Sentinel Energy Services Inc. (STNL)

FORM PREM14A | Proxy Statement - Merger or Acquistion (preliminary)
Sentinel Energy Services Inc. (Form: PREM14A, Received: 11/26/2018 06:11:52)
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Information Required in Proxy Statement

Schedule 14A Information

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant   ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Sentinel Energy Services Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

Class A Common Stock, par value $0.0001 per share, of Sentinel Energy Services Inc. and Class B Common Stock, par value $0.0001 per share, of Sentinel Energy Services Inc.

  (2)  

Aggregate number of securities to which transaction applies:

 

6,013,928 shares of Class A Common Stock and 24,550,760 shares of Class B Common Stock

  (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):

 

$10.04 per share of Common Stock (based on the average of the high and low prices of Sentinel Class A Common Stock reported on The Nasdaq Capital Market for such shares on November 16, 2018)

  (4)  

Proposed maximum aggregate value of transaction:

 

$431,269,468 (includes $124,400,000 of estimated cash consideration)

  (5)  

Total fee paid:

 

$52,269.86

  Fee paid previously with preliminary materials.
  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:

 

     

 

 

 


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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED NOVEMBER 26, 2018

SENTINEL ENERGY SERVICES INC.

700 Louisiana Street, Suite 2700

Houston, Texas 77002

PROXY STATEMENT FOR SPECIAL MEETING IN LIEU OF ANNUAL MEETING

OF STOCKHOLDERS OF SENTINEL ENERGY SERVICES INC.

To the stockholders of Sentinel Energy Services Inc.:

You are cordially invited to attend the special meeting in lieu of the 2018 annual meeting (the “special meeting”) of stockholders of Sentinel Energy Services Inc., a Delaware corporation (“Sentinel,” the “Company,” “we,” “us” or “our”), which will be held at            a.m., Central Time, on                , 2019, at the offices of Winston & Strawn LLP, at 2121 North Pearl Street, Suite 900, Dallas, Texas 75201.

Prior to the date of this proxy statement, we changed our jurisdiction of incorporation from the Cayman Islands to the State of Delaware (the “domestication”). As a result, on the effective date of the domestication, each of Sentinel’s issued and outstanding Class A ordinary shares (the “Class A ordinary shares”) and Class B ordinary shares (the “Class B ordinary shares”) automatically converted by operation of law into one share of Sentinel Class A common stock (as defined below) and one share of Sentinel Class B common stock (as defined below), respectively, and each of Sentinel’s outstanding warrants became warrants to acquire the corresponding number of shares of Sentinel Class A common stock (as defined below). Accordingly, all references to Sentinel in this proxy statement refer to the post-domestication company.

The special meeting will be held for the following purposes:

 

  (a)

Proposal No. 1 The Business Combination Proposal — to consider and vote upon a proposal to approve and adopt the transaction agreement and plan of merger, dated as of October 18, 2018 (the “Transaction Agreement”), by and among Sentinel, Strike Capital, LLC, a Texas limited liability company (“Strike”), OEP Secondary Fund (Strike), LLC (“Blocker”), One Equity Partners Secondary Fund, L.P. (“Blocker Seller”), the other equityholders of Strike party thereto (collectively, the “Unit Sellers” and together with the Blocker Seller, the “Sellers”), OEP-Strike Seller Representative, LLC (the “Seller Representative”) and a wholly-owned subsidiary of Sentinel (“Blocker Merger Sub”), which provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members (as defined in this proxy statement) retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock (as defined in this proxy statement), equal to the number of Company Units (as defined in this proxy statement) retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement (as defined in this proxy statement) (the transactions contemplated by the Transaction Agreement, the “business combination” and such proposal, the “business combination proposal”);

 

  (b)

The Charter Proposals to consider and vote upon three separate proposals (which we refer to, collectively, as the “charter proposals”) to approve, assuming the business combination proposal is approved and adopted, the following material differences between the current certificate of incorporation of Sentinel (the “Existing Charter”) and the proposed amended and restated certificate of incorporation (the “Proposed Charter”) of Strike, Inc. (“StrikeCo”), which, if approved, would take effect upon the Closing (the “Closing”):

 

  (1)

Proposal No. 2 Charter Proposal A to approve the provision in the Proposed Charter increasing the authorized share capital from $22,100 divided into 200,000,000 shares of


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  Sentinel Class A common stock, par value $0.0001 per share (“Sentinel Class A common stock”), 20,000,000 shares of Sentinel Class B common stock, par value $0.0001 per share (“Sentinel Class B common stock”), and 1,000,000 shares of preferred stock, par value $0.0001 per share (“preferred stock”), to authorized capital stock of 451,000,000 shares, consisting of (x) 450,000,000 shares of common stock, including 400,000,000 shares of Class A common stock, par value $0.0001 per share, of StrikeCo (“StrikeCo Class A common stock”), and 50,000,000 shares of Class B common stock, par value $0.0001 per share, of StrikeCo (“StrikeCo Class B common stock” and, together with StrikeCo Class A common stock, “StrikeCo common stock”) and (y) 1,000,000 shares of preferred stock (we refer to this as “charter proposal A”);

 

  (2)

Proposal No. 3 Charter Proposal B — to approve the provision in the Proposed Charter providing that each member of StrikeCo’s board of directors will be elected annually at each annual meeting of stockholders (or special meeting in lieu thereof) following the Closing (we refer to this as “charter proposal B”);

 

  (4)

Proposal No. 4 Charter Proposal C — to approve all other changes in connection with amending the Existing Charter, including, among other things, (1) changing the post-business combination corporate name from “Sentinel Energy Services Inc.” to “Strike, Inc.” and making StrikeCo’s corporate existence perpetual and (2) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Sentinel’s board of directors believe are necessary to adequately address the needs of StrikeCo after the business combination (we refer to this as “charter proposal C”).

 

  (c)

Proposal No. 5 The Stock Issuance Proposal — to consider and vote upon a proposal to approve, assuming the business combination proposal and the charter proposals are approved and adopted, for the purposes of complying with the applicable listing rules of The Nasdaq Stock Market (“Nasdaq”), the issuance of (x) shares of StrikeCo Class A common stock to (1) the Blocker Seller at the Closing, pursuant to the terms of the Transaction Agreement, (2) CSL Energy in a private placement (the “CSL Private Placement”) at the Closing, pursuant to the terms of the CSL Subscription Agreement (as defined in this proxy statement), (3) certain funds and accounts managed by Fidelity Management & Research Company (the “Fidelity Investors”) in a private placement (the “Fidelity Private Placement” and, together with the CSL Private Placement, the “Private Placement”), pursuant to the terms of the Fidelity Subscription Agreement (as defined in this proxy statement), (4) the Invacor Sellers (as defined in this proxy statement), pursuant to the terms of the Contribution Agreement and (5) to the Continuing Members who exchange the Company Units and an equal number of shares of StrikeCo Class B common stock, from time to time, held by them following the Closing, pursuant to and in accordance with, the terms of the Exchange Agreement (as defined in this proxy statement), and (y) shares of StrikeCo Class B common stock to the Continuing Members, pursuant to the terms of the Transaction Agreement, in each case as described in the accompanying proxy statement (we refer to this proposal as the “stock issuance proposal”);

 

  (d)

Proposal No. 6 The Director Election Proposal — to consider and vote upon a proposal to elect one director, assuming charter proposal B is not approved and our board of directors remains classified, to serve as a Class I director on StrikeCo’s board of directors for a term of three years expiring at the annual meeting of stockholders to be held in 2022 or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal. Assuming charter proposal B is approved and our board of directors is declassified, such nominee, if elected, will serve on our board of directors for a term expiring at the 2020 annual meeting of stockholders or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal (we refer to this proposal as the “director election proposal”);

 

  (e)

Proposal No. 7 The Incentive Award Plan Proposal — to consider and vote upon a proposal to approve, assuming the business combination proposal, the charter proposals and the stock issuance proposal are approved and adopted, the Strike, Inc. 2019 Equity and Incentive Compensation Plan, a copy of which is attached to the accompanying proxy statement as Annex D (we refer to this proposal


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  as the “incentive award plan proposal” and, collectively with the business combination proposal, the charter proposals and the stock issuance proposal, the “condition precedent proposals”);

 

  (f)

Proposal No. 8 The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, any of the condition precedent proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived (we refer to this proposal as the “adjournment proposal”).

Each of these proposals is more fully described in the accompanying proxy statement, which you are encouraged to read carefully.

Only holders of record of shares of Sentinel Class A common stock and shares of Sentinel Class B common stock (collectively, “shares of Sentinel common stock”) at the close of business on         , 2019 are entitled to notice of and to vote and have their votes counted at the special meeting and any adjournment of the special meeting. A complete list of Sentinel’s stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at Sentinel’s principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

We are providing the accompanying proxy statement and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournment of the special meeting. Whether or not you plan to attend the special meeting, we urge you to read the accompanying proxy statement (and any documents incorporated into the accompanying proxy statement by reference) carefully. Please pay particular attention to the section entitled “ Risk Factors ” beginning on page 46 of this proxy statement.

After careful consideration, Sentinel’s board of directors has determined that each of the business combination proposal, the charter proposals, the stock issuance proposal, the director election proposal, the incentive award plan proposal and the adjournment proposal are in the best interests of Sentinel and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of Sentinel’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Sentinel and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section entitled “ The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination ” in the accompanying proxy statement for a further discussion.

Sentinel’s initial stockholders (consisting of Sentinel Management Holdings, LLC, a Delaware limited liability company (the “Sponsor”), Marc Zenner and Jon A. Marshall) and its other officers and directors entered into letter agreements at the time of the Company’s initial public offering (the “IPO”), pursuant to which they agreed to vote the shares of Sentinel Class B common stock (“founder shares”) purchased by them, as well as any shares of Sentinel Class A common stock sold by Sentinel in the IPO (“public shares”) purchased by them during or after the IPO, in favor of the business combination proposal and for all other proposals presented to Sentinel’s stockholders in this proxy statement. As of the date hereof, Sentinel’s initial stockholders own 20.0% of its total outstanding shares of common stock.

Pursuant to Sentinel’s Existing Charter, a holder of public shares (“public stockholder(s)”) may request that Sentinel redeem all or a portion of its public shares for cash if the business combination is consummated. For the purposes of Section 9.2 of the Existing Charter and the Delaware General Corporation Law (the “DGCL”), the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and


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references in the accompanying proxy statement shall be interpreted accordingly. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to     a.m., Central Time, on                 , 2019, (a) submit a written request to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent (the “transfer agent”), that Sentinel redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through Depository Trust Company (“DTC”).

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal . If the business combination is not consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with the IPO (the “trust account”), calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us to pay income taxes, if any, divided by the number of then outstanding public shares. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.12 per public share. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See “ Special meeting — Redemption Rights ” in the accompanying proxy statement for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

The Transaction Agreement provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock (as defined in this proxy statement), equal to the number of Company Units retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement.

In connection with the business combination, assuming no redemptions by public shareholders, Sentinel is expected to acquire approximately 65%, of the issued and outstanding equity interests of Strike from the Unit Sellers, with those Unit Sellers who elect to retain certain of their Company Units instead of receiving all cash consideration (the “Continuing Members”) expected to retain the remaining approximately 35% of the issued and outstanding equity interests of Strike (such retained equity interests, the “Retained Company Units”). Prior to the Closing, the equity interests in Strike (referred to as “Company Units”) will be held by the Unit Sellers and indirectly by the Blocker Seller.


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Subject to the terms and conditions set forth in the Transaction Agreement, Sentinel has agreed to pay to the Sellers approximately $124.4 million in cash (the “Cash Consideration”) and issue to the Sellers an aggregate of approximately 30.6 million shares of StrikeCo common stock, with Blocker Seller receiving a portion of such cash and shares of StrikeCo Class A common stock and the Unit Sellers, who have elected to sell all of their Company Units receiving cash and the Continuing Members receiving cash and/or a number of shares of StrikeCo Class B common stock equal to the number of Retained Company Units held by them, in each case as calculated pursuant to the terms of the Transaction Agreement. Each Retained Company Unit, together with one share of StrikeCo Class B common stock, will be exchangeable in the future, subject to certain conditions, for either one share of StrikeCo Class A common stock or, at our election, the cash equivalent to the market value of one share of StrikeCo Class A common stock, subject to adjustment as provided in the Exchange Agreement. The Cash Consideration is expected to be funded from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; and (2) proceeds from a private placement of 13,200,000 shares of Sentinel Class A common stock at $10.00 per share, pursuant to the Subscription Agreements (the “Equity Offering”).

The consummation of the business combination is conditioned upon, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount (as defined in this proxy statement) to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “ The Business Combination Proposal — The Transaction Agreement .”

Under the Transaction Agreement, the approval of each of the condition precedent proposals is a condition to the consummation of the business combination. The adoption of each condition precedent proposal is conditioned on the approval of all of the condition precedent proposals. The director election proposal and the adjournment proposal are not conditioned on the approval of any other proposal. If our stockholders do not approve each of the condition precedent proposals, the business combination may not be consummated.

Approval of the business combination proposal, the stock issuance proposal, the incentive award plan proposal and the adjournment proposal require the affirmative vote of holders of a majority of the votes cast by Sentinel’s stockholders present in person or represented by proxy at the special meeting and entitled to vote thereon. Approval of each of charter proposal A and C requires the affirmative vote of holders of a majority of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting. Approval of charter proposal B requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting.

Pursuant to Sentinel’s Existing Charter, until the consummation of our initial business combination, only holders of shares of Sentinel Class B common stock can elect, remove and replace directors. Therefore, only holders of Sentinel Class B common stock will vote on the election of directors at the special meeting. The election of directors is decided by a plurality of the votes of the Sentinel Class B common stock present in person or represented by proxy at the special meeting and entitled to vote on the election of directors. This means that the director nominee will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors.

All Sentinel stockholders are cordially invited to attend the special meeting in person. To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a stockholder of record holding shares of Sentinel common stock, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank. A stockholder’s failure to vote by proxy or to vote in person at the special meeting will not be counted towards the number of shares of common stock required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will


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have no effect on the outcome of any vote on the proposals other than the charter proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the outcome of the vote on any of the proposals except for the charter proposals. Failure to vote by proxy or to vote in person or an abstention from voting on any of the charter proposals will have the same effective as a vote “AGAINST” such charter proposal.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card 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

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

 

    By Order of the Board of Directors,
                    , 2019             
       
      Krishna Shivram
      Chief Executive Officer

IF YOU RETURN YOUR PROXY CARD SIGNED AND WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (1) IF YOU HOLD SHARES OF SENTINEL CLASS A COMMON STOCK THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SHARES OF SENTINEL CLASS A COMMON STOCK AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (2) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (3) DELIVER YOUR SHARES OF SENTINEL CLASS A COMMON STOCK TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “SPECIAL MEETING — REDEMPTION RIGHTS” IN THE ACCOMPANYING PROXY STATEMENT FOR MORE SPECIFIC INSTRUCTIONS.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in the accompanying proxy statement, passed upon the merits or fairness of the Transaction Agreement or the transactions contemplated thereby, or passed upon the adequacy or accuracy of the accompanying proxy statement. Any representation to the contrary is a criminal offense.

This proxy statement is dated                , 2019 and is first being mailed to Sentinel stockholders on or about                , 2019.


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SENTINEL ENERGY SERVICES INC.

700 Louisiana Street, Suite 2700

Houston, Texas 77002

NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING

OF STOCKHOLDERS OF SENTINEL ENERGY SERVICES INC.

To the stockholders of Sentinel Energy Services Inc.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2018 annual meeting (the “special meeting”) of stockholders of Sentinel Energy Services Inc., a Delaware corporation (“Sentinel,” the “Company,” “we,” “us” or “our”), will be held at         a.m., Central Time, on         , 2019, at the offices of Winston & Strawn LLP, at 2121 North Pearl Street, Suite 900, Dallas, Texas 75201. You are cordially invited to attend the meeting, which will be held for the following purposes:

 

  (a)

Proposal No. 1 The Business Combination Proposal — to consider and vote upon a proposal to approve and adopt the transaction agreement and plan of merger, dated as of October 18, 2018 (the “Transaction Agreement”), by and among Sentinel, Strike Capital, LLC, a Texas limited liability company (“Strike”), OEP Secondary Fund (Strike), LLC (“Blocker”), One Equity Partners Secondary Fund, L.P. (“Blocker Seller”), the other equityholders of Strike party thereto (collectively, the “Unit Sellers” and together with the Blocker Seller, the “Sellers”), OEP-Strike Seller Representative, LLC (the “Seller Representative”) and a wholly-owned subsidiary of Sentinel (“Blocker Merger Sub”), which provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members (as defined in this proxy statement) retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock (as defined in this proxy statement), equal to the number of Company Units (as defined in this proxy statement) retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement (as defined in this proxy statement) (the transactions contemplated by the Transaction Agreement, the “business combination” and such proposal, the “business combination proposal”);

 

  (b)

The Charter Proposals — to consider and vote upon three separate proposals (which we refer to, collectively, as the “charter proposals”) to approve, assuming the business combination proposal is approved and adopted, the following material differences between the current certificate of incorporation of Sentinel (the “Existing Charter”) and the proposed amended and restated certificate of incorporation (the “Proposed Charter”) of Strike, Inc. (“StrikeCo”), which, if approved, would take effect upon the Closing (the “Closing”):

 

  (1)

Proposal No. 2 Charter Proposal A — to approve the provision in the Proposed Charter increasing the authorized share capital from $22,100 divided into 200,000,000 shares of Sentinel Class A common stock, par value $0.0001 per share (“Sentinel Class A common stock”), 20,000,000 shares of Sentinel Class B common stock, par value $0.0001 per share (“Sentinel Class B common stock”), and 1,000,000 shares of preferred stock, par value $0.0001 per share (“preferred stock”), to authorized capital stock of 451,000,000 shares, consisting of (x) 450,000,000 shares of common stock, including 400,000,000 shares of Class A common stock, par value $0.0001 per share, of StrikeCo (“StrikeCo Class A common stock”), and 50,000,000 shares of Class B common stock, par value $0.0001 per share, of StrikeCo (“StrikeCo Class B common stock” and, together with StrikeCo Class A common stock, “StrikeCo common stock”) and (y) 1,000,000 shares of preferred stock (we refer to this as “charter proposal A”);

 

  (2)

Proposal No. 3 Charter Proposal B — to approve the provision in the Proposed Charter providing that each member of StrikeCo’s board of directors will be elected annually at each


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  annual meeting of stockholders (or special meeting in lieu thereof) following the Closing (we refer to this as “charter proposal B”);

 

  (4)

Proposal No. 4 Charter Proposal C — to approve all other changes in connection with amending the Existing Charter, including, among other things, (1) changing the post-business combination corporate name from “Sentinel Energy Services Inc.” to “Strike, Inc.” and making StrikeCo’s corporate existence perpetual and (2) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Sentinel’s board of directors believe are necessary to adequately address the needs of StrikeCo after the business combination (we refer to this as “charter proposal C”).

