UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 8.01. Other Events.
On January 30, 2023, 10X Capital Venture Acquisition Corp. III (“10X III”) filed a complaint in the Delaware Court of Chancery (the “Delaware Action”) to obtain a declaratory judgment that the Agreement and Plan of Merger, dated December 20, 2022 (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among 10X III, 10X Sparks Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of 10X III (“Merger Sub”), and Sparks Energy, Inc., a Delaware corporation (“Sparks”), constitutes a binding and enforceable contract between 10X III, Merger Sub and Sparks, requiring Sparks to take certain steps as may be reasonably necessary to consummate the business combination pursuant to the Merger Agreement (the “Business Combination”) as soon as practicable. 10X III has been informed by the management of Sparks that it is their belief that the Merger Agreement does not constitute a binding contract, and 10X III believes that filing the Delaware Action is necessary to enforce 10X III’s and its shareholders’ rights under the Merger Agreement, which 10X III intends to do.
Additional Information and Where to Find It
10X III intends to file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (as amended, the “Registration Statement”), which will include a preliminary proxy statement/prospectus of 10X III, in connection with the Business Combination. After the Registration Statement is declared effective, 10X III will mail a definitive proxy statement/prospectus and other relevant documents to its shareholders. 10X III’s shareholders and other interested persons are advised to read, when available, the preliminary proxy statement/prospectus, and amendments thereto, and the definitive proxy statement/prospectus in connection with 10X III’s solicitation of proxies for its shareholders’ meeting to be held to approve the Business Combination because the proxy statement/prospectus will contain important information about 10X III, Sparks and the Business Combination. The definitive proxy statement/prospectus will be mailed to shareholders of 10X III as of a record date to be established for voting on the Business Combination. Shareholders will also be able to obtain copies of the Registration Statement, each preliminary proxy statement/prospectus and the definitive proxy statement/prospectus, without charge, once available, at the SEC’s website at www.sec.gov. In addition, the documents filed by 10X III may be obtained free of charge from 10X III at https://www.10xspac.com/spacIII. Alternatively, these documents, when available, can be obtained free of charge by directing a request to: 10X Capital Venture Acquisition Corp. III, 1 World Trade Center, 85th Floor, New York, NY 10007. The information contained on or accessible through 10X III’s corporate website or any other website that it may maintain is not part of this Current Report on Form 8-K.
Participants in the Solicitation
10X III, Sparks and their respective directors, executive officers, other members of management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies of 10X III’s shareholders in connection with the Business Combination. Investors and security holders may obtain more detailed information regarding the names and interests in the Business Combination of 10X III’s directors and officers in 10X III’s filings with the SEC, including the Registration Statement to be filed with the SEC by 10X III, and such information and names of Sparks’ directors and executive officers will also be in the Registration Statement to be filed with the SEC by 10X III, which will include the proxy statement of 10X III for the Business Combination.
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Forward Looking Statements
Certain statements in this Current Report on Form 8-K may be considered forward-looking statements. Forward-looking statements generally relate to future events or 10X III’s or Sparks’ future financial or operating performance. For example, statements about the expected timing of the completion of the Business Combination, the benefits of the Business Combination, the competitive environment, and the expected future performance (including future revenue, pro forma enterprise value, and cash balance) and market opportunities of Sparks are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by 10X III and its management, and Sparks and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (2) the outcome of any legal proceedings that may be instituted against 10X III, Sparks, the combined company or others following the announcement of the Business Combination; (3) the inability to complete the Business Combination due to the failure to obtain approval of the shareholders of 10X III or to satisfy other conditions to closing; (4) changes to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the Business Combination; (5) the ability to meet stock exchange listing standards at or following the consummation of the Business Combination; (6) the risk that the Business Combination disrupts current plans and operations of Sparks as a result of the announcement and consummation of the Business Combination; (7) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (8) costs related to the Business Combination; (9) changes in applicable laws or regulations; (10) the possibility that Sparks or the combined company may be adversely affected by other economic, business and/or competitive factors; and (11) other risks and uncertainties described in 10X III’s registration statement on Form S-1 and Annual Report on Form 10-K, as amended from time to time, for the fiscal year ended December 31, 2021 and its subsequent Quarterly Reports on Form 10-Q, and in the Registration Statement to be filed by 10X III with the SEC in connection with the Business Combination.
Nothing in this Current Report on Form 8-K should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Neither 10X III nor Sparks undertakes any duty to update these forward-looking statements.
No Offer or Solicitation
This Current Report relates to a proposed business combination between 10X III and Sparks. This document is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy, any securities or the solicitation of any vote in any jurisdiction pursuant to the Business Combination or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Complaint in 10X Capital Venture Acquisition Corp. III, et. al. v. Sparks Energy, Inc., C.A. No. 2023-0099 (Del. Ch.). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
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.
