UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
x | Preliminary Information Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
o | Definitive Information Statement |
SOUTHPEAK INTERACTIVE CORPORATION
(Name of Registrant as Specified in Its Charter)
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x | No fee required |
o | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11 |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
__________, 2010
Dear Stockholder:
This letter is to inform you that an Information Statement is being furnished to the stockholders of SouthPeak Interactive Corporation, a Delaware corporation, in connection with the approval of an amendment to our Amended and Restated Certificate of Incorporation by written consent in lieu of a special meeting of the stockholders.
WE ARENOTASKING FOR A PROXY AND YOU ARE REQUESTEDNOTTO SEND US A PROXY.
THIS ISNOTA NOTICE OF SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
Only stockholders of record at the close of business on July 16, 2010 shall be provided a copy of the Information Statement.
Very truly yours,
Melanie Mroz
President and Chief Executive Officer
SOUTHPEAK INTERACTIVE CORPORATION
2900 Polo Parkway
Midlothian, Virginia 23113
NOTICE OF WRITTEN CONSENT IN LIEU OF
SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given to the stockholders of SouthPeak Interactive Corporation, a Delaware corporation (the “Company”), that the holders of a majority of the outstanding voting stock of the Company (common stock and Series A convertible preferred stock) have executed a written consent in lieu of a special meeting of stockholders to amend our Amended and Restated Certificate of Incorporation (the “Charter”), to increase our authorized shares of common stock, par value $.0001, by 100,000,000 to 190,000,000 shares, as more fully described in the Information Statement accompanying this Notice.
Only stockholders of record at the close of business on July 16, 2010 are entitled to notice of the matters described in the Information Statement. Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), these corporate actions will not be effective until 20 days after the accompanying Information Statement is mailed to our stockholders.
WE ARENOTASKING YOU FOR A PROXY AND
YOU ARE REQUESTEDNOTTO SEND US A PROXY.
THIS ISNOTA NOTICE OF SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
By Order of the Board of Directors,
Melanie Mroz
President and Chief Executive Officer
Midlothian, Virginia
__________, 2010
SOUTHPEAK INTERACTIVE CORPORATION
2900 Polo Parkway
Midlothian, Virginia 23113
INFORMATION STATEMENT
WE ARENOTASKING YOU FOR A PROXY AND
YOU ARE REQUESTEDNOTTO SEND US A PROXY.
THIS ISNOTA NOTICE OF SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTERS DESCRIBED HEREIN.
We are distributing this Information Statement (this “Information Statement”) to our stockholders in full satisfaction of any notice requirements we may have under the Securities Exchange Act of 1934, as amended (“Exchange Act”) and applicable Delaware law. No additional action will be undertaken by us with respect to the receipt of written consents, and no appraisal or dissenters’ rights under the Delaware General Corporation Law are afforded to our stockholders as a result of the adoption of the resolutions discussed herein.
This Information Statement is being mailed on or about __________, 2010 to the holders of record at the close of business on July 16, 2010 (the “Record Date”), of our capital stock (consisting of common stock and Series A convertible preferred stock), in connection with stockholder action by written consent in lieu of a special meeting for the following purpose:
to amend our Amended and Restated Certificate of Incorporation to increase our authorized shares of common stock, par value $.0001, by 100,000,000 to 190,000,000 shares.
The amendment to our Charter (the “Amendment”) is attached as Annex 1 to this Information Statement. The affirmative votes of the holders of a majority in voting power of our outstanding capital stock (consisting of common stock and Series A convertible preferred stock), voting as a single class, is required to approve the Amendment. Each holder of common stock is entitled to one vote for each share of common stock held. Each holder of Series A convertible preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such shares of Series A convertible preferred stock could then be converted. The date for purposes of determining the holders of outstanding shares of common stock and Series A convertible preferred stock entitled to receive this Information Statement is the close of business on the Record Date. As of the Record Date, the Company had outstanding 60,795,538 shares of common stock and 5,503,833 shares of Series A convertible preferred stock, convertible into 5,720,567 shares of common stock, for an aggregate of 66,516,105 shares, on an as-converted to common stock basis, entitled to vote.
The holders of 33,901,746 shares of common stock, including Terry Phillips, our Chairman, and Melanie Mroz, a Director and our President and Chief Executive Officer (the “Consenting Stockholders”), have executed a written consent, effective as of July 16, 2010 (the “Written Consent”), in favor of the Amendment. Their stockholdings represent approximately 51% of the total outstanding voting shares of our capital stock (consisting of common stock and Series A convertible preferred stock, on an as-converted basis), which is sufficient to take action to amend our Charter.We do not intend to solicit any proxies or consents from any other stockholders in connection with these actions.