 

  (c)

Proposal No. 5 The Stock Issuance Proposal — to consider and vote upon a proposal to approve, assuming the business combination proposal and the charter proposals are approved and adopted, for the purposes of complying with the applicable listing rules of The Nasdaq Stock Market (“Nasdaq”), the issuance of (x) shares of StrikeCo Class A common stock to (1) the Blocker Seller at the Closing, pursuant to the terms of the Transaction Agreement, (2) CSL Energy in a private placement (the “CSL Private Placement”) at the Closing, pursuant to the terms of the CSL Subscription Agreement (as defined in this proxy statement), (3) certain funds and accounts managed by Fidelity Management & Research Company (the “Fidelity Investors”) in a private placement (the “Fidelity Private Placement” and, together with the CSL Private Placement, the “Private Placement”), pursuant to the terms of the Fidelity Subscription Agreement (as defined in this proxy statement), (4) the Invacor Sellers (as defined in this proxy statement), pursuant to the terms of the Contribution Agreement and (5) to the Continuing Members who exchange the Company Units and an equal number of shares of StrikeCo Class B common stock, from time to time, held by them following the Closing, pursuant to and in accordance with, the terms of the Exchange Agreement (as defined in this proxy statement), and (y) shares of StrikeCo Class B common stock to the Continuing Members, pursuant to the terms of the Transaction Agreement (we refer to this proposal as the “stock issuance proposal”);

 

  (d)

Proposal No. 6 The Director Election Proposal — to consider and vote upon a proposal to elect one director, assuming charter proposal B is not approved and our board of directors remains classified, to serve as a Class I director on StrikeCo’s board of directors for a term of three years expiring at the annual meeting of stockholders to be held in 2022 or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal. Assuming charter proposal B is approved and our board of directors is declassified, such nominee, if elected, will serve on our board of directors for a term expiring at the 2020 annual meeting of stockholders or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal (we refer to this proposal as the “director election proposal”);

 

  (e)

Proposal No. 7 The Incentive Award Plan Proposal — to consider and vote upon a proposal to approve, assuming the business combination proposal, the charter proposals and the stock issuance proposal are approved and adopted, the Strike, Inc. 2019 Equity and Incentive Compensation Plan, a copy of which is attached to the accompanying proxy statement as Annex D (we refer to this proposal as the “incentive award plan proposal” and, collectively with the business combination proposal, the charter proposals and the stock issuance proposal, the “condition precedent proposals”);

 

  (f)

Proposal No. 8 The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, any of the condition precedent proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived (we refer to this proposal as the “adjournment proposal”).

The above matters are more fully described in the accompanying proxy statement, which also includes, as Annex A, a copy of the Transaction Agreement.  We urge you to read carefully the accompanying proxy statement in its entirety, including the Annexes and accompanying financial statements of Sentinel and Strike.


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Prior to the date of this proxy statement, we changed our jurisdiction of incorporation from the Cayman Islands to the State of Delaware (the “domestication”). As a result, on the effective date of the domestication, each of Sentinel’s issued and outstanding Class A ordinary shares (the “Class A ordinary shares”) and Class B ordinary shares (the “Class B ordinary shares”) automatically converted by operation of law into one share of Sentinel Class A common stock (as defined below) and one share of Sentinel Class B common stock (as defined below), respectively, and each of Sentinel’s outstanding warrants became warrants to acquire the corresponding number of shares of Sentinel Class A common stock (as defined below). Accordingly, all references to Sentinel in this proxy statement refer to the post-domestication company.

Only holders of record of Shares of Sentinel Class A common stock and shares of Sentinel Class B common stock (collectively, “shares of Sentinel common stock”) at the close of business on         , 2019 are entitled to notice of and to vote and have their votes counted at the special meeting and any adjournment of the special meeting. A complete list of Sentinel’s stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at Sentinel’s principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

Pursuant to Sentinel’s Existing Charter, a holder of public shares (“public stockholder(s)”) may request that Sentinel redeem all or a portion of its public shares for cash if the business combination is consummated. For the purposes of Section 9.2 of the Existing Charter and the Delaware General Corporation Law (the “DGCL”), the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in the accompanying proxy statement shall be interpreted accordingly. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to      a.m., Central Time, on                 , 2019, (a) submit a written request to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent (the “transfer agent”), that Sentinel redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through Depository Trust Company (“DTC”).

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal . If the business combination is not consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with the IPO (the “trust account”), calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us to pay income taxes, if any, divided by the number of then outstanding public shares. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.12 per public share. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See “ Special meeting — Redemption Rights ” in the accompanying proxy statement for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in


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concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Under the Transaction Agreement, the approval of each of the condition precedent proposals is a condition to the consummation of the business combination. The adoption of each condition precedent proposal is conditioned on the approval of all of the condition precedent proposals. The director election proposal and the adjournment proposal are not conditioned on the approval of any other proposal. If our stockholders do not approve each of the condition precedent proposals, the business combination may not be consummated. Furthermore, the consummation of the business combination is conditioned upon, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “ The Business Combination Proposal — The Transaction Agreement .”

Approval of the business combination proposal, the stock issuance proposal, the incentive award plan proposal and the adjournment proposal require the affirmative vote of holders of a majority of the votes cast by Sentinel’s stockholders present in person or represented by proxy at the special meeting and entitled to vote thereon. Approval of each of charter proposal A and C requires the affirmative vote of holders of a majority of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting. Approval of charter proposal B requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting.

Pursuant to Sentinel’s Existing Charter, until the consummation of our initial business combination, only holders of shares of Sentinel Class B common stock can elect, remove and replace directors. Therefore, only holders of Sentinel Class B common stock will vote on the election of directors at the special meeting. The election of directors is decided by a plurality of the votes of the Sentinel Class B common stock present in person or represented by proxy at the special meeting and entitled to vote on the election of directors. This means that the director nominee will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors.

Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the proposed business combination and related transactions and each of the proposals. We urge you to read the accompanying proxy statement carefully. If you have any questions or need assistance voting your shares of Sentinel common stock, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing STNL.info@morrowsodali.com. This notice of special meeting and the proxy statement are available at www.                         .com .

 

    By Order of the Board of Directors,
                    , 2019             
       
      Krishna Shivram
      Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held on                , 2019: This notice of special meeting and the related proxy statement will be available at www.                .com .


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TABLE OF CONTENTS

 

CERTAIN DEFINED TERMS

     1  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     7  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

     9  

SUMMARY OF THE PROXY STATEMENT

     21  

SELECTED HISTORICAL FINANCIAL INFORMATION OF SENTINEL

     39  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF STRIKE

     41  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     44  

COMPARATIVE SHARE INFORMATION

     45  

TICKER SYMBOLS AND DIVIDEND INFORMATION

     46  

RISK FACTORS

     47  

SPECIAL MEETING

     64  

THE BUSINESS COMBINATION PROPOSAL

     71  

THE CHARTER PROPOSALS

     113  

THE STOCK ISSUANCE PROPOSAL

     115  

THE DIRECTOR ELECTION PROPOSAL

     117  

THE INCENTIVE AWARD PLAN PROPOSAL

     118  

THE ADJOURNMENT PROPOSAL

     126  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     127  

OTHER INFORMATION RELATED TO SENTINEL

     147  

SENTINEL’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     155  

BUSINESS OF STRIKE

     160  

STRIKE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     176  

MANAGEMENT OF STRIKECO FOLLOWING THE BUSINESS COMBINATION

     199  

EXECUTIVE COMPENSATION

     204  

BENEFICIAL OWNERSHIP OF SECURITIES

     214  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     218  

DESCRIPTION OF SECURITIES

     227  

APPRAISAL RIGHTS

     238  

HOUSEHOLDING INFORMATION

     238  

TRANSFER AGENT AND REGISTRAR

     238  

SUBMISSION OF STOCKHOLDER PROPOSALS

     238  

FUTURE STOCKHOLDER PROPOSALS

     238  

WHERE YOU CAN FIND MORE INFORMATION

     241  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

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CERTAIN DEFINED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company,” the “Buyer” and “Sentinel” refer to Sentinel Energy Services Inc., and the term “post-combination company” refers to StrikeCo.

In this proxy statement:

A&R Registration Rights Agreement ” means that certain Amended and Restated Registration Rights Agreement, to be entered into at the Closing, by and among StrikeCo, the Continuing Members, the Blocker Seller, the Sponsor, Marc Zenner, and Jon A. Marshall, a form of which is attached to this proxy statement as Annex G.

A&R Regulations ” means the Third Amended and Restated Regulations of Strike.

Actions ” means, in connection with the Transaction Agreement, any pending or threatened judicial, administrative, investigative or arbitral action, suit, proceeding, investigation, audit, cause of action, examination, demand, hearing, claim, complaint, inquiry or dispute by or before any governmental authority.

“a djournment proposal ” means the proposal by the Company in this proxy statement that, if the Company’s board of directors wish to permit further solicitation of proxies based on the fact that there are not sufficient votes at the time of the special meeting to approve the condition precedent proposals (as defined below) or if one or more of the closing conditions under the Transaction Agreement are not satisfied, asks stockholders to consider and approve the adjournment of the special meeting to a later date.

Blocker ” means OEP Secondary Fund (Strike), LLC, a Delaware limited liability company.

Blocker Cash Payment ” means, in connection with the Transaction Agreement, an amount in cash equal to (a) the Cash Purchase Price (as defined in the Transaction Agreement) multiplied by (b) the number of Company Units held by the Blocker as of immediately prior to the Closing divided by the number of Company Units outstanding as of immediately prior to the Closing multiplied by (c) the percentage of Company Units held by the Blocker to be acquired for cash in accordance with Schedule 2.2(a) to the Transaction Agreement.

Blocker Interests ” means, in connection with the Transaction Agreement, the membership interests in Blocker.

Blocker Merger Sub ” means SES Blocker Merger Sub, LLC, a Delaware limited liability company, a wholly-owned subsidiary of Sentinel.

Blocker Seller ” means One Equity Partners Secondary Fund, L.P., a Cayman Islands exempted limited partnership.

business combination ” means the transactions contemplated by the Transaction Agreement, including the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity.

business combination proposal ” means the proposal by the Company in this proxy statement that the stockholders consider and vote to approve and adopt the Transaction Agreement.

Buyer Stockholder Approval ” means, in connection with the Transaction Agreement, a majority of votes cast by stockholders that are present in person or by proxy at the Company’s special meeting.

 

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Cash Purchase Price ” means, in connection with the Transaction Agreement, the positive amount equal to (a) the Estimated Purchase Price minus (b) (1) the aggregate amount of Retained Company Units multiplied by (2) $10.00.

charter proposals ” means the proposals in which Sentinel’s stockholders are being asked to consider and vote upon and to approve relating to StrikeCo’s Proposed Charter.

Closing ” means the closing of the business combination.

Closing Date ” means the date upon which the Closing occurs.

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

Company Units ” means, in connection with the Transaction Agreement, the equity interests in Strike.

condition precedent proposals ” means the business combination proposal, the charter proposals, the stock issuance proposal and the incentive award plan proposal.

Continuing Members ” means the Unit Sellers who have elected to retain certain of their Company Units instead of receiving all cash consideration.

Contribution Agreement ” means that certain Purchase and Contribution Agreement, dated October 18, 2018, by and among Strike LLC, Sentinel, CSL Holdings, and Invacor.

Covered Employees ” means, in connection with the Transaction Agreement, employees of Strike and its subsidiaries who remain employed by Strike, its subsidiaries or StrikeCo following the Closing.

Crossfire ” means Crossfire, LLC.

CSL Energy ” means one or more investment funds controlled by CSL Capital Management, L.P.

CSL Holdings ” means CSL Energy Holdings III Corp, LLC, a Delaware limited liability company.

CSL Subscription Agreement ” means that certain Subscription Agreement, dated as of October 18, 2018, by and between Sentinel and CSL Energy.

D&O Tail ” means, in connection with the Transaction Agreement, the irrevocable “tail” officers’ and directors’ liability insurance policy to be obtained by Strike and its Subsidiaries at or prior to the Closing.

DGCL ” means the General Corporation Law of the State of Delaware.

director election proposal ” means the proposal by the Company in this proxy statement that the stockholders consider and elect Jon A. Marshall as director of StrikeCo, who shall serve on StrikeCo’s Board of Directors for a term of three years expiring at the annual meeting of stockholders to be held in 2022, provided that, if StrikeCo’s Board of Directors becomes declassified, such nominee shall serve for a term expiring at the 2020 annual meeting of stockholders.

Disclosure Letter ” means (a) the disclosure schedules delivered by or on behalf of the Blocker, the Company and the Sellers to the Buyer in connection with the Transaction Agreement and (b) the disclosure schedules delivered by or on behalf the Buyer and the Blocker Merger Sub to the Blocker, the Sellers and the Company in connection with the Transaction Agreement.

 

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domestication ” means the contemplated deregistration of Sentinel under Article 206 of the Cayman Islands Companies Law (2018 Revision) and the subsequent domestication under Section 388 of the DGCL, pursuant to which Sentinel’s jurisdiction of incorporation is changed from the Cayman Islands to the State of Delaware.

DTC ” means the Depository Trust Company.

Equity Financing ” means the equity financing contemplated by the Subscription Agreements.

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

Exchange Agreement ” means that certain Exchange Agreement, a form of which is attached as Annex E to this proxy statement, to be entered into at the Closing, by and among Sentinel, Strike and the Continuing Members.

Existing Charter ” means the certificate of incorporation of Sentinel under the DGCL.

EY ” means Ernst & Young LLP, an independent registered public accounting firm.

Fidelity Investors ” means, in connection with the Fidelity Subscription Agreement, certain funds and accounts managed by Fidelity Management & Research Company.

Fidelity Subscription Agreement ” means that certain Subscription Agreement, dated as of October 18, 2018, by and between Sentinel and the Fidelity Investors.

founder shares ” means the 8,625,000 shares of Class B common stock that are currently owned by our initial stockholders.

GAAP ” means United States generally accepted accounting principles, consistently applied, as in effect from time to time.

HSR Act ” means the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended.

incentive award plan proposal ” means the proposal by the Company in this proxy statement that the stockholders consider and approve the Strike, Inc. 2019 Equity and Incentive Compensation Plan.

Indemnitees ” means, in connection with the Transaction Agreement, all of the past and present directors, officers and employees of Blocker, Strike and its subsidiaries.

initial stockholders ” means the Sponsor, Marc Zenner, and Jon A. Marshall.

Invacor ” means Invacor Pipeline and Process Solutions, LLC, a Delaware limited liability company.

Invacor Sellers ” means, in connection with the Contribution Agreement, Invacor and CSL Holdings.

Investment Company Act ” means the Investment Company Act of 1940, as amended.

Investor Representative ” means, in connection with the Investor Rights Agreement, OEP-Strike Seller Representative, LLC, in its capacity as representative of the Investors.

Investor Rights Agreement ” means that certain Investor Rights Agreement, to be entered into at the Closing, by and among the Blocker Seller and the Continuing Members (collectively and together with Blocker Seller, the “Investors”) and OEP-Strike Seller Representative, LLC, in its capacity as representative of the Investors, a form of which is attached as Annex F to this proxy statement.

 

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IPO ” or “ initial public offering ” means the Company’s initial public offering, consummated on November 7, 2017, through the sale of 34,500,000 units (including the issuance of 4,500,000 units as a result of the underwriters’ exercise of their over-allotment option) at $10.00 per unit.

IRA Directors ” means, in connection with the Investor Rights Agreement, the two director nominees that the Investors, acting through the Investor Representative, shall have the right to cause StrikeCo to nominate to StrikeCo’s board of directors.

Lock-Up Agreements ” means those certain Lock-Up Agreements between StrikeCo and the Continuing Members, to be entered into at the Closing.

Material Adverse Effect ” means, in connection with the Transaction Agreement, any effect, change, development, circumstance, occurrence or event that with all other effects, changes, developments, circumstances, occurrences or events has had a material adverse effect on the business, properties, assets, liabilities, results of operations or condition (financial or otherwise but not prospects) of Strike and its subsidiaries, taken as a whole, or Blocker, as applicable, subject to the exceptions listed in the Transaction Agreement.

Minimum Cash Amount ” means, in connection with the Transaction Agreement, the amount sufficient to pay the Cash Purchase Price, repay any indebtedness of Strike to the extent such indebtedness is required to be repaid pursuant to its terms as a result of the business combination, and pay all transaction expenses and phantom unit payments.

Minimum Threshold ” means, in connection with the Investor Rights Agreement, the requisite minimum of an aggregate 10% voting power that the Investors beneficially own in order to have the right to cause StrikeCo to nominate the IRA Directors.

Morrow ” means Morrow Sodali, proxy solicitor to the Company.

Nasdaq ” means the Nasdaq Capital Market.

NYSE” means the New York Stock Exchange.

Option Agreement ” means that certain Option Agreement, dated as of November 2, 2017, by and among Sentinel, CSL Energy Opportunities Fund III, L.P. and CSL Holdings.

Pate Holding ” means, collectively, Pate LP and Pate Holding Company 3, LLC.

Pate LP ” means Pate Holding Company LP.

Phantom Unit Plan ” means that certain Phantom Unit Plan adopted by the Board of Directors of Strike as of August 30, 2013.

Pipelogic ” means Pipelogic Services, L.L.C., a Texas limited liability company.

Pipelogic Interests ” means, in connection with the Contribution Agreement, all of the issued and outstanding membership interests in Pipelogic.

private placement warrants ” means the 5,933,333 warrants held by our Sponsor concurrently with our IPO, each of which is exercisable for one share of Class A common stock, in accordance with its terms.

 

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Proposed Charter ” means the proposed amended and restated certificate of incorporation of StrikeCo that will replace Sentinel’s Existing Charter, a form of which is attached hereto as Annex C, which will become the post-combination company’s certificate of incorporation upon the approval of the Charter Proposals, assuming the consummation of the business combination.

public stockholder(s) ” a holder of public shares.

public shares” means the shares of Sentinel Class A common stock sold by Sentinel in the IPO.

public warrants ” means the warrants included in the units issued in the Company’s IPO, each of which is exercisable for one share of Class A common stock, in accordance with its terms.

Registrable Securities ” means, in connection with the A&R Registration Rights Agreement, certain securities of StrikeCo that StrikeCo will be required to register for resale pursuant to the A&R Registration Rights Agreement.

Retained Company Units ” means, with respect to the Transaction Agreement, the issued and outstanding equity interests of Strike retained by the Continuing Members.

SEC ” means the United States Securities and Exchange Commission.

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

Sellers ” means the Unit Sellers and the Blocker Seller.

Seller Parties ” means, in connection with the Transaction Agreement, the Sellers and their respective successors and permitted assigns, officers, directors, managers, employees, affiliates and representatives.

Seller Representative ” means OEP-Strike Seller Representative, LLC, a Delaware limited liability company.

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

Sentinel Class B common stock ” means the shares of Class B common stock, par value $0.0001 per share, of Sentinel.