Dated: February 1, 2023
| 10X CAPITAL VENTURE ACQUISITION CORP. III | ||
| By: | /s/ Hans Thomas | |
| Name: | Hans Thomas | |
| Title: | Chairman and Chief Executive Officer | |
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Exhibit 99.1
in the court of chancery of the state of delaware
| 10X CAPITAL VENTURE | ) | |||
| ACQUISITION CORP. III, a Cayman | ) | |||
| Islands company, and 10X SPARKS | ) | |||
| MERGER SUB, INC., a Delaware | ) | |||
| corporation, | ) | C.A. No. ____-___ | ||
| ) | ||||
| Plaintiffs, | ) | |||
| ) | ||||
| v. | ) | |||
| ) | ||||
| SPARKS ENERGY, INC., a Delaware | ) | |||
| corporation, | ) | |||
| ) | ||||
| Defendant. | ) | |||
VERIFIED COMPLAINT
Plaintiffs, 10X Capital Venture Acquisition Corp. III and 10X Sparks Merger Sub, Inc. (together, the “Plaintiffs”), by and through their undersigned counsel, upon knowledge as to themselves and upon information and belief as to all others, state as follows:
INTRODUCTION
1. Delaware enforces contracts. When a party signs a merger agreement, that act has legal consequences. Defendant in this case, who was advised by counsel, negotiated and signed a merger agreement but now claims that there is no binding contract and has refused to cooperate in proceeding toward a closing. Plaintiffs have therefore been forced to bring this action to determine their rights.
2. This is an action to obtain a declaratory judgment that the signed merger agreement attached hereto as Exhibit 1 constitutes a binding and enforceable contract between its signatories, Plaintiff 10X Capital Venture Acquisition Corp. III, Plaintiff 10X Sparks Merger Sub, Inc., and Defendant Sparks Energy, Inc., requiring Defendant to take certain steps as may be reasonably necessary to consummate the merger as soon as practicable.
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THE PARTIES
3. Plaintiff 10X Capital Venture Acquisition Corp. III (“Plaintiff Acquiror”) is a Cayman Islands exempted special purpose acquisition company formed for the purpose of acquiring one or more operating businesses through business combinations.
4. Plaintiff 10X Sparks Merger Sub, Inc. (“Plaintiff Merger Sub”) is a Delaware corporation formed for the purpose of executing the merger with Defendant.
5. Defendant Sparks Energy, Inc. (“Defendant”) is a Delaware corporation headquartered in Alabama specializing in coordinating restoration of electricity and power-line repair following natural disasters or other disruptions.
JURISDICTION
6. This Court has subject matter jurisdiction under 10 Del. C. § 6501, which provides this Court with jurisdiction “to declare rights, status and other legal relations whether or not further relief is or could be claimed,” and 8 Del. C. § 111, which provides this Court with jurisdiction over “[a]ny civil action to interpret, apply, enforce, or determine the validity of provisions” in the Agreement.
7. Personal jurisdiction is proper because Defendant consented to jurisdiction pursuant to Section 11.12 of the Agreement, titled in part “Jurisdiction,” which provides in relevant part that “[a]ny Action based upon, arising out of or related to this Agreement, or the transactions contemplated hereby, shall be brought in the Court of Chancery of the State of Delaware, or if such court lacks jurisdiction, the state or federal courts in the State of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court[.]”
8. On December 20, 2022, following months of negotiations between Plaintiff Acquiror and its counsel and Defendant and its counsel, Plaintiff Acquiror, Plaintiff Merger Sub, and Defendant executed the Agreement and Plan of Merger dated as of December 20, 2022, by and among 10X Capital Venture Acquisition Corp. III, 10X Sparks Merger Sub, Inc., and Sparks Energy, Inc. (the “Agreement”). The Agreement is attached hereto as Exhibit A. In connection with execution of the Agreement, Defendant identified (a) Echo Powerline Holdings, LLC, Echo Powerline LLC, and Sparks Unified, LLC as its wholly-owned subsidiaries, (b) NXS Powerline, Inc., OEDACK Energy LLC, 49% of Echo Power LLC, and Sparks OnPower, LLC as entities it would contribute or assign, and (c) certain vehicles and heavy equipment as assets it would contribute or assign.
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9. Ottis Jarrada Sparks, founder, president, and sole stockholder of Defendant, executed the Agreement on behalf of Defendant.
10. On December 21, 2022, following execution of the Agreement, Defendant issued a press release confirming its entry into the Agreement. Defendant stated: “Sparks Energy, Inc. (‘Sparks’), a power infrastructure services firm and a leader in power restoration management, has entered into a merger agreement with 10X Capital Venture Acquisition Corp. III (NYSE: VCXB) (‘10X III’); the newly combined company will be listed on the New York Stock Exchange under the ticker symbol ‘SPKS’.” This statement remains on Defendant’s public website in the section titled “Investors: Resources and Information.”
