SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported):
January 23,
2009
TAILWIND FINANCIAL
INC.
(Exact
Name of Registrant as Specified in Charter)
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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BCE
Place, 181 Bay Street, Suite 2040, Toronto, Ontario, Canada M5J
2T3
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(416)
601-2422
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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x
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Soliciting material
pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12(b))
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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On
January 23, 2009, Tailwind Financial Inc. (“Tailwind”), Allen-Vanguard
Corporation (“Allen-Vanguard”) and a subsidiary of Tailwind formed for the
purpose of effecting the acquisition of Allen-Vanguard (“AV Acquisition Corp.”)
entered into an arrangement agreement pursuant to which AV Acquisition Corp.
will acquire all of the outstanding securities of Allen-Vanguard, resulting in
Allen-Vanguard becoming a wholly owned indirect subsidiary of
Tailwind.
If the
arrangement is approved and completed, in exchange for each share of common
stock of Allen-Vanguard, the holder of such common stock will receive a fraction
of a share of Tailwind common stock equal to the “exchange ratio.” The “exchange
ratio” means 0.046492659 multiplied by the exchange rate posted by the Bank of
Canada for one Canadian dollar expressed in U.S. dollars as described in the
arrangement agreement. The stockholders of Allen-Vanguard will
receive 4,298,478 shares of Tailwind common stock based upon the current number
of outstanding shares of Allen- Vanguard and an exchange rate of C$1 =
US$0.8387. Using the same exchange rate an additional 1,056,423 shares of
Tailwind common stock may be issued if all outstanding warrants of
Allen-Vanguard are exercised. In addition, if the transaction with
Allen-Vanguard is consummated, under current arrangements with the lender, the
lender would be entitled to receive warrants to purchase an additional 2,950,218
shares of Tailwind’s common stock using the same exchange rate and assuming
maximum conversion by Tailwind stockholders.
Prior to
the consummation of the transactions contemplated by the arrangement agreement,
Allen-Vanguard anticipates conducting a public offering of rights to its
stockholders. If all of the rights are subscribed, an aggregate of 350,877,193
shares of common stock of Allen-Vanguard will be issued to its stockholders
immediately prior to the consummation of the transactions contemplated by the
arrangement agreement. Shares issued under the rights offering will also be
exchanged for shares of common stock of Tailwind pursuant to the arrangement.
This will result in substantial additional dilution to Tailwind stockholders.
Based on the exchange rate of C$1=US$0.8387 as of January 9, 2009, the maximum
number of additional Tailwind shares that could be issued in connection with the
rights offering would be 13,681,892.
Accordingly,
on the effective date of the acquisition, Tailwind will pay aggregate
consideration of approximately $35 million ($147 million if the rights offering
is fully subscribed and completed), i.e., $35,118,565 through the issuance of
the 4,298,478 shares of common stock of Tailwind ($146,899,625 through the
issuance of 17,980,370 shares if the rights offering is fully subscribed and
completed) valued at approximately $8.17 based upon the trust account
liquidation value of a share of common stock of Tailwind as of September 30,
2008.
Tailwind
has valued the acquisition of Allen-Vanguard at approximately $235 million
comprised of the aforementioned $35 million value of Tailwind shares being
issued and the outstanding indebtedness of Allen-Vanguard of approximately $200
million.
Any
unexercised stock options for shares of common stock of Allen-Vanguard will
terminate upon the consummation of the transactions contemplated by the
arrangement agreement. Allen-Vanguard has agreed to take such action as may be
necessary to provide that all of its unvested stock options currently
outstanding will vest prior to the exercise date (as defined in the arrangement
agreement) and options not exercised prior to the exercise date will be
cancelled and will terminate at the effective time of the arrangement. The
warrants to purchase common shares of Allen-Vanguard that are not exercised
prior to the exercise date shall be exercisable for shares of Tailwind common
stock from and after the effective date subject to adjustment based on the
Exchange Ratio. Additionally, Allen-Vanguard will also amend the terms of all
outstanding unvested restricted stock units, as necessary and as permitted by
its restricted stock unit plan, to provide that the restricted stock units
outstanding immediately prior to the effective date shall from and after the
effective date be redeemable in accordance with the terms of the restricted
stock unit plan for cash (as adjusted by the exchange ratio) or such number of
shares of common stock of Tailwind as equals (i) the number of shares of common
stock of Allen-Vanguard for which the restricted stock units, if vested, would
have been redeemable immediately prior to the effective date, multiplied by (ii)
the exchange ratio, or a combination of the two.