Sentinel stockholder ” means a holder of Sentinel’s common stock prior to the business combination.

Sponsor ” means Sentinel Management Holdings, LLC, a Delaware limited liability company.

“s tock issuance proposal ” means the proposal by the Company in this proxy statement that the stockholders consider and approve certain issuances of shares of StrikeCo Class A common stock and StrikeCo Class B common stock.

Strike ” means Strike Capital, LLC, a Texas limited liability company.

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

StrikeCo Class B common stock ” means the shares of Class B common stock, par value $0.0001 per share, of StrikeCo, each of which represents a non-economic voting interest in StrikeCo.

 

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Strike, Inc. 2019 Equity and Incentive Compensation Plan ” or the “ Incentive Plan ” means that certain Strike, Inc. 2019 Equity and Incentive Compensation Plan, a form of which is attached as Annex D to this proxy statement.

Strike LLC ” means Strike, LLC, a Texas limited liability company and wholly owned subsidiary of Strike.

Strike Units ” means units of Strike.

Strike Unitholders ” means the holders of units of Strike.

Subscription Agreements ” means, collectively, the CSL Subscription Agreement and the Fidelity Subscription Agreement.

Tax Receivable Agreement ” means that certain Tax Receivable Agreement, by and between StrikeCo, Strike, the Continuing Members, and the Seller Representative, to be entered into at the Closing, a form of which is attached to this proxy statement as Annex H.

Termination Date ” means, in connection with the Transaction Agreement, February 13, 2019, or such later date, if any, as Sentinel and Strike agree upon in writing.

Transaction Agreement ” means that certain Transaction Agreement, dated as of October 18, 2018, by and among the Company, Strike, Blocker, Blocker Seller, the other equityholders of Strike party thereto, the Seller Representative, and the Blocker Merger Sub.

transfer agent ” means Continental Stock Transfer & Trust Company.

trust account ” means the trust account of the Company that holds the proceeds from the Company’s IPO and the private placement of the private placement warrants.

Trustee ” means Continental Stock Transfer & Trust Company.

units ” means the units of the Company, each consisting of one share of Class A common stock and one-third of one warrant of the Company, whereby each whole public warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per whole share, sold in the IPO.

Unit Sellers ” means, in connection with the Transaction Agreement, equityholders of Strike other than Blocker.

Voting and Support Agreement ” means that certain Voting and Support Agreement, dated October 18, 2018, by and among Strike, the Company’s initial stockholders and Charles S. Leykum, which agreement, among other things, amends the letter agreement dated November 2, 2017, among the Company and its initial stockholders.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this proxy statement and in any document incorporated by reference herein that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The information included in this proxy statement in relation to Strike and StrikeCo has been provided by Strike and StrikeCo and their respective management teams, and forward-looking statements include statements relating to Strike’s and StrikeCo’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement and in any document incorporated by reference herein may include, for example, statements about:

 

   

our ability to complete the business combination, or, if we do not consummate the business combination, any other initial business combination;

 

   

satisfaction of conditions to the business combination, including approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Transaction Agreement;

 

   

the ability to obtain and/or maintain the listing of our Class A common stock on Nasdaq following the business combination;

 

   

our ability to raise financing in the future;

 

   

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

 

   

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the business combination, as a result of which they would then receive expense reimbursements;

 

   

our potential ability to obtain financing to complete the business combination;

 

   

our public securities’ potential liquidity and trading;

 

   

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

 

   

factors relating to the business, operations and financial performance of Strike, including:

 

   

its ability to successfully obtain contracts through the bid process;

 

   

its ability to effectively compete in the energy industry;

 

   

its reliance on some of its largest customers;

 

   

failure to manage or obtain a sufficient workforce, including failure to maintain relationships with subcontractors;

 

   

its ability to successfully acquire and integrate new operations, as well as continue to grow organically;

 

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factors relating to competition, economic factors, market conditions, weather and project location, some of which may beyond Strike’s control;

 

   

its inability to effectively manage projects, costs or project delays;

 

   

its inability or the inability of its customers to comply with regulatory requirements; and

 

   

other factors detailed under the section entitled “Risk Factors”

The forward-looking statements contained in this proxy statement and in any document incorporated by reference herein are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “ Risk Factors ” in this proxy statement and in our Annual Report on Form 10-K for the year ended December 31, 2017. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Before a stockholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the special meeting, it should be aware that the occurrence of the events described in the “ Risk Factors ” section and elsewhere in this proxy statement may adversely affect Sentinel, Strike, or, following the consummation of the business combination, StrikeCo.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

Prior to the date of this proxy statement, we changed our jurisdiction of incorporation from the Cayman Islands to the State of Delaware (the “domestication”). As a result, on the effective date of the domestication, each of Sentinel’s issued and outstanding Class A ordinary shares and Class B ordinary shares automatically converted by operation of law into one share of Sentinel Class A common stock and one share of Sentinel Class B common stock, respectively, and each of Sentinel’s outstanding warrants became warrants to acquire the corresponding number of shares of Sentinel Class A common stock. Accordingly, all references to Sentinel in this proxy statement refer to the post-domestication company.

 

Q:

Why am I receiving this proxy statement?

 

A:

Sentinel is proposing to consummate a business combination with Strike. Sentinel and Strike have entered into the Transaction Agreement, the terms of which are described in this proxy statement. A copy of the Transaction Agreement is attached to this proxy statement as Annex A. Sentinel urges its stockholders to read the Transaction Agreement in its entirety. The Transaction Agreement, provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock equal to the number of Company Units retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement, all of which is referred to, along with the other transactions contemplated by the Transaction Agreement, as the “business combination.”

Consummation of the business combination requires the approval of holders of at least a majority of the outstanding shares of Sentinel common stock that are voted in person or represented by proxy at the special meeting and entitled to vote thereon.

On the effective date of the business combination, each currently issued and outstanding share of Sentinel Class A common stock and Sentinel Class B common stock will convert into one share of StrikeCo Class A common stock in accordance with the terms of the Existing Charter. StrikeCo will also issue shares of StrikeCo Class B common stock. In addition, each of Sentinel’s outstanding whole warrants will entitle the holder thereof to purchase one share of StrikeCo Class A common stock in accordance with its terms.

Similarly, before the Closing, each outstanding unit of Sentinel (each of which consists of one share of Sentinel Class A common stock and one-third of one warrant to purchase one share of Sentinel Class A common stock) will be separated into its component common stock and warrant.

THE VOTE OF STOCKHOLDERS IS IMPORTANT. STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT.

 

Q:

Why is Sentinel proposing the business combination?

 

A:

Sentinel was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.

Strike, a Texas limited liability company established in 2003, is a nationwide provider of end-to-end pipeline and facilities infrastructure solutions. Strike offers a full complement of integrated maintenance, integrity, repair, construction, and technical services to its highly diversified, long-standing client base, which includes some of the largest midstream and upstream companies in North America. Strike’s broad

 

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range of services includes installation and maintenance of pipelines and associated facilities, integrity testing, instrumentation, electrical fabrication and technical services for the management and operation of midstream assets. In addition, Strike offers engineering support and other professional services. With more than 30 local service locations across key U.S. energy markets, Strike offers nationwide asset maintenance and service coverage to its clients to provide a single, unified solution for maintaining and servicing their entire asset footprint. Strike also provides large-scale pipeline and facilities construction services, with a particular focus on highly technical and complex installation techniques. Strike’s installation capabilities provide its clients with a single service provider for the full scope of their infrastructure needs from initial construction through an asset’s full life cycle.

Strike operates through two business segments: (1) Infrastructure and Integrity Services (“IIS”) and (2) Major Projects. Strike’s IIS segment provides end-to-end support from initial construction to ongoing integrity, maintenance, engineering, design, program management and operations. Strike’s Major Projects segment provides construction services for large-scale pipeline and facility construction projects across the United States.

Strike’s “safety first” culture is at the core of its operations and service offerings. Coupled with its high standards of quality and environmental stewardship, the leadership team’s commitment to safety ensures quick, safe and reliable service. For clients, Strike’s investment in safety education and enforcement translates to a decreased risk of financial, legal, and reputational repercussions.

See “The Business Combination Proposal — Sentinel’s Board of Directors’ Reasons for Approval of the Business Combination.”

 

Q:

What will Strike’s equityholders receive in return for the acquisition of Strike by Sentinel?

 

A:

Subject to the terms and conditions of the Transaction Agreement, upon completion of the business combination, Sentinel has agreed to pay to the Sellers approximately $124.4 million in cash (the “Cash Consideration”) and issue to the Sellers an aggregate of approximately 30.6 million shares of StrikeCo common stock, with Blocker Seller receiving a portion of such cash and shares of StrikeCo A common stock and the Unit Sellers receiving a portion of such cash and/or a number of shares of StrikeCo Class B common stock equal to the number of Retained Company Units held by them, in each case, as calculated pursuant to the terms of the Transaction Agreement. Pursuant to the Exchange Agreement, each Retained Company Unit, together with one share of StrikeCo Class B common stock, will be exchangeable in the future, subject to certain conditions, for either one share of StrikeCo Class A common stock, or, at StrikeCo’s election, the cash equivalent to the market value of one share of StrikeCo Class A common stock, subject to adjustment as provided in the Exchange Agreement. The Cash Consideration is expected to be funded from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; and (2) proceeds from a private placement of 13,200,000 shares of Sentinel Class A common stock at $10.00 per share, pursuant to the Subscription Agreements (the “Equity Offering”).

 

Q:

What are the principal differences between StrikeCo Class A common stock and StrikeCo Class B common stock?

 

A:

After the business combination, the StrikeCo Class A common stock and StrikeCo Class B common stock will constitute all of the classes of StrikeCo common stock and will possess all voting power for the election of directors of StrikeCo and all other matters requiring stockholder action. The StrikeCo Class A common stock and StrikeCo Class B common stock will at all times vote together as one class on all matters submitted to a vote of the stockholders of StrikeCo, which shares of StrikeCo Class A common stock and StrikeCo Class B common stock each are entitled to one vote per share. The principal difference between the StrikeCo Class A common stock and StrikeCo Class B common stock is that the StrikeCo Class B common stock will not be entitled to receive dividends, if declared by StrikeCo’s board of directors, or to

 

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  receive any portion of any assets in respect of such shares upon the liquidation, dissolution, distribution of assets or winding-up of the post-business combination company. In addition, upon the conversion or cancellation of the Company Units held by the Continuing Members pursuant to the Exchange Agreement for shares of StrikeCo Class A common stock, the corresponding shares of StrikeCo Class B common stock automatically will be cancelled for no consideration.

 

Q:

What equity stake will current Sentinel stockholders hold in StrikeCo immediately after the consummation of the business combination?

 

A:

It is anticipated that, upon completion of the business combination, the ownership interests in StrikeCo will be as set forth in the table below.

 

     Assuming No
Redemptions 
of Public
Shares
    Assuming
Maximum

Redemptions of
Public
Shares (1)
 

Sentinel’s public stockholders

     39     3

Initial Stockholders

     10     15

CSL Energy

     4     7

Fidelity Investors

     12     20

Sellers

     35     55

 

  (1)

Assumes that holders of 32,632,412 shares of Sentinel Class A common stock exercise their redemption rights (maximum redemptions scenario based on $348,956,985 held in trust as of September 30, 2018 and a redemption price of approximately $10.12 per share).

The ownership percentages set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the closing of the business combination) or (b) the issuance of any shares upon completion of the business combination under the Incentive Plan, a copy of which is attached to this proxy statement as Annex D, but does include the founder shares, which, on the effective date of the business combination, will convert into one share of StrikeCo Class A common stock in accordance with the terms of the Existing Charter. If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information .”

Furthermore, there are currently outstanding an aggregate of 17,433,333 warrants to acquire our shares of Sentinel Class A common stock, which comprise 5,933,333 private placement warrants held by our initial stockholders and 11,500,000 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the Closing for one share of Class A common stock and, following the consummation of the business combination, will entitle the holder thereof to purchase one share of StrikeCo Class A common stock in accordance with its terms. Therefore, as of the date of this proxy statement, if we assume that each outstanding whole warrant is exercised and one share of StrikeCo Class A common stock is issued as a result of such exercise, with payment to Sentinel of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 17,433,333 shares, with approximately $200,483,330 paid to Sentinel to exercise the warrants.

 

Q:

What happens to the funds deposited in the trust account after consummation of the business combination?

 

A:

A total of $345,000,000, comprised of approximately $336,100,000 of the proceeds from the IPO, including approximately $12,075,000 of underwriters’ deferred discount, and $8,900,000 of the proceeds of the sale of

 

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  the private placement warrants were placed in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. As of September 30, 2018, there were investments and cash held in the trust account of $348,956,985. These funds will not be released until the earlier of the completion of our initial business combination or the redemption of our public shares if we are unable to complete an initial business combination by November 7, 2019, although we may withdraw the interest earned on the funds held in the trust account to pay income taxes.

 

Q:

What happens if a substantial number of the public stockholders vote in favor of the business combination proposal and exercise their redemption rights?

 

A:

Sentinel’s public stockholders may vote in favor of the business combination and exercise their redemption rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are reduced as a result of redemptions by public stockholders.

However, the consummation of the business combination is conditioned upon, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement.

In addition, with fewer public shares and public stockholders, the trading market for StrikeCo Class A common stock may be less liquid than the market for shares of Sentinel common stock was prior to consummation of the business combination and StrikeCo may not be able to meet the listing standards for Nasdaq or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into StrikeCo’s business will be reduced.

 

Q:

What conditions must be satisfied to complete the business combination?

 

A:

Unless waived by the parties to the Transaction Agreement, and subject to applicable law, the consummation of the business combination is subject to a number of conditions set forth in the Transaction Agreement including, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “The Business Combination Proposal — The Transaction Agreement.”

 

Q:

What happens if the business combination is not consummated?

 

A:

If we are not able to complete the business combination with Strike or another initial business combination by November 7, 2019, we will cease all operations except for the purpose of winding up and redeeming our public shares and liquidating the trust account, in which case our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

Q:

When do you expect the business combination to be completed?

 

A:

It is currently anticipated that the business combination will be consummated as soon as practicable following the Sentinel special meeting, which is set for                 , 2019; however, such meeting could be adjourned if the adjournment proposal is adopted by our stockholders at the special meeting and we elect to adjourn the special meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, each of the condition precedent proposals has not been approved. For a description of the conditions for the completion of the business combination, see “ The Transaction Agreement — Conditions to the Closing of the Business Combination .”

 

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Q:

What proposals are stockholders being asked to vote upon?

 

A:

Under the Transaction Agreement, the approval of the business combination proposal, the charter proposals, the stock issuance proposal and the incentive award plan proposal (which we sometimes refer to as the “condition precedent proposals”) are conditions to the consummation of the business combination. If our public stockholders do not approve each of the condition precedent proposals, then the business combination may not be consummated.

The stockholders are also being asked to elect Jon A. Marshall as a member of StrikeCo’s board of directors. Pursuant to our Existing Charter, until the closing of our business combination, only holders of shares of Sentinel Class B common stock have a right to vote on the election of directors. Therefore, only holders of shares of Sentinel Class B common stock will vote on the director election proposal.

In addition to the foregoing proposals, the stockholders also may be asked to consider and vote upon a proposal to adjourn the special meeting to a later date or dates to permit further solicitation and vote of proxies if (1) based upon the tabulated vote at the time of the special meeting, each of the condition precedent proposals has not been approved and/or (2) Sentinel determines that one or more of the closing conditions under the Transaction Agreement has not been satisfied. See “ The Adjournment Proposal .”

Sentinel will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement contains important information about the business combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

After careful consideration, Sentinel’s board of directors has determined that the business combination proposal, each of the charter proposals, the stock issuance proposal, the director election proposal, the incentive award plan proposal and the adjournment proposal are in the best interests of Sentinel and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of Sentinel’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Sentinel and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section entitled “ The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination ” for a further discussion.

THE VOTE OF STOCKHOLDERS IS IMPORTANT. STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT.

 

Q:

What material negative factors did Sentinel’s board of directors consider in connection with the business combination?

 

A:

Although the Sentinel board of directors believes that the acquisition of Strike will provide Sentinel stockholders with an opportunity to participate in a combined company with significant growth potential, market share and iconic brands, the board of directors did consider certain potentially material negative factors in arriving at that conclusion, such as the risk that stockholders would not approve the business combination and the risk that a significant number of stockholders would exercise their redemption rights. These factors are discussed in greater detail in the section entitled “The Business Combination Proposal — Sentinel’s Board of Director’s Reasons for Approval of the Business Combination ,” as well as in the section entitled “ Risk Factors — Risks Relating to Strike’s Business and Industry .”

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that Sentinel redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in

 

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  this proxy statement. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the trust account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act, will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Our initial stockholders entered into insider letter agreements, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination.

The consummation of the business combination is conditioned upon, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “ The Business Combination Proposal — The Transaction Agreement .”

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a holder of public shares and wish to exercise your right to redeem your public shares, you must:

 

  (i)

(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to      a.m., Central Time, on                , 2019 (a) submit a written request to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent (the “transfer agent”), that StrikeCo redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

The address of the transfer agent is listed under the question “Who can help answer my questions?” below.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, directly and instruct them to do so.

Any holder of public shares will be entitled to request that their public shares be redeemed for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us to pay income taxes, if any, divided by the number of then outstanding public shares. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.12 per public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders, regardless of whether such public stockholders vote for or against the

 

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business combination proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public stockholders electing to redeem their public shares will be distributed promptly after the consummation of the business combination.

If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, at the address listed at the end of this section.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the special meeting. If you deliver your shares for redemption to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, and later decide prior to the special meeting not to elect redemption, you may request that Sentinel instruct its transfer agent to return the shares (physically or electronically). You may make such request by contacting Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, at the phone number or address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by Sentinel’s secretary prior to the vote taken on the business combination proposal at the special meeting. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, by      a.m., Central Time, on                 , 2019.

If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the business combination is consummated, StrikeCo will redeem public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the business combination.

If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any Sentinel warrants that you may hold.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, directly and instruct them to do so. If you fail to cause your public shares to be separated and delivered to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, by      a.m., Central Time, on                 , 2019 you will not be able to exercise your redemption rights with respect to your public shares.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

Whether the redemption is subject to U.S. federal income tax depends on the particular facts and circumstances. Please see the section entitled “The Business Combination Proposal — Certain U.S. Federal Income Tax Considerations.” We urge you to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

 

Q:

Do I have appraisal rights in connection with the proposed business combination?

 

A:

No. Neither Sentinel stockholders nor Sentinel warrant holders have appraisal rights in connection with the business combination under the DGCL.

 

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Q:

What do I need to do now?

 

A:

Sentinel urges you to read carefully and consider the information contained in this proxy statement, including the annexes, and to consider how the business combination will affect you as a stockholder and/or warrant holder of Sentinel. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.

 

Q:

How do I vote?

 

A:

If you are a holder of record of shares of Sentinel common stock on the record date, you may vote in person at the special meeting or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker, bank or nominee.