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Section 228(a) of the Delaware General Corporation Law provides that any action that may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice if a consent in writing setting forth the action taken is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to take such action. In order to eliminate the costs and management time involved in obtaining proxies and in order to effect the above actions as early as possible in order to accomplish the purposes hereafter described, our Board of Directors (the “Board”), voted to utilize, and has obtained, the written consent of the Consenting Stockholders who own shares representing a majority of our outstanding capital stock entitled to vote (consisting of common stock and Series A convertible preferred stock, on an as-converted basis), voting as a single class. The resolutions adopted in that written consent will not become effective before the date that is 20 days after the date on which this Information Statement is first mailed to stockholders. You are urged to read this Information Statement in its entirety for a description of the actions taken by the Consenting Stockholders.
Pursuant to Section 228(e) of the Delaware General Corporation Law, we are required to provide prompt notice of the taking of the corporate action without a meeting to the stockholders of record who have not consented in writing to such action. This Information Statement is intended to provide such notice. No dissenters’ or appraisal rights under the Delaware General Corporation Law are afforded to our stockholders as a result of the approval of the Amendment.
This Information Statement is being distributed pursuant to the requirements of Section 14(c) of the Exchange Act. The entire cost of furnishing this Information Statement will be borne by the Company. We will request brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of our common stock held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith.
Our executive offices are located at 2900 Polo Parkway, Midlothian, Virginia 23113, and our telephone number at that location is (804) 378-5100.
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AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Overview and General Effect of the Amendment
The Consenting Stockholders have adopted resolutions authorizing the Amendment. The adoption of the resolutions authorizes the Company to cause the Amendment to be filed with the Secretary of State of the State of Delaware (the “Secretary of State”). Upon acceptance by the Secretary of State, the Company’s authorized capital will consist of 190,000,000 shares of common stock and 20,000,000 shares of preferred stock.
Reasons for Approval of the Amendment
Our Board unanimously recommended that the stockholders approve the Amendment for the following reasons:
Availability. Of our 90 million currently authorized shares of common stock, 60,795,538 shares were outstanding as of the Record Date. Prior to the Record Date, after taking into account shares of common stock reserved for issuance under our outstanding stock options, warrants, Series A convertible preferred stock, convertible debt instruments, and pursuant to our 2008 Equity Incentive Compensation Plan (the “Plan”), we determined that we lacked a sufficient number of authorized and unissued shares of common stock to fully satisfy our various obligations to issue common stock under those securities and the Plan, in the unlikely event that we were required to do so simultaneously. In particular, if we were to issue all of the shares of common stock into which such outstanding securities were convertible or exercisable, as well as all 2,008,704 shares of common stock reserved for issuance under the Plan (but for which no awards have yet been granted), we would need an additional 952,403 shares of authorized common stock. Although we were aware of the need to authorize additional shares, in light of our plans to conduct a convertible debt and warrant financing, we chose to wait to increase our authorized capital stock until it was clear how many shares of common stock into and for which the proposed convertible debt would be convertible and the proposed warrants would be exercisable.
On the Record Date, we entered into a Securities Purchase Agreement, dated as of July 16, 2010, and described in the Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on July 22, 2010, (the “Purchase Agreement”). Pursuant to the Purchase Agreement, we sold to certain investors (the “Investors”), including Terry Phillips, our Chairman and one of the Consenting Stockholders, senior secured convertible promissory notes, Series A warrants, and Series B warrants for an aggregate purchase price of $5.5 million (collectively, the “Financing Securities”), each of which is, or may be in the future, convertible into or exercisable for common stock (the “Financing”). The Financing Securities are initially convertible or exercisable into a total of 25,522,042 shares of common stock. Pursuant to the Purchase Agreement, we agreed to authorize and reserve for issuance that number of shares of common stock which equals or exceeds 130% of the sum of the maximum number of shares issuable upon conversion or exercise of the Financing Securities. The Company and the Investors agreed to consummate the Financing notwithstanding our inability to reserve for issuance, or to issue, sufficient shares of authorized but unissued common stock upon the conversion or exercise of the Financing Securities. However, we agreed in the Purchase Agreement to prepare and file with the SEC this Information Statement in respect of the Written Consent, to distribute it to our stockholders and to file the Amendment with the Secretary of State as soon as possible.