The
consummation of the arrangement depends on the satisfaction or waiver (to the
extent permitted by law) of a number of conditions, including the
following:
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the
arrangement agreement must have received interim and final approval from
the Ontario Superior Court of Justice, satisfactory to Allen-Vanguard and
Tailwind and such Court will have determined that the issuance of the
common stock of Tailwind to the Allen-Vanguard stockholders is fair to
such stockholders;
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as
of the effective time of the acquisition, the shares of common stock of
Tailwind issued in connection with the arrangement shall be quoted and
approved for listing on NYSE Alternext US
;
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at
or prior to the Tailwind stockholders’ meeting, holders of less than
thirty percent (30%) of the shares issued in the initial public offering
shall have demanded that Tailwind convert such shares into cash pursuant
to the terms of the Tailwind certificate of
incorporation;
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stockholders
of Allen-Vanguard representing in the aggregate 10% or more of its
outstanding common stock immediately prior to the effective date of the
acquisition shall not have validly exercised dissent
rights;
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Allen-Vanguard
shall have entered into a revised arrangement with its senior secured
lenders with respect to the outstanding credit facilities provided to it
and its subsidiaries by such lenders that is satisfactory to Tailwind and
Allen-Vanguard including with respect to the warrants issued and issuable
to such lenders in connection with such facilities;
and
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certain
shareholders of Allen-Vanguard will have entered into a lock-up agreement
for a period of six months.
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Each of
the signatories to the arrangement agreement also made certain representations
and warranties to the other parties of the arrangement agreement.
The
arrangement agreement provides that Allen-Vanguard has the right to solicit and
engage in discussions and negotiations with any person without restriction,
provided that from March 15, 2009 until the termination of the agreement or in
the event the proxy statement is not mailed to Tailwind’s stockholders by April
7, 2009, until April 7, 2009, Allen-Vanguard will not solicit any third party to
engage in a potential transaction (as defined in the arrangement agreement)
without the consent of Tailwind. Notwithstanding the foregoing limitation,
Allen-Vanguard has the right to pursue a joint venture alliance partnership,
teaming arrangement or other, strategic alliance with any person relating to its
electronic systems business at any time.
The
arrangement agreement may be terminated (i) by mutual written consent by
Allen-Vanguard and Tailwind; (ii) by either Tailwind, on the one hand, or
Allen-Vanguard, on the other hand, (a) so long as the terminating party has not
breached or failed to fulfill its obligations under the arrangement agreement
resulting in the failure of the transactions contemplated therein, if: (x) the
arrangement is not completed on or before April 17, 2009, or (y) if Tailwind or
Allen- Vanguard has not obtained the requisite approval of their respective
stockholders, (b) any governmental authority of competent jurisdiction issues a
nonappealable final order restraining, enjoining or otherwise prohibiting the
consummation of the Transaction (c) due to a material breach by the other party
of any representation, warranty, covenant or agreement made by such other party
or if any representation, warranty, covenant, agreement by such other party
shall have become untrue such that certain conditions to the obligation of the
terminating party would not be satisfied and has not been cured within twenty
(20) business days after written notice, and the terminating party is in
compliance with all of its obligations; or (d) if the other party has not
satisfied certain specified conditions as set forth in the agreement; (iii)
subject to the break-up fee (discussed below) and reimbursement of certain
Tailwind fees associated with the transaction, by Allen-Vanguard (a) at any time
prior to the date the required approval of the arrangement by Allen-Vanguard
shareholders and Tailwind stockholders is obtained in connection with the
completion of a potential transaction with a person not identified in the
arrangement agreement; (b) at any time following the date the required approvals
of the arrangement by Allen-Vanguard shareholders and Tailwind stockholders is
obtained and prior to the effective date, in connection with the completion of a
potential transaction with a person identified in the arrangement agreement or
with a person not identified in the arrangement agreement that makes an
unsolicited bid for the majority of Allen-Vanguard’s capital stock prior to
April 17, 2009 with the purpose of taking control of Allen-Vanguard; or (c) in
connection with the entering into a superior proposal, or (iv) by Tailwind,
acting reasonably and in good faith, if it determines that the transactions are
unlikely to be consummated because certain conditions to transaction cannot be
met. In addition, in the event that the arrangement agreement has not been
terminated during the relevant time period and Tailwind has not announced
another potential alternative transaction on or prior to the completion of a
potential transaction by Allen-Vanguard, and Allen-Vanguard completes a
potential transaction by April 30, 2010 with a person that it has provided
information to or entered into negotiations with prior to April 17, 2009, and no
break fee is payable, Allen-Vanguard’s will be obligated to reimburse Tailwind
for its reasonable costs and expenses up to a maximum of C$500,000.
