain stockholders that have had entered into Stockholder Agreements with the Company from the definition of “interested stockholder.”  

No Similar Provision

 

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Accounting Treatment of the Domestication

 

The Domestication is being proposed solely for the purpose of changing the legal domicile of Thunder Bridge. There will be no accounting effect or change in the carrying amount of the assets and liabilities of Thunder Bridge as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of Thunder Bridge immediately following the Domestication will be the same as those immediately prior to the Domestication.

 

Resolution to be Voted Upon

 

The full text of the resolution to be passed is as follows:

 

“It is resolved as special resolutions that Thunder Bridge Acquisition, Ltd. be de-registered in the Cayman Islands pursuant to Article 47 of the Amended and Restated Articles of Association of Thunder Bridge Acquisition, Ltd. and be registered by way of continuation as a corporation in the State of Delaware and conditional upon, and with effect from, the registration of Thunder Bridge Acquisition, Ltd. in the State of Delaware as a corporation, governed by the certificate of incorporation attached as Annex A to this proxy statement/prospectus, wit