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Broker non-votes, while considered present for the purposes of establishing a quorum, will have no effect on a particular proposal. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

 

Q:

When and where will the special meeting be held?

 

A:

The special meeting will be held at the offices of Winston & Strawn LLP, at 2121 North Pearl Street, Suite 900, Dallas, Texas 75201 on             , 2019, at      a.m., Central Time, unless the special meeting is adjourned.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Sentinel has fixed                 , 2019 as the record date. If you were a stockholder of Sentinel at the close of business on the record date, you are entitled to vote on matters that come before the special meeting. However, a stockholder may only vote his or her shares if he or she is present in person or is represented by proxy at the special meeting.

 

Q:

How many votes do I have?

 

A:

Sentinel stockholders are entitled to one vote at the special meeting for each share of common stock held of record as of the record date. As of the close of business on the record date, there were outstanding 43,125,000 shares of Sentinel common stock, of which 34,500,000 were outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of Sentinel stockholders is necessary to hold a valid meeting. A quorum will be present at the Sentinel special meeting if one or more stockholders holding at least a majority of the paid up voting share

 

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  capital entitled to vote are present in person or by proxy. As of the record date for the special meeting, 21,562,501 shares of Sentinel common stock would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the special meeting?

 

A:

The following votes are required for each proposal at the special meeting:

 

   

Business combination proposal: The approval of the business combination proposal requires the affirmative vote for the proposal by the holders of a majority of shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the business combination proposal, vote at the special meeting.

 

   

Charter proposals: The approval of each of charter proposal A and C requires the affirmative vote of holders of a majority of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting. Approval of charter proposal B requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting.

 

   

Stock issuance proposal: The approval of the stock issuance proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the stock issuance proposal, vote at the special meeting.

 

   

Director election proposal: Pursuant to our Existing Charter, until the closing of our business combination, only holders of shares of Sentinel Class B common stock have a right to vote on the election of directors. Therefore, only holders of shares of Sentinel Class B common stock will vote on the director election proposal. The election of the director nominee pursuant to the director election proposal requires the affirmative vote of the holders of a plurality of the outstanding shares of Sentinel Class B common stock who, being present in person or represented by proxy and entitled to vote at the special meeting to vote on the election of directors, vote at the special meeting.

 

   

Incentive award plan proposal: The approval of the incentive award plan proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the incentive award plan proposal, vote at the special meeting.

 

   

Adjournment proposal: The approval of the adjournment proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the adjournment proposal, vote at the special meeting.

 

Q:

What are the recommendations of Sentinel’s board of directors?

 

A:

Sentinel’s board of directors believes that the business combination proposal and the other proposals to be presented at the special meeting are in the best interest of Sentinel’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” each of the separate charter proposals, “FOR” the stock issuance proposal, “FOR” the director nominee set forth in the director election proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the special meeting.

The existence of financial and personal interests of Sentinel’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Sentinel and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. These conflicts of interest include, among others, that if we do not consummate an initial business combination by November 7, 2019, we may be forced to liquidate and the 8,625,000 founder shares and 5,933,333 private placement warrants owned by our initial stockholders would be worthless. See the section entitled “ The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination ” for a further discussion.

 

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Q:

How do our Sponsor and the other initial stockholders intend to vote their shares?

 

A:

Pursuant to the terms of the Voting and Support Agreement, our initial stockholders and Charles S. Leykum agreed to vote their founder shares, as well as any public shares purchased by them, in favor of the business combination proposal and for all other proposals presented to Sentinel’s stockholders in this proxy statement. As of the date of this proxy statement, our initial stockholders own an aggregate of 8,625,000 shares of Sentinel common stock, which in the aggregate represents 20% of our total outstanding shares on the date of this proxy statement.

 

Q:

May our Sponsor and the other initial stockholders purchase public shares or warrants prior to the special meeting?

 

A:

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Sentinel or its securities, our initial stockholders, Strike and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Sentinel common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that (1) the proposals presented to stockholders for approval at the special meeting are approved and/or (2) that Sentinel satisfy the minimum cash condition. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement, 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.

Entering into any such arrangements may have a depressive effect on shares of Sentinel common stock. 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 he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Sentinel will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the special meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Q:

What happens if I sell my shares of Sentinel common stock before the special meeting?

 

A:

The record date for the special meeting is earlier than the date of the special meeting and earlier than the date that the business combination is expected to be completed. If you transfer your shares of Sentinel common stock after the applicable record date, but before the special meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such special meeting.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Stockholders may send a later-dated, signed proxy card to Sentinel’s secretary at the address set forth below so that it is received by Sentinel’s secretary prior to the vote at the special meeting (which is scheduled to take place on                 , 2019) or attend the special meeting in person and vote. Stockholders

 

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  also may revoke their proxy by sending a notice of revocation to Sentinel’s secretary, which must be received by Sentinel’s secretary prior to the vote at the special meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

Q:

What happens if I fail to take any action with respect to the special meeting?

 

A:

If you fail to take any action with respect to the special meeting and the business combination is approved by stockholders and consummated, you will become a stockholder and/or warrant holder of StrikeCo. If you fail to take any action with respect to the special meeting and the business combination is not approved, you will remain a stockholder and/or warrant holder of Sentinel. However, if you fail to take any action with respect to the special meeting, you will nonetheless be able to elect to redeem your public shares in connection with the business combination, provided you follow the instructions in this proxy statement for redeeming your shares.

 

Q:

What should I do with my stock certificates, warrant certificates and/or unit certificates?

 

A:

Sentinel stockholders who exercise their redemption rights must deliver their stock certificates to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, (either physically or electronically) prior to      a.m., Central Time, on                 , 2019.

Sentinel warrant holders should not submit the certificates relating to their warrants. Public stockholders who do not elect to have their public shares redeemed for the pro rata share of the trust account should not submit the certificates relating to their public shares.

Upon effectiveness of the business combination, holders of Sentinel units, common stock and warrants will receive units, Class A common stock and warrants of StrikeCo without needing to take any action and accordingly such holders should not submit the certificates relating to their units, common stock and warrants. In addition, before the Closing, each outstanding unit of StrikeCo (each of which consists of one share of StrikeCo Class A common stock and one-third of one warrant to purchase one share of StrikeCo Class A common stock) will be separated into its component Class A common stock and warrants.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of Sentinel common stock.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the business combination or if you need additional copies of the proxy statement, any document incorporated by reference herein or the enclosed proxy card you should contact:

Morrow Sodali LLC

470 West Avenue, Suite 3000

Stamford CT 06902

Tel: (800) 662-5200

Banks and brokers call collect: (203) 658-9400

E-mail: STNL.info@morrowsodali.com

 

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You also may obtain additional information about Sentinel from documents filed with the Securities and Exchange Commission (“SEC”) by following the instructions in the section entitled “ Where You Can Find More Information; Incorporation by Reference. ” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, at the address below prior to            a.m., Central Time, on                , 2019. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mark Zimkind

Continental Stock Transfer & Trust Company

One State Street Plaza, 30 th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the business combination, you should read this entire document carefully, including the Transaction Agreement, attached as Annex A to this proxy statement. The Transaction Agreement is the legal document that governs the business combination and the other transactions that will be undertaken in connection therewith. The Transaction Agreement is also described in detail in this proxy statement in the section entitled “The Transaction Agreement.” This proxy statement also includes forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.”

The Parties to the Business Combination

Sentinel Energy Services Inc.

Sentinel is a blank check company incorporated on June 5, 2017 as a Cayman Islands exempted company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Prior to the date of this proxy statement, Sentinel intends to change its jurisdiction of incorporation to Delaware . We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, Sentinel is a “shell company” as defined under the Exchange Act because we have no operations and nominal assets consisting almost entirely of cash.

Sentinel’s units, shares of common stock and warrants are currently listed on Nasdaq under the symbols “STNLU,” “STNL,” and “STNLW,” respectively. Sentinel intends to apply to list the shares of StrikeCo Class A common stock and warrants, upon the consummation of the business combination, on the NYSE under the symbols “STRK” and “STRK.W,” respectively.

The mailing address of Sentinel’s principal executive office is 700 Louisiana Street, Suite 2700, Houston, Texas 77002. Its telephone number is (281) 407-0686.

Strike Capital, LLC

Strike, a Texas limited liability company established in 2003, is a nationwide provider of end-to-end pipeline and facilities infrastructure solutions. Strike offers a full complement of integrated maintenance, integrity, repair, construction, and technical services to its highly diversified, long-standing client base, which includes some of the largest midstream and upstream companies in North America. Strike’s broad range of services includes installation and maintenance of pipelines and associated facilities, integrity testing, instrumentation, electrical fabrication, and technical services for the management and operation of midstream assets. In addition, Strike offers engineering support and other professional services. With more than 30 local service locations across key U.S. energy markets, Strike offers nationwide asset maintenance and service coverage to its clients to provide a single, unified solution for maintaining and servicing their entire asset footprint. Strike also provides large-scale pipeline and facilities construction services, with a particular focus on highly technical and complex installation techniques. Strike’s installation capabilities provide its clients with a single service provider for the full scope of their infrastructure needs from initial construction through an asset’s full life cycle.

Strike operates through two business segments: (1) Infrastructure and Integrity Services and (2) Major Projects. Strike’s IIS segment provides end-to-end support from initial construction to ongoing integrity, maintenance, engineering, design, program management and operations. Strike’s Major Projects segment provides construction services for large scale pipeline and facility construction projects across the United States.



 

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Strike’s “safety first” culture is at the core of its operations and service offerings. Coupled with its high standards of quality and environmental stewardship, the leadership team’s commitment to safety ensures quick, safe and reliable service. For clients, Strike’s investment in safety education and enforcement translates to a decreased risk of financial, legal, and reputational repercussions.

The mailing address of Strike’s principal executive office is 1800 Hughes Landing Blvd., Suite 500, The Woodlands, TX 77380 and its phone number is (888) 353-1444.

Summary of the Transaction Agreement

The Transaction Agreement provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members retaining the remaining issued and outstanding equity interests of Strike, and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock equal to the number of Company Units retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement.

In connection with the business combination, assuming no redemptions by public shareholders, Sentinel is expected to acquire approximately 65% of the issued and outstanding equity interests of Strike from the Unit Sellers, with those Unit Sellers who elected to retain certain of their Company Units instead of receiving all cash consideration (the “Continuing Members”) expected to retain the remaining approximately 35% of the issued and outstanding equity interests of Strike (such retained equity interests, the “Retained Company Units”). Prior to the Closing, the equity interests in Strike (referred to as “Company Units”) will be held by the Unit Sellers and indirectly by the Blocker Seller.

For additional information about the Transaction Agreement and the business combination and other transactions contemplated thereby, see “ The Business Combination Proposal — The Transaction Agreement .”

Business Combination Consideration

Subject to the terms and conditions set forth in the Transaction Agreement, Sentinel has agreed to pay to the Sellers approximately $124.4 million in cash (the “Cash Consideration”) and issue to the Sellers an aggregate of approximately 30.6 million shares of StrikeCo common stock, with Blocker Seller receiving a portion of such cash and shares of StrikeCo Class A common stock, the Unit Sellers who have elected to sell all of their Company Units receiving cash and the Continuing Members receiving cash and/or a number of shares of StrikeCo Class B common stock equal to the number of Retained Company Units held by them, in each case as calculated pursuant to the terms of the Transaction Agreement. Each Retained Company Unit, together with one share of StrikeCo Class B common stock, will be exchangeable in the future, subject to certain conditions, for either one share of StrikeCo Class A common stock or, at our election, the cash equivalent to the market value of one share of StrikeCo Class A common stock, subject to adjustment as provided in the Exchange Agreement. The Cash Consideration is expected to be funded from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; and (2) proceeds from a private placement of 13,200,000 shares of Sentinel Class A common stock at $10.00 per share, pursuant to the Subscription Agreements (the “Equity Offering”).



 

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Related Agreements

Exchange Agreement

At the Closing, StrikeCo, Strike and the Continuing Members will enter into the Exchange Agreement, substantially in the form attached as Annex E to this proxy statement. Pursuant to the Exchange Agreement, the Continuing Members and such other Strike Unitholders from time to time party thereto will be entitled to exchange any or all of the Retained Company Units held by them, and surrender an equal number of shares of StrikeCo’s Class B common stock for cancellation, in exchange for, at the option of StrikeCo, a number of shares of StrikeCo’s Class A common stock or the cash equivalent of such shares. For more information on the Exchange Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Exchange Agreement.”

Investor Rights Agreement

At the Closing, StrikeCo will enter into an Investor Rights Agreement (the “Investor Rights Agreement”) with the Blocker Seller and the Continuing Members (collectively and together with Blocker Seller, the “Investors”) and OEP-Strike Seller Representative, LLC, in its capacity as representative of the Investors (the “Investors Representative”), substantially in the form attached as Annex F to this proxy statement.

The Investor Rights Agreement provides that, so long as the Investors beneficially own, on a continuous basis, in the aggregate, at least 10% in voting power of the then outstanding capital stock of StrikeCo entitled to vote generally in the election of directors (the “Minimum Threshold”), the Investors, acting through the Investors Representative, shall have the right to cause StrikeCo, and, if so directed, StrikeCo will take all reasonable necessary action to nominate up to two director nominees (the “IRA Directors”) selected by the Investors (acting through the Investors Representatives) to the StrikeCo board of directors at each applicable annual or special meeting of the stockholders of StrikeCo at which directors are generally elected. The Investors’ right to nominate any person to the StrikeCo board of directors shall automatically terminate, and be of no further force and effect, on the date that the Investors beneficially own less than the Minimum Threshold; provided, further, that if the Investors beneficially own less than the Minimum Threshold, the IRA Directors will, at the request of remaining members of the StrikeCo board of directors, resign from the StrikeCo board of directors.

Further, the Investor Rights Agreement provides that, so long as the Investors beneficially own on a continuous basis, in the aggregate, at least 15% in voting power of the then outstanding capital stock of StrikeCo entitled to vote generally in the election of directors, StrikeCo will permit a representative of the Investors selected by the Investors, acting through the Investors Representative, to attend any and all meetings of the StrikeCo board of directors, in a non-voting capacity and, in this respect, StrikeCo shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided that the representative agrees to hold in confidence and trust all information so provided. For more information on the Investor Rights Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Investor Rights Agreement.”

Amended and Restated Registration Rights Agreement

At the Closing, StrikeCo, the Blocker Seller, the Continuing Members, the Sponsor and Marc Zenner and Jon A. Marshall, will enter into the A&R Registration Rights Agreement, substantially in the form attached as Annex G to this proxy statement, pursuant to which StrikeCo will have certain obligations to register for resale under the Securities Act of 1933, as amended (the “Securities Act”), all of the shares of the (1) founder shares; (2) private placement warrants; (3) shares of StrikeCo Class A common stock issued or issuable upon exercise of the private placement warrants; (4) shares of StrikeCo Class A common stock into which the Retained Company Units and StrikeCo Class B common stock may be exchanged pursuant to the Exchange Agreement; (5) any



 

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outstanding shares of StrikeCo Class A common stock or any other equity securities (including shares of StrikeCo Class A common stock issued or issuable upon the exercise or exchange of any equity security) of StrikeCo held by a party to the A&R Registration Rights Agreement or their affiliates as of the date of the A&R Registration Rights Agreement; and (6) other equity securities issued or issuable with respect to any Registrable Security, held by each of the parties thereto. Additionally, the A&R Registration Rights Agreement provides for customary demand and piggyback rights. The A&R Registration Rights Agreement will amend, restate and replace in its entirety the registration rights agreement, entered into by Sentinel, the Sponsor and Mr. Zenner in connection with Sentinel’s initial public offering. For more information on the Registration Rights Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Amended and Restated Registration Rights Agreement.”

Tax Receivable Agreement

At the Closing, StrikeCo, Strike, the Continuing Members and the Seller Representative will enter into the Tax Receivable Agreement, substantially in the form attached as Annex H to this proxy statement. The Tax Receivable Agreement will generally provide for the payment by StrikeCo to the Continuing Members of 85% of the net cash savings in respect of such Continuing Member, if any, in U.S. federal, state and local income tax that StrikeCo actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing as a result of the utilization of certain tax attributes of StrikeCo. StrikeCo will retain the benefit of the remaining 15% of these cash savings. For more information on the Tax Receivable Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Tax Receivable Agreement.”

Lock-Up Agreements

At the Closing, StrikeCo will enter into Lock-Up Agreements with the Continuing Members with respect to the shares of StrikeCo Class A common stock that may be issued to them pursuant to the Exchange Agreement, substantially in the form attached as Annex I to this proxy statement. Pursuant to the Lock-Up Agreements, each signatory thereto will agree that, from the completion of the transactions contemplated by the Transaction Agreement until the earliest of: (1) the first anniversary of the Closing Date (other than OEP, whose lock-up period is discussed below); and (2) the date following Closing Date on which StrikeCo completes a liquidation, merger, stock exchange or other similar transaction that results in all of StrikeCo’s stockholders having the right to exchange their shares of StrikeCo’s capital stock for cash, securities or other property (the period between the Closing Date and the earliest of clauses (1) and (2), the “Lock-Up Period”), such Continuing Member will not (1) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate a decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to shares of StrikeCo Class A common stock issued to them pursuant to the Exchange Agreement (such shares of StrikeCo Class A common stock, collectively, the “Lock-Up Shares”), (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Lock-Up Shares, in cash or otherwise, or (3) publicly announce any intention to effect any transaction specified in clause (1) or (2). Notwithstanding the foregoing, pursuant to the Lock-Up Agreements, each signatory thereto may sell or otherwise transfer any Lock-Up Shares to its respective equity holders or to any of its other affiliates, provided that the transferee thereof agrees to be bound by the restrictions set forth in the Lock-Up Agreements. For more information on the Lock-Up Agreements, please see the section entitled “The Business Combination Proposal — Related Agreements — Lock-Up Agreements.”

Subscription Agreements

In order to finance a portion of the Cash Consideration payable in the business combination and the costs and expenses incurred in connection therewith, Sentinel entered into the Subscription Agreements, copies of



 

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which are attached as Annexes J and K hereto, each dated as of October 18, 2018, with certain investors, including (1) one or more investment funds controlled by CSL Capital Management L.P. (“CSL Energy”), an energy services-focused private equity fund (the “CSL Subscription Agreement”) and (2) certain funds and accounts managed by Fidelity Management & Research Company (the “Fidelity Investors” and, collectively with CSL Energy, the “Subscribed Investors”) (the “Fidelity Subscription Agreement”), pursuant to which, among other things, Sentinel agreed to issue and sell in a private placement an aggregate of 13,200,000 shares of Sentinel Class A common stock to the Subscribed Investors for $10.00 per share, or an aggregate cash purchase price of $132.0 million (the “Private Placement”). The Private Placement is expected to close concurrently with the Closing. For more information on the Subscription Agreements, please see the section entitled “The Business Combination Proposal — Related Agreements — Subscription Agreements.”