In addition to satisfying a requirement under the Purchase Agreement, the increase of our authorized shares of common stock pursuant to the Amendment would enable our Board, from time to time, to issue additional shares of our common stock for such purposes and such consideration as our Board may approve without further approval of our stockholders, except as may be required by law or the rules of any national securities exchange or association on which our shares of common stock are at the time listed. As is true for shares presently authorized, common stock authorized by the Amendment may, when issued, have a dilutive effect on the equity and voting power of existing holders of common stock. The Company has no current plans to issue the additional shares of common stock that are the subject of the Amendment, other than with
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respect to the Financing Securities, our existing warrants, convertible debt instruments, Series A convertible preferred stock and stock options that are outstanding or available for future grant pursuant to the Plan, or any other existing obligation.
The effective increase in the number of authorized, unissued shares of our common stock may be construed as having an anti-takeover effect by permitting the issuance of shares to purchasers who might oppose a hostile takeover bid or oppose any efforts to amend or repeal certain provisions of our Charter or by-laws. Such a use of these additional authorized shares could render more difficult, or discourage, an attempt to acquire control of the Company through a transaction opposed by our Board. Our management could use the additional shares to resist or frustrate a third-party transaction providing an above-market premium that is favored by a majority of the stockholders. We do not currently have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences.
There are no preemptive rights with respect to our common stock. The additional shares to be authorized after the Amendment would have powers, preferences and rights identical to the currently outstanding shares.
Interest of Certain Persons in Matters to be Acted Upon
Directors and Officers. The Company’s Chairman and one of the Consenting Stockholders, Terry Phillips, is a party to the Purchase Agreement. The Amendment is necessary to comply with the terms of the Purchase Agreement and will allow the Notes and Warrants purchased by the Investors, including Mr. Phillips, to be fully converted or exercised pursuant to their terms, if the Investors choose to do so.
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OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known to us regarding the beneficial ownership of our common stock as of July 16, 2010 by:
• | each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock on July 16, 2010; |
• | each of our current executive officers and directors; and |
• | all executive officers and directors as a group. |
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
Beneficial ownership is determined in accordance with the rules of the SEC, and is based on a total of 60,795,538 shares of our common stock outstanding as of July 16, 2010. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options, warrants or rights held by that person that are currently exercisable, or exercisable, convertible or issuable within 60 days of July 16, 2010, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned | Approximate Percentage of Outstanding Common Stock | ||||||
Executive Officers and Directors | ||||||||
Terry Phillips(2) | 18,945,906 | 30.0 | % | |||||
Melanie Mroz | 3,214,459 | 5.3 | % | |||||
Reba McDermott | — | — | ||||||
David Buckel(3) | 145,000 | * | ||||||
Paul Eibeler(4) | 120,000 | * | ||||||
Louis M. Jannetty(5) | 160,000 | * | ||||||
All executive officers and directors as a group (6 persons) | 22,585,365 | 37.2 | % | |||||
Other 5% Stockholders | ||||||||
Greg Phillips | 10,394,900 | 17.1 | % | |||||
Intermezzo Establishment(6) | 5,000,000 | 8.2 | % | |||||
Hummingbird Management, L.L.C.(7) | 4,078,499 | 6.6 | % | |||||
Atlas II, LP(8) | 3,866,000 | 6.2 | % | |||||
FI Investment Group, LLC(9) | 3,808,523 | 5.9 | % | |||||
Paragon Investment Fund(10) | 5,000,000 | 8.2 | % |
* | Less than 1% |
(1) | Unless otherwise indicated, the address of the Beneficial Owner is c/o SouthPeak Interactive Corporation, 2900 Polo Parkway, Midlothian, Virginia 23113. |
(2) | Includes 1,160,093 shares of common stock issuable upon exercise of Series A warrants and 1,160,093 shares of common stock issuable upon conversion of senior secured convertible notes. |
(3) | Includes 115,000 shares of common stock issuable upon exercise of options. The address of Mr. Buckel is 1065 Admiral Crossing, Alpharetta, Georgia 30005. |
(4) | Includes 100,000 shares of common stock issuable upon exercise of options. The address of Mr. Eibeler is 41 Frost Creek Drive, Lattingtown, New York 11560. |
(5) | Includes 135,000 shares of common stock issuable upon exercise of options. The address of Mr. Jannetty is 10 Cordage Park Circle, Suite 235, Plymouth, Massachusetts 02360. |
(6) | The address of Intermezzo Establishment is Landstrasse 114,9495 Triefen, Liechtenstein. The foregoing information is derived from a Schedule 13D filed April 9, 2010. |