11. The Agreement is a 100-page contract negotiated at arm’s-length by Plaintiff Acquiror and Defendant, each with the assistance of legal counsel. In the Agreement, Plaintiff Acquiror is designated by the defined term “Acquiror,” and Defendant is designated by the defined term “Company.”
12. Section 8.01(a) of the Agreement, titled “Support of Transaction,” provides that the “Acquiror and the Company shall each, and shall cause their respective Subsidiaries to[ ] use commercially reasonable efforts to assemble, prepare, and file any information (and, as needed, to supplement such information) as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the Transaction.”
13. Section 8.01(c) of the Agreement further provides that the Plaintiff Acquiror and Defendant shall “take such other action as may reasonably be necessary or as another party may reasonably request to satisfy the conditions of Article IX or otherwise to comply with this Agreement and to consummate the Transactions as soon as practicable.”
14. Section 8.02(a) of the Agreement, titled in part “Preparation of Registration Statement,” provides that the “[e]ach of Acquiror and the Company shall furnish all information concerning itself and its Subsidiaries, officers, directors, and holders of equity securities as may reasonably be requested by the other party in connection with such actions and the preparation of the Registration Statement and the Proxy Statement.”
15. On January 23, 2023—more than one month after it executed the Agreement—Defendant, through Mr. Sparks, advised Plaintiffs that it had taken the position that the Agreement was not a valid, binding merger agreement.
16. Defendant accordingly instructed its officers, employees, accountants, and legal counsel to cease work on the preparation of the Registration Statement.
17. On January 27, 2023, the Plaintiff Acquiror delivered to Defendant and its counsel via email a letter providing Defendant notice in accordance with Section 10.01(b)(i) of the Agreement that Defendant has committed a willful breach of certain covenants set forth in the Agreement, including:
| a. | by failing to use its reasonable best efforts to make its officers and employees available to the Plaintiff Acquiror and its counsel in connection with the drafting of the Registration Statement by instructing its officers, employees, accountants, and legal counsel to cease work on the preparation of the Registration Statement; and |
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| b. | by failing to provide to the Plaintiff Acquiror financial statements for use in the Registration Statement. |
This letter is attached hereto as Exhibit B.
18. To date, Defendant has provided no response to this letter and has maintained its position that it is not bound by the Agreement.
COUNT ONE – DECLARATORY JUDGMENT
19. Plaintiffs repeat and reallege the foregoing allegations as if fully set forth herein.
20. Plaintiffs and Defendant negotiated the Agreement at arm’s-length and executed the Agreement on December 20, 2022. The executed Agreement is attached as Exhibit 1.
21. Defendant has instructed its officers, employees, accountants, and legal counsel to cease work on the preparation of the Registration Statement.
22. In connection with its refusal to progress toward closing of the merger in accordance with the terms of the Agreement, Defendant has taken the position that the Agreement is not a binding contract enforceable against Defendant.
23. Defendant has further taken the position that because the Agreement is not binding upon it, Defendant is not required to use commercially reasonable efforts to assemble, prepare and file any information as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the merger, and Defendant is not required to take such other action as may reasonably be necessary or as another party may reasonably request to satisfy closing conditions and to consummate the merger as soon as practicable.
24. Plaintiffs disagree with Defendant’s positions in light of the Agreement and take the positions that the Agreement is a binding contract enforceable against Defendant and that Section 8.01(a) of this Agreement requires Defendant to use commercially reasonable efforts to assemble, prepare and file any information as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the merger, and Section 8.01(c) of this Agreement requires Defendant to take such other action as may reasonably be necessary or as another party may reasonably request to satisfy closing conditions and to consummate the merger as soon as practicable.
25. Accordingly, there is a litigable dispute that requires resolution.
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PRAYER FOR RELIEF
Wherefore, Plaintiffs respectfully request that this Court grant judgment for Plaintiffs:
| A. | Declaring that the Agreement is a binding and enforceable contract between and among Plaintiffs and Defendant, and that the Agreement requires Defendant (1) to use commercially reasonable efforts to assemble, prepare and file any information as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the merger, and (2) to take such other action as may reasonably be necessary or as another party may reasonably request to satisfy closing conditions and to consummate the merger as soon as practicable. |
| B. | Awarding Plaintiffs their reasonable attorney’s fees and costs incurred in this action; and |
| C. | Awarding Plaintiffs any such additional and further relief as the Court may deem proper and just. |
| /s/ Raymond J. DiCamillo | |
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OF COUNSEL:
Blair G. Connelly Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1200
Dated: January 30, 2023 |
Raymond J. DiCamillo (#3188) Kevin M. Gallagher (#5337) Caroline M. McDonough (#6870) Nicholas F. Mastria (#7085) Richards, Layton & Finger, P.A. 920 North King Street Wilmington, Delaware 19801 (302) 651-7700
Attorneys for Plaintiffs |
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