Contribution Agreement

In connection with its entry into the Transaction Agreement, on October 18, 2018, Sentinel entered into the Contribution Agreement with Strike, LLC, a wholly owned subsidiary of Strike (“Strike LLC”), CSL Energy Holdings III Corp, LLC (“CSL Holdings”) and Invacor Pipeline and Process Solutions, LLC, an entity under common control with CSL Holdings (“Invacor” and, together with CSL Holdings, the “Invacor Sellers”), pursuant to which (1) immediately prior to the Closing, the Invacor Sellers have agreed to transfer all of the issued and outstanding membership interests (the “Pipelogic Interests”) in Pipelogic Services, L.L.C. (“Pipelogic”) to Sentinel in exchange for 1,800,000 shares of Sentinel Class A common stock at $10.00 per share and (2) immediately following the Closing, Sentinel has agreed to contribute the Pipelogic Interests to Strike LLC in exchange for 1,800,000 units of Strike. For more information on the Contribution Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Contribution Agreement.”

Voting and Support Agreement

In connection with its entry into the Transaction Agreement, on October 18, 2018, Sentinel’s initial stockholders, including the Sponsor, and Charles S. Leykum entered into the Voting and Support Agreement with Strike, a copy of which is attached as Annex M hereto. Pursuant to the Voting and Support Agreement, the initial stockholders and Mr. Leykum agreed to vote: (1) in favor of the adoption of the Transaction Agreement and approval of the business combination and other transactions contemplated by the Transaction Agreement; (2) against any actions that would result in a breach by Sentinel of any representations, warranties, covenants, obligations or agreements contained in the Transaction Agreement; (3) in favor of the proposals set forth in Sentinel’s proxy statements/prospectus on Form S-4 related to the domestication and this proxy statement (including in favor of the election of designees of the board of directors of Sentinel as set forth in the Voting and Support Agreement); (4) for any proposal to adjourn or postpone the applicable special meeting of stockholders to approve matters related to Sentinel’s domestication and the business combination to a later date if there are not sufficient votes for approval of such matters, (5) against any alternative proposals or transactions to the domestication and the business combination; and (6) in favor of any proposal submitted to shareholder for approval in connection with the domestication.

Under the Voting and Support Agreement, the initial stockholders and Mr. Leykum agreed to waive any and all rights such party has or may have (including pursuant to any side letters between the initial stockholders and Sentinel or otherwise) to receive any additional warrants or any equity securities of Sentinel or any of its subsidiaries, whether in connection with the repayment of any loans to Sentinel or otherwise. For more information on the Voting and Support Agreement, please see the section entitled “The Business Combination Proposal — Related Agreements — Voting and Support Agreement.”



 

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Employment Agreements

Prior to the completion of the business combination, StrikeCo expects to enter into employment agreements with certain of its key executive officers. For descriptions of the employment agreements, see the section entitled “ Management of StrikeCo Following the Business Combination .”

Equity Ownership Upon Closing

As of the date of this proxy statement, there are 43,125,000 shares of Sentinel common stock outstanding, comprised of 34,500,000 shares of Sentinel Class A common stock and 8,625,000 shares of Sentinel Class B common stock, of which our Sponsor owns 8,550,000 shares of Sentinel Class B common stock and Marc Zenner and Jon A. Marshall own an aggregate of 75,000 shares of Sentinel Class B common stock. On the effective date of the business combination, each currently issued and outstanding share of Sentinel Class A common stock and Sentinel Class B common stock will convert into one share of StrikeCo Class A common stock in accordance with the terms of the Existing Charter. StrikeCo will also issue shares of StrikeCo Class B common stock.

It is anticipated that, upon completion of the business combination, the ownership interests in StrikeCo will be as set forth in the table below.

 

     Assuming No
Redemptions 
of Public
Shares
    Assuming
Maximum
Redemptions
of Public
Shares (1)
 

Sentinel’s public stockholders

     39     3

Initial Stockholders

     10     15

CSL Energy

     4     7

Fidelity Investors

     12     20

Sellers

     35     55

 

(1)

Assumes that holders of 32,632,412 shares of Sentinel Class A common stock exercise their redemption rights (maximum redemptions scenario based on $348,956,985 held in trust as of September 30, 2018 and a redemption price of approximately $10.12 per share).

The ownership percentages set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the closing of the business combination) or (b) the issuance of any shares upon completion of the business combination under the Incentive Plan, a copy of which is attached to this proxy statement, but does include the founder shares, which, on the effective date of the business combination, will convert into one share of StrikeCo Class A common stock in accordance with the terms of the Existing Charter. If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Furthermore, there are currently outstanding an aggregate of 17,433,333 warrants to acquire our shares of Sentinel Class A common stock, which comprise 5,933,333 private placement warrants held by our initial stockholders and 11,500,000 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the Closing for one share of Class A common stock and, following the domestication, will entitle the holder thereof to purchase one share of StrikeCo Class A common stock in accordance with its terms. Therefore, as of the date of this proxy statement, if we assume that each outstanding whole warrant is exercised



 

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and one share of StrikeCo Class A common stock is issued as a result of such exercise, with payment to Sentinel of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 17,433,333 shares, with approximately $200,483,330 paid to Sentinel to exercise the warrants.

Subject to certain limited exceptions, the founder shares will not be transferred, assigned or sold until the date that is one year after the date of the consummation of our initial business combination or earlier if, subsequent to our business combination, (1) the last sale price of our shares of Sentinel Class A common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (2) we consummate a subsequent liquidation, merger, share exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Proposals to be put to the Special meeting

The following is a summary of the proposals to be put to the special meeting.

The Business Combination Proposal

The Transaction Agreement provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock equal to the number of Company Units retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement.

In connection with the business combination, assuming no redemptions by public stockholders, Sentinel is expected to acquire approximately 65%, of the issued and outstanding equity interests of Strike from the Unit Sellers, and the Continuing Members are expected to retain the remaining approximately 35% of the issued and outstanding equity interests of Strike (such retained equity interests, the “Retained Company Units”). Prior to the Closing, the equity interests in Strike (referred to as “Company Units”) will be held by the Unit Sellers and indirectly by the Blocker Seller.

After consideration of the factors identified and discussed in the section entitled “ The Business Combination Proposal — Sentinel’s Board of Directors’ Reasons for Approval of the Business Combination ,” Sentinel’s board of directors concluded that the business combination met all of the requirements disclosed in the prospectus for its initial public offering, including that the business of Strike had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Transaction Agreement.

If any proposal is not approved by Sentinel’s stockholders at the special meeting, the Sentinel board of directors may submit the adjournment proposal for a vote.

For additional information, see “ The Business Combination Proposal ” section of this proxy statement.

The Charter Proposals

If the business combination proposal is approved and the business combination is to be consummated, Sentinel will amend its current certificate of incorporation (the “Existing Charter”), with an amended and restated



 

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certificate of incorporation (the “Proposed Charter”) of StrikeCo, in each case, under the Delaware General Corporation Law (the “DGCL”).

The Proposed Charter differs in certain material respects from the Existing Charter and we urge stockholders to carefully consult the information set out in the Section “ The Charter proposals ” (including the chart of material differences included therein) and the full text of the Proposed Charter of StrikeCo, attached hereto as Annex C.

Sentinel’s stockholders are being asked to consider and vote upon and to approve three separate proposals (collectively, the “charter proposals”) relating to StrikeCo’s Proposed Charter. The charter proposals are conditioned on the approval of the business combination proposal. Therefore, if the business combination proposal is not approved, the charter proposals will have no effect, even if approved by our public stockholders. A brief summary of each of the charter proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Charter of StrikeCo.

Charter Proposal A — Authorized Capital Stock

Assuming the business combination proposal is approved, our stockholders are also being asked to approve charter proposal A, which is, in the judgment of our board of directors, necessary to adequately address the needs of StrikeCo after the business combination. Under the Transaction Agreement, the approval of each of the charter proposals is a condition to the consummation of the business combination and therefore approval of this charter proposal A is a condition to the consummation of the business combination.

Charter proposal A is a proposal to approve the provision in the Proposed Charter increasing the authorized share capital from $22,100 divided into 200,000,000 shares of Sentinel Class A common stock of a par value of $0.0001 each, 20,000,000 shares of Sentinel Class B common stock of a par value of $0.0001 each and 1,000,000 shares of preferred stock of a par value of $0.0001 each, to authorized capital stock of 451,000,000 shares, consisting of (x) 450,000,000 shares of common stock, including 400,000,000 shares of StrikeCo Class A common stock, 50,000,000 shares of StrikeCo Class B common stock, and (y) 1,000,000 shares of preferred stock.

For additional information, see “ The Charter proposals ” section in this proxy statement.

Charter Proposal B — Declassification of the Board

Assuming the business combination proposal is approved, our stockholders are also being asked to approve charter proposal B, which is, in the judgment of our board of directors, necessary to adequately address the needs of StrikeCo after the business combination. Under the Transaction Agreement, the approval of each of the charter proposals is a condition to the consummation of the business combination and therefore approval of this charter proposal B is a condition to the consummation of the business combination.

Charter proposal B is a proposal to approve the provision in the Proposed Charter pursuant to which each member of StrikeCo’s board of directors will be elected annually at each annual meeting of stockholders (or special meeting in lieu thereof) following the Closing.

For additional information, see “ The Charter proposals ” section in this proxy statement.

Charter Proposal C — Approval of Other Changes in Connection with Adoption of the Proposed Charter

Assuming the business combination proposal is approved, our stockholders are also being asked to approve charter proposal C, which is, in the judgment of our board of directors, necessary to adequately address the needs



 

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of StrikeCo after the business combination. Under the Transaction Agreement, the approval of each of the charter proposals is a condition to the consummation of the business combination and therefore approval of this charter proposal C is a condition to the consummation of the business combination.

Charter proposal C is a proposal to approve all other changes relating to StrikeCo’s Proposed Charter as part of the business combination, including (1) changing the post-business combination corporate name from “Sentinel Energy Services Inc.” to “Strike, Inc.” and making StrikeCo’s corporate existence perpetual and (2) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Sentinel’s board of directors believe are necessary to adequately address the needs of StrikeCo after the business combination.

For additional information, see “The Charter Proposal” section of this proxy statement.

The Stock Issuance Proposal

Assuming the business combination proposal and each of the charter proposals are approved, our stockholders are also being asked to approve the stock issuance proposal.

Sentinel’s units, shares of common stock and public warrants are listed on Nasdaq and, as such, we are seeking stockholder approval of the issuance of (x) shares of StrikeCo Class A common stock to (1) the Blocker Seller at the Closing, pursuant to the terms of the Transaction Agreement, (2) CSL Energy in the CSL Private Placement at the Closing, pursuant to the terms of the CSL Subscription Agreement, (3) the Fidelity Investors in the Fidelity Private Placement, pursuant to the terms of the Fidelity Subscription Agreement, (4) the Invacor Sellers, pursuant to the terms of the Contribution Agreement and (5) to the Continuing Members who exchange the Company Units and an equal number of shares of StrikeCo Class B common stock, from time to time, held by them following the Closing, pursuant to and in accordance with, the terms of the Exchange Agreement, and (y) shares of StrikeCo Class B common stock to the Continuing Members, pursuant to the terms of the Transaction Agreement, in order to comply with the applicable listing rules of Nasdaq.

The number of shares of StrikeCo common stock that may be issued in connection with the stock issuance proposal is expected to be approximately 21.0 million shares of StrikeCo Class A common stock and 24.6 million shares of StrikeCo Class B common stock.

For additional information, see “ The Stock Issuance Proposal ” section of this proxy statement.

The Director Election Proposal

Our board of directors is currently divided into three classes, with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of our Class I director, Mr. Jon A. Marshall, will expire at the special meeting.

If charter proposal B is approved, our Proposed Charter will provide for the declassification of StrikeCo’s board of directors and StrikeCo’s board of directors will consist of one class of directors only, whose term will continue to the first annual meeting of stockholders following the date of the Closing, and, thereafter, all directors will be elected annually and will be elected for one year terms expiring at the next annual meeting of StrikeCo’s stockholders. If charter proposal B is not approved, our board of directors will remain classified.

Assuming charter proposal B is not approved and StrikeCo’s board of directors remains classified, Mr. Marshall, if elected, will serve on StrikeCo’s board of directors as a Class I director for a term of three years



 

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expiring at the 2022 annual meeting of stockholders or until his successor has been duly elected and qualified, or until his earlier death, resignation, retirement or removal. Assuming charter proposal B is approved and StrikeCo’s board of directors is declassified, Mr. Marshall, if elected, will serve on StrikeCo’s board of directors for a term expiring at the 2020 annual meeting of stockholders or until his successor has been duly elected and qualified, or until his earlier death, resignation, retirement or removal.

Pursuant to our Existing Charter, until the closing of our business combination, only holders of shares of Sentinel Class B common stock have a right to vote on the election of directors. Therefore, only holders of shares of Sentinel Class B common stock will vote on the director election proposal. The director election proposal is not conditioned on the approval of any other proposal at the special meeting.

For additional information, see “ The Director Election Proposal ” section of this proxy statement.

The Incentive Award Plan Proposal

Assuming the business combination proposal, each of the charter proposals and the stock issuance proposal are approved, our stockholders are also being asked to approve the incentive award plan proposal.

We expect that, prior to the consummation of the business combination, our board of directors will approve and adopt the Strike, Inc. 2019 Equity and Incentive Compensation Plan, referred to as the “Incentive Plan”, and assuming the business combination proposal, each of the charter proposals and the stock issuance proposal are approved, we expect that our stockholders will be asked to approve the Incentive Plan. Our stockholders should carefully read the entire Plan, a copy of which is attached to this proxy statement as Annex D, before voting on this proposal.

For additional information, see “ The Incentive Award Plan Proposal ” section of this proxy statement.

The Adjournment Proposal

If based on the tabulated vote, there are not sufficient votes at the time of the special meeting to authorize Sentinel to consummate the business combination (because any of the condition precedent proposals have not been approved (including as a result of the failure of any other cross-conditioned condition precedent proposals to be approved)) or Sentinel determines that one or more of the closing conditions under the Transaction Agreement has not been satisfied, Sentinel’s board of directors may submit a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies.

For additional information, see “ The Adjournment Proposal ” section of this proxy statement.

Date, Time and Place of Special meeting of Sentinel’s Stockholders

The special meeting will be held at      a.m., Central Time, on                , 2019, at the offices of Winston & Strawn LLP at 2121 North Pearl Street, Suite 900, Dallas, Texas 75201, to consider and vote upon the proposals to be put to the special meeting, including if necessary, the adjournment proposal.

Voting Power; Record Date

Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of Sentinel common stock at the close of business on                , 2019, which is the record date for the special meeting. Stockholders will have one vote for each share of common stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact



 

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your broker to ensure that votes related to the shares you beneficially own are properly counted. Our warrants do not have voting rights. On the record date, there were 43,125,000 shares of Sentinel common stock outstanding, of which 34,500,000 were public shares, with the rest being held by our initial stockholders.

Quorum and Vote of Sentinel Stockholders

A quorum of Sentinel stockholders is necessary to hold a valid meeting. A quorum will be present at the Sentinel special meeting if one or more stockholders holding at least a majority of the paid up voting share capital entitled to vote are present in person or by proxy. Abstentions, broker non-votes or the failure to vote on this proposal, will have the same effect as a vote “AGAINST” this proposal.

As of the record date for the special meeting, 21,562,501 shares of Sentinel common stock would be required to achieve a quorum.

Our initial stockholders and our other officers and directors at the time of the IPO entered into letter agreements to vote their founder shares, as well as any public shares purchased during or after the IPO, in favor of the business combination proposal and for all other proposals presented to Sentinel’s stockholders in this proxy statement. As of the date hereof, our initial stockholders own 20.0% of our total outstanding common shares.

The proposals presented at the special meeting require the following votes:

 

   

Business combination proposal: The approval of the business combination proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the business combination proposal, vote at the special meeting.

 

   

Charter proposals: The approval of each of charter proposal A and C requires the affirmative vote of holders of a majority of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting. Approval of charter proposal B requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting.

 

   

Stock issuance proposal: The approval of the stock issuance proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the stock issuance proposal, vote at the special meeting.

 

   

Director election proposal: Pursuant to our Existing Charter, until the closing of our business combination, only holders of shares of Sentinel Class B common stock have a right to vote on the election of directors. Therefore, only holders of shares of Sentinel Class B common stock will vote on the director election proposal. The election of the director nominee pursuant to the director election proposal requires the affirmative vote of the holders of a plurality of the outstanding shares of Sentinel Class B common stock who, being present in person or represented by proxy and entitled to vote at the special meeting to vote on the election of directors, vote at the special meeting.

 

   

Incentive award plan proposal: The approval of the incentive award plan proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the incentive award plan proposal, vote at the special meeting.

 

   

Adjournment proposal: The approval of the adjournment proposal requires the affirmative vote for the proposal by the holders of a majority of the shares of Sentinel common stock who, being present and entitled to vote at the special meeting to approve the adjournment proposal, vote at the special meeting.



 

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Abstentions, broker non-votes or the failure to vote on this proposal, will have the same effect as a vote “AGAINST” this proposal.

Redemption Rights

Pursuant to Sentinel’s Existing Charter, a public stockholder may request that Sentinel redeem all or a portion of their public shares for cash if the business combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to     a.m., Central Time, on                , 2019 (a) submit a written request to the transfer agent that StrikeCo redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal. If the business combination is not consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its public shares to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, Sentinel will redeem each share of Sentinel Class A common stock for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us to pay income taxes, if any, divided by the number of then outstanding public shares. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See “ Special meeting — Redemption Rights ” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

In order for public stockholders to exercise their redemption rights in respect of the proposed business combination, public stockholders must properly exercise their right to redeem the public shares they hold no later than the close of the vote on the business combination proposal and deliver their public shares (either physically or electronically) to Continental Stock Transfer & Trust Company, Sentinel’s transfer agent, prior to      a.m., Central Time, on                 , 2019. Immediately following the consummation of the business combination, StrikeCo shall satisfy the exercise of redemption rights by redeeming the public shares issued to the public stockholders that validly exercised their redemption rights.

Holders of our warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither Sentinel stockholders nor Sentinel warrant holders have appraisal rights in connection with the business combination under the DGCL.



 

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Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. Sentinel has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

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

Interests of Sentinel’s Directors and Officers in the Business Combination

When you consider the recommendation of Sentinel’s board of directors in favor of approval of the business combination proposal, you should keep in mind that Sentinel’s initial stockholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to those of Sentinel stockholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

If we do not consummate an initial business combination by November 7, 2019, we will cease all operations except for the purpose of winding up, redeem all of the outstanding public shares for cash and, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such event, the 8,625,000 founder shares owned by our initial stockholders would be worthless because following the redemption of the public shares, we would likely have few, if any, net assets and because our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete an initial business combination by November 7, 2019. Our initial stockholders purchased the founder shares for an aggregate purchase price of $25,000. Upon the Closing, such founder shares will convert into 8,625,000 shares of StrikeCo Class A common stock, and such securities, if unrestricted and freely tradable would be valued at approximately $            , based on the closing price of $            per share of our shares of Sentinel Class A common stock on Nasdaq on                , 2019.