Allen-Vanguard
has agreed to pay Tailwind a “break fee” of $5 million if the agreement has not
been terminated under certain enumerated conditions and Allen-Vanguard completes
a transaction with a party identified in the agreement, a party who makes an
unsolicited bid or a party that makes a superior proposal.
In
addition, pursuant to the arrangement agreement:
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for
every C$1 million Allen-Vanguard receives before March 15, 2009 pursuant
to an indemnification claim against the shareholders of a company
Allen-Vanguard acquired, the exchange ratio will be increased by a
percentage equal to 0.001109883.
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Tailwind
has agreed to file a registration statement with the SEC
registering a number of shares of its common stock equal to the number of
its shares issuable in connection with the redemption of its Allen-
Vanguard restricted share units and its outstanding
warrants.
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Allen-Vanguard
has waived any claims it may have to any monies in the trust account
established by Tailwind for the benefit of its public
stockholders.
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Tailwind
has agreed to cause each of its directors and officers to voluntarily
resign as of the effective date of the acquisition and one representative
from Tailwind will be appointed to the new Board of
Directors.
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Additional Information and
Where to Find It
In
connection with the proposed transaction and required stockholder approval,
Tailwind will file with the Securities and Exchange Commission a proxy
statement, which will be mailed to the stockholders of Tailwind.
Tailwind stockholders
and other interested persons are urged to read the preliminary proxy statement
filed with the SEC and the definitive proxy statement and other relevant
materials when they become available since they will contain important
information about Tailwind, Allen-Vanguard and the transaction with
Allen-Vanguard. Such persons can also read Tailwind’s preliminary proxy
statement for a description of the security holdings of the Tailwind officers
and directors and their respective interests in the successful consummation of
the proposed merger. The definitive proxy statement will be mailed to
stockholders as of a record date to be established for voting on the proposed
merger. Tailwind stockholders may obtain a free copy of such filings
at the Securities and Exchange Commission’s internet site (http://www.sec.gov).
Copies of such filings can also be obtained, without charge, by directing a
request to Tailwind Financial Inc., Brookfield Place, 181 Bay Street, Suite
2040, Toronto, Ontario, Canada M5J 2T3. Such documents are not
currently available.
Participants in
Solicitation
Tailwind
and its directors and executive officers and Allen-Vanguard and its directors
and executive officers may be deemed to be participants in the solicitation of
proxies from the holders of Tailwind common stock in respect of the proposed
merger. Information about the directors and executive officers of Tailwind is
set forth in the preliminary proxy statement, which was filed with the
Securities and Exchange Commission on January 26, 2009.
On
January 26, 2009, Tailwind and Allen-Vanguard intend to hold a presentation for
their respective stockholders regarding the proposed transaction. A
copy of the presentation is attached as
Exhibit 99.1
and is incorporated by reference herein.
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Item
9.01
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Financial
Statements and Exhibits.
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Exhibit
No.
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Description
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Arrangement
Agreement dated January 23, 2009
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Presentation
dated January 26, 2009
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99.2
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Press
Release dated January 26, 2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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TAILWIND
FINANCIAL INC.
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Date:
January 26, 2009
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By:
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/s/ Andrew A. McKay
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Name:
Andrew A. McKay
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Title:
Chief Executive Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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Arrangement
Agreement dated January 23, 2009
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Presentation
dated January 26, 2009
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99.2
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Press
Release dated January 26, 2009
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