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(7) | Includes 1,350,030 shares of common stock issuable upon exercise of Class Y warrants, held by Hummingbird Value Fund, L.P. (“HVF”), Hummingbird Microcap Value Fund, L.P. (“Microcap Fund”), Hummingbird SPAC Partners, L.P. (“SPAC”), Hummingbird Concentrated Fund, L.P. (“Concentrated”) and Tarsier Nanocap Value Fund, L.P. (“Tarsier”, together with HVF, Microcap Fund, SPAC and Concentrated, the “Hummingbird Funds”). As investment manager of the Hummingbird Funds, Hummingbird Management, L.L.C. (“Hummingbird”) may be deemed to have the sole voting and investment authority over the shares of common stock and warrants owned by the Hummingbird Funds. The managing member of Hummingbird is Paul Sonkin. Mr. Sonkin, as the managing member and control person of Hummingbird, may be deemed to have the sole voting and investment authority over the shares of common stock and the warrants beneficially owned by Hummingbird. Hummingbird Capital, LLC (“HC”), as the general partner of each of the Hummingbird Funds, may be deemed to have the sole voting and investment authority over such shares and warrants owned by the Hummingbird Funds. Each of Hummingbird, Mr. Sonkin and HC disclaim any beneficial ownership of the shares of common stock and the warrants owned by the Hummingbird Funds. The business address of Hummingbird Management, L.L.C. is 145 East 57th Street, 8th Floor, New York, New York 10022. |
(8) | Includes 1,496,500 shares of common stock issuable upon exercise of Class Y warrants and Class Z warrants. Patty Shanley is the General Partner of Atlas II, L.P. and consequently may be deemed to be the beneficial owner of its holdings by virtue of controlling the voting and dispositive powers of Atlas II, L.P. The business address of Atlas II, L.P. is 11470 Stone Corral Place, Gold River, CA 95670. The foregoing information is derived from a Schedule 13G filed June 19, 2009. |
(9) | Includes 3,093,333 shares of common stock issuable upon conversion of Series A convertible preferred stock and 500,000 shares of common stock issuable upon exercise of Class Y warrants. On June 5, 2008, FI Investment Group, LLC acquired 2,093,333 shares of Series A convertible preferred stock upon the conversion of outstanding principal and interest owed by SouthPeak Interactive, L.L.C., a subsidiary of the Company, at a purchase price of $1.00 per share. Frank Islam is the principal of FI Investment Group, LLC and, as such, has indirect voting and dispositive power over the shares of Series A convertible preferred stock and the warrants held by FI Investment Group, LLC. The business address of FI Investment Group, LLC is 1600 Tysons Boulevard, Suite 1150, McLean, Virginia 22102. |
(10) | The address of Paragon Investment Fund is Bahnhofstrasse 76, 8001 Zurich, Switzerland. The foregoing information is derived from a Schedule 13D filed April 9, 2010. |
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Where to Obtain More Information
We file reports, proxy statements and other information with the SEC as required by the Exchange Act. Stockholders can read our SEC filings, including this Information Statement, over the Internet at the SEC’s website athttp://www.sec.gov. Stockholders may also read and copy any document we file with the SEC at the SEC public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C., 20549. Stockholders may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330 and may also obtain copies of the materials described above at prescribed rates by writing to the SEC, Public Reference Section, 100 F Street, N.E., Washington, D.C., 20549.
If stockholders would like additional copies of this Information Statement or have questions about the Information Statement, you should contact us by telephone or in writing:
SOUTHPEAK INTERACTIVE CORPORATION
2900 Polo Parkway
Midlothian, Virginia 23113
Attention: Reba McDermott, Chief Financial Officer
Telephone: (804) 378-5100
One Information Statement is mailed to multiple stockholders sharing the same address unless we receive contrary instructions from one or more of the stockholders. Please send requests for additional Information Statements or SEC reports to the person and address noted above. If multiple stockholders sharing the same address are receiving multiple copies of Information Statements or SEC reports and only wish to receive one copy at such address, please send such request to the person and address noted above.
Dated: __________, 2010
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Annex 1
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SOUTHPEAK INTERACTIVE CORPORATION
SouthPeak Interactive Corporation, a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that:
1. The amended and restated certificate of incorporation of the Corporation is hereby amended by deleting the first sentence of ARTICLE IV in its entirety and inserting the following in lieu thereof:
The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Two Hundred Ten Million (210,000,000) shares, of which:
One Hundred Ninety Million (190,000,000) shares, par value $0.0001 per share, shall be shares of common stock (the “Common Stock”); and
Twenty Million (20,000,000) shares, par value $0.0001 per share, shall be shares of preferred stock (the “Preferred Stock”).
2. The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and by the written consent of stockholders of the Corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware.
Annex 1