 

   

Simultaneously with the closing of the IPO, Sentinel consummated the sale of 5,933,333 private placement warrants at a price of $1.50 per warrant in a private placement to our initial stockholders. The private placement warrants are each exercisable commencing 30 days following the Closing for one share of Class A common stock at $11.50 per share. If we do not consummate an initial business combination by November 7, 2019, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by our initial stockholders will be worthless. The warrants held by our initial stockholders had an aggregate market value of $            based upon the closing price of $            per warrant on Nasdaq on                , 2019.

 

   

Our Sponsor, officers and directors will lose their entire investment in us if we do not complete a business combination by November 7, 2019.

 

   

Andrew Gould, Krishna Shivram, Charles S. Leykum, Jon A. Marshall and Marc Zenner will continue to be directors of StrikeCo after the consummation of the business combination. As such, in the future they will receive any cash fees, stock options or stock awards that the StrikeCo board of directors determines to pay to its directors.

 

   

Our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if Sentinel fails to complete an initial business combination by November 7, 2019.

 

   

In order to protect the amounts held in the trust account, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a



 

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prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the trust account. This liability will not apply with respect to any claims by a third-party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.

 

   

Following the consummation of the business combination, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to Sentinel and remain outstanding. As of the date of this proxy statement, we have no working capital loans outstanding. If we do not complete an initial business combination by November 7, 2019, we may use a portion of our working capital held outside the trust account to repay any working capital loans then outstanding, but no proceeds held in the trust account would be used to repay the working capital loans.

 

   

Following the consummation of the business combination, we will continue to indemnify our former and existing directors and officers and will maintain our directors’ and officers’ liability insurance.

 

   

Following consummation of the business combination, our Sponsor, our officers and directors and their respective affiliates would be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by Sentinel from time to time, made by our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. However, if we fail to consummate an initial business combination by November 7, 2019, our Sponsor and our officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Sentinel or its securities, the Sentinel initial stockholders, Strike and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Sentinel common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that (1) the proposals presented to stockholders for approval at the special meeting are approved and/or (2) Sentinel has sufficient cash available to pay the Minimum Cash Amount. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement, 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.

Entering into any such arrangements may have a depressive effect on shares of Sentinel common stock. 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 he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Sentinel will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the special meeting or the redemption threshold. Any such report will



 

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include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of the Sentinel directors may result in a conflict of interest on the part of one or more of them between what he may believe is best for Sentinel and what he may believe is best for him in determining whether or not to grant a waiver in a specific situation. See the sections entitled “Risk Factors” and “ The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination ” for a further discussion of this and other risks.

Recommendation to Stockholders

Sentinel’s board of directors believes that the business combination proposal and the other proposals to be presented at the special meeting are in the best interest of Sentinel’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” each of the separate charter proposals, “FOR” the stock issuance proposal, “FOR” the director nominee set forth in the director election proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the special meeting.

The existence of financial and personal interests of Sentinel’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Sentinel and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section entitled “ The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination ” for a further discussion.

Conditions to the Closing of the Business Combination

Unless waived by the parties to the Transaction Agreement, and subject to applicable law, the consummation of the business combination is subject to a number of conditions set forth in the Transaction Agreement including, among others, approval by Sentinel’s stockholders of the Transaction Agreement and the business combination and Sentinel having sufficient cash available to pay the Minimum Cash Amount to the Sellers under the Transaction Agreement, which is expected to be approximately $124.4 million, subject to adjustment in accordance with the Transaction Agreement. For more information about conditions to the consummation of the business combination, see “ The Business Combination Proposal — The Transaction Agreement — Conditions to the Closing of the Business Combination .”



 

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Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the business combination. Where actual amounts are not known or knowable, the figures below represent Sentinel’s good faith estimate of such amounts assuming a closing as of the indicated date.

Sources and Uses of Proceeds

($ in 000s)

 

Sources

   No
Redemption
     Max
Redemption
 

Proceeds from Trust Account (1)

   $ 348,957      $ 18,900  

Private placement (2)

     132,000        132,000  

Sellers Rollover Equity

     305,647        305,647  
  

 

 

    

 

 

 

Total Sources

   $ 786,604      $ 456,547  

Uses

   No
Redemption
     Max
Redemption
 

Cash consideration to Unit Sellers

   $ 124,400      $ 124,400  

Sellers Rollover Equity

     305,647        305,647  

Repayment of debt (3)

     330,057        —    

Transaction costs (4)

     26,500        26,500  
  

 

 

    

 

 

 

Total Uses

   $ 786,604      $ 456,547  

 

(1)

Cash held in the trust account as of September 30, 2018.

(2)

This amount excludes shares and units issued in connection with the Contribution Agreement.

(3)

This amount includes repayment of the Term Loans (as defined herein) totaling $300.2 million, as well as $0.9 million in accrued interest, and partial repayment of the Amended ABL Credit Agreement (as defined herein) totaling $29.0 million of the $34.0 million outstanding. For further information on Strike’s indebtedness see Note 10 to Strike’s consolidated condensed financial statements.

(4)

This amount includes $12.1 million of deferred underwriting commission.

U.S. Federal Income Tax Considerations

For a discussion summarizing the U.S. federal income tax considerations of an exercise of redemption rights, please see “ U.S. Federal Income Tax Considerations.

Anticipated Accounting Treatment

The final determination of the accounting acquirer will depend on an assessment of factors at the time that the merger is consummated because the amount of redemptions will affect the extent to which Sentinel or Strike will be able to exercise control of the combined company. Depending on the ultimate number of redemptions as of the closing date, the merger will be accounted for as follows:

 

   

If Sentinel is determined to be the accounting acquirer, the merger will be accounted for as a business combination under the scope of the Financial Accounting Standards Board’s Accounting Standards Codification 805, Business Combinations , or ASC 805. Pursuant to ASC 805, Sentinel could be considered the accounting acquirer based on the following indicators under certain redemption scenarios:

 

   

Sentinel pays cash and equity consideration for a majority of the members’ equity in Strike;

 

   

The board of directors will consist of seven directors. Sentinel has control of the chairmanship and the ability to appoint five of the seven board members; and



 

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The existing stockholders of Sentinel will retain relatively more voting rights in the combined company than the historical Strike unitholders.

Under the acquisition method, the acquisition-date fair value of the gross consideration paid by Sentinel to affect the business combination will be allocated to the assets acquired and the liabilities assumed based on their estimated fair values. Any excess purchase price after this allocation will be assigned to goodwill.

 

   

If Strike is determined to be the accounting acquirer, the merger will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded in accordance with GAAP. Consequently, Strike’s consolidated financial statements will become the historical financial statements of the registrant following consummation of the merger. Pursuant to ASC 805, Strike could be considered the accounting acquirer based on the following indicators under certain redemption scenarios:

 

   

Strike management will hold key senior management positions;

 

   

The historical Strike unitholders will hold the majority voting interest in the combined company; and

 

   

The board of directors are subject to annual election by majority vote, and Strike would have the ability to control the combined company through its voting interests and management.

Regulatory Matters

The business combination is not subject to any additional federal or state regulatory requirements or approvals, except for filings with the State of Delaware necessary to effectuate the transactions contemplated by the Transaction Agreement.

Risk Factors

In evaluating the proposals to be presented at the special meeting, a stockholder should carefully read this proxy statement and especially consider the factors discussed in the section entitled “ Risk Factors .”

Sources of Industry and Market Data

Where information has been sourced from a third party, the source of such information has been identified.

Unless otherwise indicated, the information contained in this proxy statement on the market environment, market developments, growth rates, market trends and competition in the markets in which Sentinel and Strike operate is taken from publicly available sources, including third-party sources, or reflects Sentinel’s, or Strike’s estimates that are principally based on information from publicly available sources.

Emerging Growth Company

Sentinel is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other 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 of 2002, as amended (“SOX”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

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



 

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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. Sentinel intends to take advantage of the benefits of this extended transition period. This may make comparison of Sentinel’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

Sentinel will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which it has total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time), or (c) in which it is deemed to be a large accelerated filer, which means the market value of its shares of Sentinel Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30 th , and (2) the date on which it has issued more than $1.00 billion in non-convertible debt during the prior three-year period. Upon the consummation of the business combination, StrikeCo will lose its status as an emerging growth company as a result of its year ended December 31, 2017 revenue exceeding $1.07 billion.



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SENTINEL

Sentinel is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the business combination.

Sentinel’s statement of operations data for the period from June 5, 2017 (date of inception) to December 31, 2017 and balance sheet data as of December 31, 2017 are derived from Sentinel’s audited financial statements included elsewhere in this proxy statement. Sentinel’s statement of operations data for the nine months ended September 30, 2018, the period from June 5, 2017 (date of inception) to September 30, 2017 and balance sheet data as of September 30, 2018 are derived from Sentinel’s unaudited financial statements included elsewhere in this proxy statement.

The information is only a summary and should be read in conjunction with Sentinel’s consolidated financial statements and related notes and “ Sentinel’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of Sentinel.

 

     For the nine
months ended 
September 30,
2018
    For the
Period from

June 5, 2017
(date of
inception) to
September 30,
2017
    For the
Period from
June 5, 2017 
(date of
inception) to
December 31,
2017
 

Statement of Operations Data:

      

Revenue

     —       $ —       $ —    

EXPENSES

      

General and administrative

     1,272,615       16,356       86,384  
  

 

 

   

 

 

   

 

 

 

TOTAL EXPENSES

     1,272,615       16,356       86,384  
  

 

 

   

 

 

   

 

 

 

OTHER INCOME

      

Investment income on Trust Account

     3,956,985       —         —    
  

 

 

   

 

 

   

 

 

 

TOTAL OTHER INCOME

     3,956,985       —         —    
  

 

 

   

 

 

   

 

 

 

Net income (loss)

     2,684,370     $ (16,356 )   $ (86,384 )
  

 

 

   

 

 

   

 

 

 

Two Class Method:

      

Weighted average number of Class A ordinary shares outstanding — basic and diluted

     34,500,000       —         33,723,214  
  

 

 

   

 

 

   

 

 

 

Basic and diluted net income per Class A ordinary share

     0.11     $ —       $ —    
  

 

 

   

 

 

   

 

 

 

Weighted average number of Class B ordinary shares outstanding — basic and diluted

     8,625,000       6,375,000       8,625,000  
  

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per Class B ordinary share

     (0.11 )   $ —       $ (0.01
  

 

 

   

 

 

   

 

 

 

 

     September 30,
2018

(unaudited)
     December 31,
2017
 

Balance Sheet Data:

     

Total assets

   $ 349,640,901      $ 346,075,285  

Total liabilities

     12,976,141        12,094,890  

Total stockholders’ equity

     5,000,005        5,000,005  


 

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     For the Nine
Months Ended
September 30,
2018
    For the
Period from
June 5, 2017
(date of
inception)
through
September 30,
2017
     For the Period
from June 5, 2017
(date of inception)
through
December 31,
2017
 

Statement of Cash Flows Data:

       

Net Cash Used In Operating Activities

   $ (336,680   $ —        $ (249,827

Net Cash Used In Investing Activities

     —         —          (345,000,000

Net Cash Provided By Financing Activities

     —         2,500        346,141,779  


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF STRIKE

The following table shows selected historical consolidated financial data for Strike. The financial data as of December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016 and for the period from January 10, 2015 to December 31, 2015 are derived from Strike’s audited financial statements and related notes that are included elsewhere in this proxy statement. The financial data for the period from January 1, 2015 to January 9, 2015 is derived from Strike’s unaudited consolidated financial data not included elsewhere in this proxy statement. The financial data as of December 31, 2015, 2014 and 2013 and for the years ended December 31, 2014 and 2013 are derived from the unaudited financial statements of Strike that are not included elsewhere in this proxy statement.

The selected historical condensed consolidated financial data as of September 30, 2018 and for the nine months ended September 30, 2018 and September 30, 2017 are derived from Strike’s unaudited condensed consolidated financial statements and related notes that are included elsewhere in this proxy statement. Strike’s management believes that Strike’s unaudited condensed consolidated financial statements have been prepared on a basis consistent with its audited consolidated financial statements and include all normal and recurring adjustments necessary for a fair presentation of the results for each interim period.

The information set forth below is only a summary and it is not necessarily indicative of the results of future operations of Strike, nor does it include the effects of the business combination. Interim financial position and results of operations as of September 30, 2018 and for the nine months ended are not necessarily indicative of, and are not projections for, the results to be expected for the fiscal year ended December 31, 2018. The selected historical consolidated financial statement data provided below is only a summary, and you should read it in conjunction with the audited consolidated financial statements of Strike and the related notes contained in the audited financial statements and related notes, the unaudited condensed consolidated financial statements and notes, and “ Strike’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” which are included elsewhere in this proxy statement.



 

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    As of and for the Nine
Months Ended 
(in thousands, except per unit
amounts)
    As of and for the  
Years   Ended
(in thousands, except per
unit amounts)
    As of and for the
(in thousands, except
per unit amounts)
    As of and for the
Years   Ended
(in  thousands, except

per unit amounts)
 
    September 30,
2018
    September 30,
2017
    2017     2016     Period ended
December 31,
2015
    Period from
January 1 to
January 9, 2015
    2014     2013  

Consolidated statements of operations data:

             
(unaudited)
 
    (unaudited)       (unaudited)  

Revenues

  $ 1,279,194     $ 925,032     $ 1,402,524     $ 748,501     $ 713,924     $ 6,447     $ 674,034     $ 745,391  

Cost of revenues

    1,159,485       838,773       1,261,251       670,035       637,324       6,095       588,110       623,704  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

  $ 119,709     $ 86,259     $ 141,273     $ 78,466     $ 76,600     $ 352     $ 85,924     $ 121,687  

Payroll and payroll related costs

    25,067       28,096       40,168       24,908       24,728       544       21,033       40,388  

Depreciation and amortization

    18,046       16,914       21,119       19,241       20,027       628       25,236       8,266  

General and administrative

    28,272       23,926       31,248       23,640       24,337       479       15,031       14,326  

(Gain) loss on sale of property and equipment

    (1,773     (2,629     (6,179     4,268       (1,749     —         —         —    

Equity based compensation

    2,373       2,102       2,850       2,494       2,092       53       936       —    

Transaction expenses

    2,815       —         —         —         —         —         —         7,345  

Interest expense

    (31,286     (26,622     (37,474     (13,052     (11,575     (293     (11,033     (6,299

Loss on extinguishment of debt

    —         —         —         (2,993     —         —         —         (2,094

Other income (expense), net

    (2     29       41       562       5       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) before taxes

  $ 13,621     $ (8,743   $ 14,634     $ (13,052   $ (4,405   $ (1,645   $ 12,654     $ 42,969  

Provision for income taxes

    874       637       1,114       714       747       44       978       1,809  

Earnings from equity method investment

    —         450       100       —         —         —         —         —    

Net income (loss)

  $ 12,747     $ (8,930   $ 13,620     $ (12,282   $ (5,152   $ (1,601   $ 11,676     $ 41,160  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of units, Founder units — basic and diluted

    635,352       635,352       635,352       611,519       591,769        

Weighted average number of units, Common units — basic and diluted

    28,537       28,537       28,537       11,104       10,938        

Net income (loss) per unit, Founder units — basic and diluted

  $ 19.30     $ (13.35   $ 20.65     $ (19.67   $ (8.49      

Net income (loss) per unit, Common units — basic and diluted

  $ 16.93     $ (15.70   $ 17.49     $ (22.96   $ (11.79      

Statement of cash flows data:

               

Net cash provided by (used in) operating activities

  $ (31,647   $ 18,992     $ 15,749     $ 11,996     $ 44,633       $ 67,289     $ 9,343  

Net cash provided by (used in) investing activities

  $ (15,781   $ (27,619   $ (17,081   $ (7,530   $ (19,332     $ (22,702   $ (11,732

Net cash provided by (used in) financing activities

  $ 36,688     $ (7,705   $ (5,867   $ 12,859     $ (29,729     $ (38,600   $ 2,179  

Balance sheet data:

               

Cash and cash equivalents

  $ 948       $ 11,688     $ 18,887     $ 1,560       $ 5,986     $ —    

Accounts receivable, net

  $ 241,693       $ 253,116     $ 127,639     $ 129,507       $ 145,692     $ 168,864  

Total assets

  $ 813,606       $ 770,140     $ 603,041     $ 583,342       $ 576,976     $ 591,992  

Long-term obligations (1)

  $ 333,119       $ 253,407     $ 245,690     $ 206,556       $ 247,327     $ 246,974  

Total member’s equity

  $ 264,249       $ 258,048     $ 245,930     $ 247,254       $ 241,643     $ 247,150  

Other data:

               

Adjusted EBITDA (2)

  $ 79,557     $ 47,541     $ 96,695     $ 51,222     $ 46,718       $ 49,859     $ 59,628  

Further Adjusted EBITDA (2)(3)

  $ 97,460       —         —         —         —           —         —    

 

(1)

Long-term obligations includes long-term portion of notes payable, net of debt issuance costs, and inclusive of long-term capital lease obligations.



 

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(2)

Adjusted EBITDA and Further Adjusted EBITDA are non-GAAP financial measures. See the reconciliation of these measures to net income (loss) on page 195.

(3)

Reflects $17.9 million adjustment, based on Strike management’s estimate, related to a one-time commercial contract settlement that occurred in the third quarter of 2018 in anticipation of the business combination. Sentinel and Strike considered this adjustment relevant in evaluating Strike’s financial results in connection with negotiating the business combination; however, Strike does not intend to present Further Adjusted EBITDA as part of its historical financial results following the consummation of the business combination.



 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined balance sheet data gives effect to the proposed transaction as if it had occurred on September 30, 2018, while the unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2017 and the nine months ended September 30, 2018 is presented as if the merger had occurred on January 1, 2017. The following summary unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger occurred as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors.” The following summary unaudited pro forma condensed combined financial information should be read in conjunction with the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” and the related notes.

 

     Assuming no redemption      Assuming maximum redemption  
     For the year ended
December 31, 2017
     For the nine
months ended
September 30, 2018
     For the year ended
December 31, 2017
     For the nine
months ended
September 30, 2018
 
     (in thousands, except per share data)  

Selected Unaudited Pro Forma Condensed Combined Statement of Operations

           

Revenue

   $ 1,402,524      $ 1,279,194      $ 1,402,524      $ 1,279,194  

Net income per share - basic and diluted

   $ 0.06      $ 0.10      $ 0.14      $ 0.18  

Weighted average shares outstanding - basic and diluted

     64,113,928        64,113,928        34,480,980        34,480,980  

 

     As of September 30, 2018  
     No
Redemption
     Maximum
Redemption
 
     (in thousands)  

Selected Unaudited Pro Forma Combined Balance Sheet Data

     

Total assets

   $ 1,066,698      $ 847,192  

Total liabilities

   $ 288,811      $ 574,831  

Total equity

   $ 777,887      $ 272,361  


 

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COMPARATIVE SHARE INFORMATION

The following table sets forth historical comparative share information for Strike and Sentinel and unaudited pro forma combined share information after giving effect to the business combination, assuming (1) that no holders of public shares exercise their redemption rights and (2) the maximum redemption of Sentinel’s common stock subject to possible redemption. The historical information should be read in conjunction with “ Selected Historical Financial Information of Sentinel ” and “ Selected Historical Consolidated Financial Information of Strike ,” included elsewhere in this proxy statement and the historical financial statements of Strike and Sentinel included elsewhere in this proxy statement. The unaudited pro forma combined share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement.

The unaudited pro forma combined share information does not purport to represent what the actual results of operations of Strike and Sentinel would have been had the business combination been completed or to project Strike and Sentinel’s results of operations that may be achieved after the business combination. The unaudited pro forma book value per share information below does not purport to represent what the value of Strike and Sentinel would have been had the business combination been completed nor the book value per share for any future date or period.

This information is based on, and should be read together with, the selected historical consolidated financial information, the unaudited pro forma condensed combined financial information and the historical consolidated financial information of Sentinel and Strike, that has been presented in its filings with the SEC that are included or incorporated herein by reference in this proxy statement. The unaudited pro forma condensed combined per share data are presented for illustrative purposes only and are not necessarily indicative of actual or future financial position or results of operations that would have been realized if the business combination had been completed as of the dates indicated or will be realized upon the completion of the business combination.

 

     Historical      Combined Pro Forma  
     Sentinel Energy
Services Inc.
    Strike,
LLC (2)
     Assuming No
Redemption
    Assuming
Maximum
Redemption
 

As of and for the nine months ended September 30, 2018:

         

Book value per share (1)

   $ 0.12     $ 0.39      $ 12.13     $ 7.90  

Weighted average number of Class A shares outstanding—basic and diluted

     33,723,214          64,113,928       34,480,980  

Weighted average number of Class B shares outstanding—basic and diluted

     8,625,000          N/A (4)      N/A (4) 

Net income per share, Class A—basic and diluted

   $ 0.11        $ 0.10     $ 0.18  

Net income (loss) per share, Class B—basic and diluted

   $ (0.15        N/A (4)      N/A (4) 

Weighted average number of units, Founder units—basic and diluted

       635,352       

Weighted average number of units, Common units—basic and diluted

       28,537       

Net income per unit, Founder units—basic and diluted

     $ 19.30       

Net income per unit, Common units—basic and diluted

     $ 16.93       

As of and for the year ended December 31, 2017:

         

Book value per share (1)

   $ 0.12     $ 0.39        N/A (3)      N/A (3) 

Weighted average number of Class A shares outstanding—basic and diluted

     34,500,000          64,113,928       34,480,980  

Weighted average number of Class B shares outstanding—basic and diluted

     8,625,000          N/A (4)      N/A (4) 

Net income per share, Class A—basic and diluted

   $ 0.00        $ 0.06     $ 0.14  

Net income (loss) per share, Class B—basic and diluted

   $ (0.01        N/A (4)      N/A (4) 

Weighted average number of units, Founder units—basic and diluted

       635,352       

Weighted average number of units, Common units—basic and diluted

       28,537       

Net income per unit, Founder units—basic and diluted

     $ 20.65       

Net income per unit, Common units—basic and diluted

     $ 17.49       

 

(1)

Book value per share = Total stockholders’ (Members') equity/shares (units) outstanding

(2)

Strike is an LLC and as such has units versus shares

(3)

Pro forma balance sheet for year ended December 31, 2017 is not required and as such, no such calculation included in this table

(4)

Pro forma Class B shares have no economic interest in the combined company



 

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TICKER SYMBOLS AND DIVIDEND INFORMATION

Sentinel

Units, Common Stock and Warrants

Sentinel’s units, shares of common stock and warrants are currently listed on The Nasdaq Capital Market under the symbols “STNLU,” “STNL” and “STNLW,” respectively. Sentinel intends to apply to list the shares of StrikeCo Class A common stock and warrants, upon the consummation of the business combination, on the NYSE under the symbols “STRK” and “STRK.W” respectively.

Holders

As of November 21, 2018, there was one holder of record of our units, one holder of record of our shares of Sentinel Class A common stock, three holders of record of our shares of Sentinel Class B common stock and two holders of record of our warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, shares of Sentinel Class A common stock and warrants are held of record by banks, brokers and other financial institutions.

Dividend Policy

Sentinel has not paid any cash dividends on its shares of common stock to date and does not intend to pay any cash dividends prior to the completion of the business combination. The payment of cash dividends in the future will be dependent upon StrikeCo’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the business combination. The payment of any cash dividends subsequent to a business combination will be within the discretion of StrikeCo’s board of directors at such time.



 

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RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement. These risks could have a material adverse effect on the business, results of operations or financial condition of StrikeCo and could adversely affect the trading price of its common stock.

Risks Relating to Strike’s Business and Industry

The markets for oil and gas have been volatile and are likely to continue to be volatile.

Prices for oil and natural gas are subject to large fluctuations in response to changes in supply and demand, as well as market uncertainty and a variety of other factors that are beyond Strike’s control. Lower oil and natural gas prices generally lead to decreased spending by Strike’s customers. During times of lower prices, Strike’s customers may not have the ability to fund capital expenditures for planned projects. Strike’s customers may also be forced to cut back on discretionary spending and maintenance related projects. In addition, Strike’s customers may find it challenging or impossible to pay for services already performed by Strike. If a client fails to pay Strike on a timely basis or defaults in making payments on a project for which Strike has devoted significant resources, Strike may be required to make a working capital investment. Additionally, in some cases, Strike could experience a material decrease in profitability and liquidity if it chooses, or is required, to pay its subcontractors for work performed for customers that fail to pay, or delay paying, for the related work. Any of these factors could have a material adverse effect on Strike’s results of operations, cash flows and liquidity.

Higher oil and natural gas prices generally lead to increased spending by Strike’s customers. However, sustained high energy prices can also be an impediment to overall economic growth and can therefore negatively affect spending by Strike’s customers. Strike’s customers may also require higher returns for individual projects if there is higher perceived risk of price volatility. In addition, Strike’s vehicles and equipment are gasoline powered. An increase in gas prices may negatively affect Strike’s operating costs and lower margins. The price volatility of oil and gas could also make it difficult for Strike’s customers to estimate their demand for Strike’s services. Any factor resulting in a decrease in Strike’s customers spending on Strike’s services could have a material adverse effect on Strike’s results of operations, cash flows and liquidity.

Future disruptions in the U.S. financial and credit markets or increases in the costs of capital could have an adverse effect on Strike’s business.

Future disruptions in the U.S. financial and credit markets or increases in the costs of capital could have an adverse effect on Strike’s business. Uncertain or adverse economic conditions that create volatility in the credit and equity markets could reduce the availability of debt or equity financing for Strike. In addition, if costs of capital were to increase significantly due to a lowering of Strike’s credit rating, prevailing industry conditions, the volatility of capital markets or other factors, Strike may be unable to obtain new financing on acceptable terms, or at all. An adverse event in Strike’s financial performance could limit its future ability to access amounts that may be available under its Amended ABL Credit Agreement and Amended Term Loan Credit Agreement (each as defined below) or even result in a default on outstanding indebtedness. Such defaults or unavailability of alternative funding could materially and adversely affect Strike’s results of operations, cash flows and liquidity as well as reputation.

A substantial portion of Strike’s revenues is dependent on successfully obtaining contracts through the bid process.

A substantial portion of Strike’s revenues is dependent on being awarded customers’ contracts through a bid process. Price is often the principal factor that determines who wins the bid, but other factors such as

 

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governmental approvals, financing contingencies, commodity prices, environmental conditions, reputation, quality and overall market and economic conditions are also considered. Strike may not be successful due to, among other things, a potential customer’s perception of its ability to perform the work or the availability of certain crews for highly complex projects.

The competitive environment Strike operates in makes being awarded projects unpredictable. In addition, the bid process is often complex and involves lengthy negotiations and bidding processes. If Strike is unsuccessful in winning bids, or if the ability to win such projects requires the acceptance of lower margins, Strike’s financial condition, results of operations and cash flows could be materially and adversely affected.

Strike’s business faces significant competition in the markets it serves.

Strike’s business competes with other companies in the markets in which it operates, including numerous small, owner-operated private companies servicing local markets and some public companies and several large regional companies servicing regional and national markets. Strike also faces competition from existing and prospective customers that employ in-house personnel to perform some of the services Strike provides. Relatively few barriers prevent entry into the markets in which Strike operates, and as a result, any organization that has adequate financial resources and access to technical expertise may become one of Strike’s competitors.

Some of Strike’s competitors have significant financial, technical and marketing resources. Strike cannot be certain that its competitors do not have or will not develop the expertise, experience and resources to provide services that are superior in both price and quality to Strike’s services. In addition, certain of Strike’s competitors may have lower overhead cost structures, and therefore may be able to provide the desired services at lower rates than Strike.

Some of the markets for Strike’s services and products are characterized by continual technological developments to provide better and more reliable performance and services. Unlike some of its competitors, Strike may not be able to design, develop and produce commercially competitive products or to implement such services in a timely manner in response to changes in the market, customer requirements or technology trends. A failure to keep up with competitors may result in Strike’s inability to maintain its competitive position within the industry or maintain its current customer base.

The failure to properly manage projects or project delays could result in additional costs or claims, which could have a material adverse effect on Strike’s operating results, cash flows and liquidity.

Several of Strike’s engagements involve large-scale, complex projects involving the construction of major pipelines and major facilities over extended time periods. The success and benefits of these projects depend in large part on Strike’s ability to manage its client relationships and manage the project itself. To properly manage a project, Strike must timely deploy appropriate resources, including third-party contracts and subcontractors as well as its own personnel. For example, Strike maintains a workforce based upon current and anticipated workloads. Strike could incur significant costs and reduced profitability from underutilization of its workforce if its projects are delayed, or not awarded, or if there is a significant reduction in the level of services it provides. In addition, Strike could incur significant costs or fail to meet deadlines if it underestimates the workforce needed for a particular project. Strike’s results of operations, cash flows and liquidity could be adversely affected if it miscalculates the resources or time needed to complete a project.

Strike may also recognize adverse effect due to operational delays. These operational delays could include delays on a particular project due to local opposition, including political and social activism, injunctive actions or public protests related to the siting of oil, natural gas, or other facilities. Such operational delays could adversely affect Strike’s project margins. These operational delays could also include delays in designs, engineering information or materials provided by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, delays from a customer’s failure to timely obtain permits or rights-of-way or

 

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to meet other requirements, delays by subcontractors in completing their portion of the project and other factors, some of which are beyond Strike’s control. These operational delays may result in cancellations or deferrals of project work, which could lead to a decline in revenue, or, for project deferrals, which could cause Strike to incur costs for standby pay, and could lead to personnel shortages on other projects scheduled to commence at a later date.

Strike’s failure to properly manage projects may result in missed deadlines. A failure to meet deadlines may require Strike to share in cost overages or pay liquidated damages, which could adversely affect its results of operations, cash flows and liquidity. Further, any defects or errors, or failures to meet customers’ expectations, could result in large damage claims against Strike. Due to the substantial cost of, and potentially long lead-times necessary to acquire, certain of the materials and equipment used in Strike’s complex projects, damage claims could substantially exceed the amount Strike can charge for its associated services.

Strike recognizes revenue for certain projects using the percentage-of-completion method of accounting; therefore, variations of actual results from Strike’s assumptions could reduce its profitability.

Strike recognizes a portion of its revenue from fixed price contracts, as well as for certain projects pursuant to master and other service agreements, using the percentage-of-completion method of accounting, under which the percentage of revenue to be recognized in a given period is measured by the percentage of costs incurred to date on the contract to the total estimated costs for the contract. The percentage-of-completion method, therefore, relies on estimates of total expected contract costs. Contract revenue and total cost estimates are reviewed and revised on an ongoing basis as the work progresses. Adjustments arising from changes in the estimates of contract revenues or costs are reflected in the fiscal period in which such estimates are revised. Estimates are based on management’s reasonable assumptions, judgment and experience, but are subject to the risks inherent in estimates, including unanticipated delays or technical complications. Variances in actual results from related estimates on a large project, or on several smaller projects, could be material. The full amount of an estimated loss on a contract is recognized in the period that Strike’s estimates indicate such a loss. Such adjustments could result in reduced profitability, which could negatively affect Strike’s results of operations.

Strike’s failure to comply with the regulations of OSHA and other state and local agencies that oversee safety compliance could reduce Strike’s revenue, profitability and liquidity.

Some of Strike’s operations are inherently dangerous and subject to extensive laws and regulations relating to the maintenance of safe conditions in the workplace. The Occupational Safety and Health Act of 1970, as amended (the “Occupational Safety and Health Act”), establishes certain employer responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated by the Occupational Safety and Health Administration (“OSHA”) and various recordkeeping, disclosure and procedural requirements. Various standards, including standards for notices of hazards and safety in excavation and demolition work, may apply to Strike’s operations. Strike has taken and will continue to take steps, including capital and operating expenditures, to comply with the Occupational Safety and Health Act and other state and local laws and regulations. Failure to comply with the Occupational Safety and Health Act and other state and local laws and regulations could result in penalties and fines in the future, including, in extreme cases, criminal sanctions for failure to comply.

Amounts included in Strike’s backlog may not result in actual revenue or translate into profits. Strike’s backlog is subject to cancellation and unexpected adjustments and is, therefore, an uncertain indicator of future operating results.

Strike had a backlog of signed contracts, agreements, and recurring master service agreements of $1.51 billion at December 31, 2017 and $1.30 billion at September 30, 2018. Backlog is the amount of revenue expected to be realized by Strike on its uncompleted contracts, consisting of the portion of revenue relating to work to be performed on contracts, including new contractual agreements on which work has not begun. Backlog

 

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also includes eighteen months of projected revenue related to master service agreements or other service contracts, none of which require Strike’s customers to purchase a minimum amount of services and are cancelable on short notice or no advance notice. Backlog amounts are determined based on estimates that incorporate historical trends, anticipated seasonal impacts, experience from similar projects and customer communications. These estimates may prove inaccurate, which could cause estimated revenue to be realized in periods later than originally expected, or not at all. In the past, Strike has occasionally experienced postponements, cancellations and reductions in expected future work due to market volatility, regulatory changes, changes in Strike’s customers’ spending plans or other factors. There can be no assurance as to the accuracy of the estimates. As a result, Strike’s backlog as of any particular date is an uncertain indicator of future revenue and earnings. In addition, contracts included in backlog may not be profitable. If backlog fails to materialize, Strike’s results of operations, cash flows and liquidity would be materially and adversely affected.

Strike derives a significant portion of its revenue from master service agreements and other long-term contracts that may be canceled on short notice or no advance notice by its customers and do not guarantee a specific quantity of work.

During the fiscal year ended December 31, 2017, Strike derived approximately 44.5% of its revenue from master service agreements or other long-term service contracts. The majority of these contracts are cancelable at the option of Strike’s customers with relatively short notice or no advance notice. In addition, Strike’s customers generally have no obligation to provide Strike with a minimum amount of work under these agreements. This makes estimating expenditures by customers difficult as work is not assured until a definitive work order is placed with Strike and the work completed. Furthermore, Strike’s customers generally require competitive bidding of these contracts upon expiration of their terms. Strike may not be able to renew a contract if its competitors reduce their prices and underbid to procure business. Failure to renew these contracts could reduce Strike’s profitability and cash flows.

Strike’s business may be affected by difficult work sites and environments and adverse weather conditions, which could cause delays and/or increase its costs and reduce profitability.

Strike conducts its operations in challenging and hard to reach terrain and difficult site conditions where delivery of materials and availability of labor may be affected. In addition, Strike’s operations may be materially affected by adverse weather conditions in areas where it operates. Severe weather, such as hurricanes, high winds and seas, blizzards, flooding, heavy rainfall and extreme temperatures may cause the evacuation of personnel, curtailment of services, suspension of operations, inability to deliver materials to jobsites in accordance with contract schedules, loss of or damage to equipment and facilities and reduced productivity. Weather changes can materially change work site conditions after initial inspection and bid submittal. In addition, variations from normal weather patterns can have a significant impact on the demand for oil and natural gas, thereby reducing demand for Strike’s services and equipment.

Performing operations in such conditions can result in project delays or cancellations, potentially causing Strike to incur additional unanticipated costs, reductions in revenue or the payment of liquidated damages. In some cases, delays and additional costs may be substantial, and Strike may be required to cancel a project and/or compensate the customer for the delay. Strike may not be able to recover any such costs. Any such delays or cancellations or errors or other failures to meet customer expectations could result in damage claims substantially in excess of the revenue associated with a project. Delays or cancellations could also negatively affect Strike’s reputation or relationships with its customers, which could adversely affect its ability to secure new contracts.

Acquisitions involve risks that could negatively affect Strike’s operating results, cash flows and liquidity.

Strike has made, and in the future may continue to make, strategic acquisitions and investments. Strike tries to evaluate companies that it believes will strategically fit into its business and growth objectives. For example, in December 2016, Strike acquired Crossfire, LLC (“Crossfire”), making Strike one of the largest service

 

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providers in the Permian Basin and solidifying its presence in the Four Corners and Rocky Mountain regions. If Strike is unable to successfully integrate and develop acquired businesses it could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on its financial results.

Strike may not be able to identify suitable acquisition or strategic investment opportunities, or may be unable to obtain the required consent of its lenders and, therefore, may not be able to complete such acquisitions or strategic investments. Strike may incur expenses associated with sourcing, evaluating and negotiating acquisitions (including those that do not get completed), and Strike may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors. Any of these amounts may be substantial, and together with the size, timing and number of acquisitions Strike pursues, may negatively affect and cause significant volatility in its financial results.

In addition, Strike has assumed, and may in the future assume, liabilities of the company it is acquiring. While Strike retains third-party advisors to consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to Strike. If there are unknown liabilities or other obligations, Strike’s business could be materially affected.

Certain adverse conditions may require, and future conditions might require, Strike to make substantial write-downs in its assets, which would adversely affect Strike’s balance sheet and results of operations.

Strike reviews its long-lived tangible and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Strike also tests its goodwill and indefinite-lived intangible assets for impairment at least annually on December 31, or when events or changes in the business environment indicate that the carrying value of a reporting unit may exceed its fair value. Based on those results, no impairments were recorded to Strike’s goodwill or other indefinite-lived intangible assets as of and for the year ended December 31, 2017. If conditions in any of the businesses in which Strike competes were to deteriorate, it could determine that certain of its assets were impaired, and it would then be required to write-off all or a portion of its costs for such assets. Any significant write-offs would adversely affect Strike’s balance sheet and results of operations.

Legal or other administrative proceedings could have a material adverse effect on Strike’s operations or results of operations.

In the ordinary course of Strike’s business, it is involved in various legal and other administrative proceedings involving claims arising from its operations. A significant adverse result, or multiple adverse results involving similar issues, could require Strike to pay significant amounts or to change the manner in which it does business, which could have a material adverse effect on its operations or results of operations.

Strike’s failure to comply with laws and regulations regarding health, safety and protection of the environment could result in significant liabilities or harm its reputation.

Strike’s operations are subject to stringent laws and regulations relating to protection of natural resources, clean air, drinking water, wetlands, endangered species, greenhouse gases, the environment, health and safety, chemical use and storage, waste management, and transportation of hazardous and non-hazardous materials. These laws and regulations subject Strike to risks of environmental liability. Some environmental laws and regulations may impose strict liability, joint and several liability or both. Strict liability means that Strike could be exposed to liability as a result of Strike’s conduct that was lawful at the time it occurred, or the conduct of or conditions caused by third parties without regard to whether Strike caused or contributed to the conditions. Sanctions for noncompliance with environmental laws and regulations could result in fines and penalties (administrative, civil or criminal), revocations of permits, expenditures for remediation, and issuance of corrective action orders, and actions arising under these laws and regulations could result in liability for property damage, exposure to waste and other hazardous materials, nuisance or personal injuries. Such claims or sanctions

 

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could cause Strike to incur substantial costs or losses and could have a material adverse effect on Strike’s business, financial condition, reputation, and results of operations.

Existing or future laws and regulations related to greenhouse gases and climate change could have a negative effect on Strike’s business and may result in additional compliance obligations with respect to the release, capture, and use of carbon dioxide that could have a material adverse effect on Strike’s business, results of operations, and financial condition.

Changes in environmental requirements related to greenhouse gases and climate change may negatively affect demand for Strike’s services. For example, oil and natural gas exploration and production may decline as a result of environmental requirements, including land use policies responsive to environmental concerns. Local, state, and federal agencies have been evaluating climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases in areas in which Strike conducts business. Because a portion of Strike’s business depends on the level of activity in the oil and natural gas industry, existing or future laws and regulations related to greenhouse gases and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative effect on Strike’s business if such laws or regulations reduce demand for oil and natural gas. Likewise, such restrictions may result in additional compliance obligations with respect to the release, capture, sequestration, and use of carbon dioxide or other gases that could have a material adverse effect on Strike’s business, results of operations, and financial condition.

Strike’s customers face stringent regulatory and environmental requirements and permitting processes that could result in delays and/or cancellations of current or planned future projects that could materially and adversely affect Strike.

Many of Strike’s customers face stringent regulatory and environmental requirements and permitting processes, including governmental regulations and policies pertaining to the exportation, exploration, production, development and transportation of oil and natural gas, as well as environmental laws, climate change initiatives, and effects of political or social activism. Failure on the part of Strike’s customers to properly navigate the regulatory and environmental requirements could result in delays and/or cancellations of current or planned future projects. Furthermore, environmental laws applicable to Strike’s customers, including laws regulating the energy industry, and the interpretation and enforcement of these laws, are constantly evolving, making it difficult to predict the effect changes in these environmental laws, or their interpretation, may have upon current or planned future projects. In addition, there may be additional unforeseen factors affecting Strike’s customers such as government shutdowns or understaffing at applicable state and federal agencies that could result in unforeseen delays despite compliance with these environmental and regulatory laws. A delay or cancellation could materially and adversely affect Strike’s results of operations, cash flows and liquidity.

Strike may be unable to employ a sufficient number of key employees, technical personnel and other skilled or qualified workers.

The delivery of Strike’s services and products require personnel with specialized skills and experience who can perform labor intensive and physically demanding work. At times of low unemployment in the areas Strike serves, it can be difficult for Strike to find qualified and affordable personnel. As a result of the volatility in the markets in which Strike operates and the demanding nature of the work, workers may choose to pursue employment with Strike’s competitors or in fields that offer a more desirable work environment. Strike’s ability to be productive and profitable will depend upon its ability to employ and retain skilled workers. In addition, its ability to further expand its operations according to geographic demand for its services depends in part on its ability to relocate or increase the size of its skilled labor force. The demand for skilled workers in Strike’s areas of operations can be high, the supply may be limited and Strike may be unable to relocate its employees from areas of lower utilization to areas of higher demand. A significant increase in the wages paid by competing employers could result in a reduction of Strike’s skilled labor force, increases in the wage rates that Strike must pay, or both. Furthermore, a significant decrease in the wages paid by Strike or its competitors as a result of

 

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reduced industry demand could result in a reduction of the available skilled labor force, and there is no assurance that the availability of skilled labor will improve following a subsequent increase in demand for Strike’s services or an increase in wage rates. If any of these events were to occur, Strike’s capacity and profitability could be diminished and its growth potential could be impaired.

Strike also depends heavily on the efforts of executive officers, managers and other key employees to manage its operations. The unexpected loss or unavailability of key members of management or technical personnel may have a material adverse effect on its business, financial condition, prospects, or results of operations.

Failure to maintain relationships with Strike’s subcontractors or failure for Strike’s subcontractors to satisfy their obligations may have a material adverse effect on Strike’s results of operations, cash flows and liquidity.

Strike employs subcontractors at various locations to perform work on some of its projects. The use of subcontractors decreases Strike’s control over the performance and quality of work. There is also a risk that Strike may have disputes with subcontractors arising from, among other things, the quality and timeliness of the work they perform. These risks could adversely affect Strike’s profitability and business reputation. In addition, the absence of qualified subcontractors with whom Strike has satisfactory relationships could adversely affect Strike’s ability to perform under some of its contracts, or the quality of the services it provides.

Strike may be subject to risks relating to its information technology systems.

Strike relies on information technology systems to process, transmit and store electronic information and manage and operate its business. A breach in cyber security could expose Strike, its customers, its suppliers and its employees to risks of misuse of confidential information. A breach could also result in manipulation and destruction of data, production downtimes and operations disruptions, which in turn could adversely affect Strike’s reputation, competitive position, business or results of operations. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means.

In addition, from time to time Strike may implement new technology systems or replace and/or upgrade its current information technology systems. These upgrades or replacements may not improve Strike’s productivity to the levels anticipated and may subject it to inherent costs and risks associated with implementing, replacing and updating these systems, including potential disruption of Strike’s internal control structure, substantial capital expenditures, demands on management’s time and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into other existing systems. Strike’s inability to prevent information technology system disruptions or to mitigate the impact of such disruptions could have an adverse effect on Strike.

Strike’s business is subject to physical hazards that could result in substantial liabilities and weaken its financial condition.

Strike’s operations are subject to hazards inherent in the oil and gas industry that may lead to property damage, personal injury, death or discharge of hazardous materials into the environment. Many of these events are outside Strike’s control. Construction projects undertaken by Strike expose its employees to pipelines carrying potentially explosive or toxic materials, heavy equipment, mechanical failures, transportation accidents, adverse weather conditions and the risk of damage to equipment and property. If serious accidents or fatalities occur, or if Strike’s safety records were to deteriorate, Strike may be restricted from bidding on certain work and obtaining new contracts and certain existing contracts could be terminated. In addition, the occurrence of accidents in Strike’s business could result in significant liabilities, employee turnover, increase the costs of Strike’s projects, or harm Strike’s ability to perform under its contracts or enter into new customer contracts, all of which could materially adversely affect Strike’s revenue, profitability and liquidity.

 

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Indemnification obligations may increase Strike’s overall risk exposure as well as disrupt its operations. In addition, indemnification obtained by Strike may not cover all of its costs owed.

Some of Strike’s contracts require that it assume the environmental risk of site conditions and require that it indemnify its customers for any damages, including environmental damages, or bodily injury incurred in connection with its projects. In addition, Strike generally indemnifies its customers for claims related to the services it provides and actions it takes under contracts. Indemnification obligations may increase Strike’s overall risk exposure as well as disrupt its operations in the event an indemnification obligation arises.

In certain instances, Strike has obtained indemnification or covenants from third parties (including predecessors or lessors) for such clean-up and other obligations and liabilities. However, such third-party indemnities or covenants may not cover all of Strike’s costs and the indemnitors may not pay amounts owed to Strike, and such unanticipated obligations or liabilities, or future obligations and liabilities, may have a material adverse effect on Strike’s business, financial condition, results of operations and cash flows.

Recently enacted comprehensive U.S. tax reform legislation may adversely affect Strike.

On December 22, 2017, the legislation commonly known as the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law, making substantial changes to U.S. tax law, including a reduction in the corporate tax rate, a limitation on deductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the allowance of immediate expensing of capital expenditures, and deemed repatriation of foreign earnings. Strike expects this legislation to have significant effects on it, some of which may be adverse. The magnitude of the net impact remains uncertain at this time and is subject to any other regulatory or administrative developments, including any regulations or other guidance promulgated by the U.S. Internal Revenue Service (the “IRS”).

Strike depends on particular suppliers and is vulnerable to product shortages and price increases.

Some of the materials that Strike uses in its operations are obtained from a limited number of suppliers. Strike’s reliance on these suppliers involves several risks, including price increases, inferior quality and a potential inability to obtain an adequate supply in a timely manner. Strike does not have long-term contracts with most of these sources, and the partial or complete loss of certain of these sources could have a negative effect on its results of operations and could damage its customer relationships. Further, a significant increase in the price of one or more of these materials could have a negative impact on Strike’s results of operations. While Strike believes it can increase its prices to adjust for some price increases in commodities, there can be no assurance that price increases of commodities, if they were to occur, would be recoverable.

Strike depends on a core group of customers.

During the year ended December 31, 2017, Strike recognized contract revenue from two customers totaling approximately $701.6 million, or 50% of total contract revenues. If one or both of these customers experience a prolonged period of adverse demand, depressed business activity or financial distress, or if either of these customers breaches or seeks relief from its contractual obligations under its agreements with Strike or if any of these customer relationships otherwise end or materially deteriorate and such lost business is not successfully replaced, Strike’s financial position, results of operations and cash flows could be adversely affected.

Substantial defaults by Strike’s customers on its accounts receivable could have a significant impact on Strike’s business, results of operations, financial condition or liquidity.

A significant portion of Strike’s working capital consists of accounts receivable. Strike’s accounts receivable was $360.4 million and $396.6 million as of December 31, 2017 and September 30, 2018, respectively. If entities responsible for a significant amount of these accounts receivable were to cease doing

 

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business, direct their business elsewhere, become insolvent or unable to pay the amount they owe Strike, or were to become unwilling or unable to make such payments in a timely manner, Strike’s business, results of operations, financial condition or liquidity could be adversely affected. An economic or industry downturn could adversely affect the collectability of these accounts receivable, which could result in longer payment cycles, increased collection costs and defaults in excess of management’s expectations.

Strike has outstanding debt obligations that could limit its ability to fund future growth and operations and increase its exposure to risk during adverse economic conditions.

As of September 30, 2018, Strike had $34.0 million outstanding under its Amended ABL Credit Agreement (as defined below) and $300.2 million outstanding under its Amended Term Loan Credit Agreement (as defined below). In addition, Strike had approximately $0.7 million of letters of credit outstanding under its Amended ABL Credit Agreement. Strike’s existing debt and associated commitments may have important adverse consequences. For example, the current level of indebtedness could:

 

   

make it more difficult for Strike to satisfy its contractual obligations;

 

   

decrease Strike’s liquidity position;

 

   

increase Strike’s vulnerability to general adverse economic and industry conditions;

 

   

limit Strike’s ability to borrow additional funds in the future or refinance on terms favorable to Strike;

 

   

limit Strike’s ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements;

 

   

limit Strike’s flexibility in planning for, or reacting to, changes in Strike’s business and industry; and

 

   

place Strike at a disadvantage compared to its competitors that have less debt or less restrictive covenants in such debt.

Strike’s indebtedness exposes it to affirmative and negative covenants. For example, the Amended ABL Credit Agreement requires Strike and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 as of each fiscal quarter while a trigger period (as described in the Amended ABL Credit Agreement) is in effect. Strike’s indebtedness also exposes it to interest rate risk. If interest rates increase, Strike’s debt service obligations on its variable rate indebtedness will increase even though the amount borrowed remains the same. In addition, Strike’s net income and cash flows, including cash available to service its indebtedness, will correspondingly decrease.

Strike’s indebtedness is secured by substantially all of the assets of the borrowers thereunder and other guarantors. The terms of Strike’s indebtedness contain customary events of default and covenants. If an event of default occurs and continues, the lenders may be permitted to terminate their commitments and accelerate all obligations and exercise other rights and remedies. For additional information on the Amended ABL Credit Agreement and the Amended Term Loan Credit Agreement see the section entitled “Strike’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Strike may be unable to compete for or work on certain projects if it is unable to obtain sufficient bonding capacity to support certain service offerings. In addition, the amount of performance and surety bonds could reduce availability under Strike’s Amended ABL Credit Agreement and Amended Term Loan Credit Agreement (each as defined below).

Strike is required to obtain performance bonds for some of its contracts. The amount of performance bonds Strike is required to obtain fluctuates between contracts. If Strike is unable to renew or obtain a sufficient level of bonding capacity in the future, it may be precluded from being able to bid for certain contracts or successfully contract with certain customers. Under standard terms in the surety market, sureties issue bonds on a project-by-

 

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project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds. If Strike were to experience an interruption or reduction in the availability of bonding capacity as a result of these or any other reasons, it may be unable to compete for or work on projects that require bonding. Strike may also be required to post letters of credits in connection with the bonds or pursuant to contracts with third parties, which could reduce borrowing availability under Strike’s Amended ABL Credit Agreement and Amended Term Loan Credit Agreement (each as defined below).

Strike leases a majority of its properties and equipment, which subject it to ongoing payment obligations and compliance with certain covenants.

As of September 30, 2018, Strike leased 62 properties to run its operations. Strike’s lease obligations have terms ranging from month-to-month to 13 years, expiring through December 31, 2027. Under these leases, Strike is obligated to make lease payments in the amount of $2.1 million for the remainder of 2018 (which includes amounts covered under month-to-month leases), $6.5 million for 2019, $4.9 million for 2020 and $16.3 million beyond 2020. If Strike is unable to make such rent payments or comply with the other covenants contained in the leases, the respective landlord could take certain actions against it, up to and including termination of the respective lease. In addition, Strike may be unable to renew such leases or find acceptable alternative lease locations. Any such event could have an adverse impact on Strike’s business, results of operations or financial conditions.

In addition to leases for real property, Strike also leases a significant amount of its equipment assets. As of September 30, 2018, Strike leased $321.4 million of equipment. Under these equipment leases, Strike is obligated to make lease payments in the amount of $16.8 million for the remainder of 2018, $49.2 million for 2019, $31.7 million for 2020 and $13.6 million beyond 2020. Strike’s equipment lease obligations have terms ranging from month-to-month to 5 years. Failure to make lease payments or comply with the other covenants contained in the leases could result in monetary damages, repossession, and the inability to obtain equipment on favorable terms in the future.

Risks Relating to Sentinel and the Business Combination

Directors of Sentinel have potential conflicts of interest in recommending that securityholders vote in favor of approval of the business combination and approval of the other proposals described in this proxy statement.

When considering Sentinel’s board of directors’ recommendation that its stockholders vote in favor of the approval of the business combination, Sentinel’s stockholders should be aware that directors and executive officers of Sentinel have interests in the business combination that may be different from, or in addition to, the interests of Sentinel’s stockholders. These interests include:

 

   

the continuation of five directors, including two current independent directors, of Sentinel as members of the board of directors of StrikeCo;

 

   

the repayment of loans made by, and the reimbursement of out-of-pocket expenses incurred by, certain officers or directors or their affiliates in the aggregate amount of approximately $1,500,000 (which right to receive such repayment in the form of warrants was waived in connection with entering into the Voting and Support Agreement); and

 

   

the continued indemnification of former and current directors and officers of Sentinel and the continuation of directors’ and officers’ liability insurance after the business combination.

In addition, certain of Sentinel’s founders, directors and entities affiliated with certain of Sentinel’s directors and executive officers, own shares of Sentinel common stock that were issued prior to Sentinel’s initial public offering. Such purchasers have waived their right to receive distributions with respect to the shares of Sentinel Class B common stock held by them upon Sentinel’s liquidation which will occur if we are unable to complete an initial business combination by November 7, 2019. Accordingly, the shares of Sentinel Class B common stock

 

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will be worthless if Sentinel is forced to liquidate. In addition, in the event of Sentinel’s liquidation, Sentinel’s warrants, including the private placement warrants held by certain of Sentinel’s directors and executive officers, will expire worthless. These financial interests of the founders, officers and directors and entities affiliated with them may have influenced their decision to approve the business combination. You should consider these interests when evaluating the business combination and the recommendation of Sentinel’s board of directors to vote in favor of the business combination proposal and other proposals to be presented to the stockholders.

Subsequent to the consummation of the business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although Sentinel has conducted due diligence on Strike, Sentinel cannot assure you that this diligence revealed all material issues that may be present in their respective businesses, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Sentinel’s or Strike’s control will not later arise. As a result, StrikeCo may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that StrikeCo reports charges of this nature could contribute to negative market perceptions about StrikeCo or its securities. In addition, charges of this nature may cause StrikeCo to violate net worth or other covenants to which it may be subject. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.

The Warrants will become exercisable for shares of StrikeCo’s Class A common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to StrikeCo’s stockholders.

Following the business combination, StrikeCo will have 11,500,000 outstanding warrants to purchase 11,500,000 shares of common stock at an exercise price of $11.50 per whole share, which warrants will become exercisable 30 days following the Closing. Only whole warrants are exercisable. In addition, there will be 5,933,333 private placement warrants outstanding exercisable for 5,933,333 shares of common stock at an exercise price of $11.50 per share. To the extent such warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the holders of StrikeCo common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of StrikeCo’s Class A common stock.

If our stockholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled to redeem their shares of our Class A common stock for a pro rata portion of the trust account.

Holders of public shares are not required to affirmatively vote against the business combination proposal in order to exercise their rights to redeem their shares for a pro rata portion of the trust account. To exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent by     a.m., Central Time, on                , 2019. Stockholders electing to redeem their shares will receive their pro rata portion of the trust account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the business combination.

 

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We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

StrikeCo will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders (1) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (2) to sell the warrants at the then-current market price when the holder might otherwise wish to hold your warrants or (3) 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 the warrants. The private placement warrants are not redeemable by us so long as they are held by the Sponsor or its permitted transferees.

If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of Sentinel’s securities prior to the Closing may decline. The market values of Sentinel’s securities at the time of the business combination may vary significantly from their prices on the date the Transaction Agreement were executed, the date of this proxy statement, or the date on which our stockholders vote on the business combination. Because the number of shares to be issued pursuant to the Transaction Agreement will not be adjusted to reflect any changes in the market price of Sentinel’s common stock, the market value of StrikeCo common stock issued in the business combination may be higher or lower than the values of these shares on earlier dates.

In addition, following the business combination, fluctuations in the price of StrikeCo’s securities could contribute to the loss of all or part of your investment. Prior to the business combination, there has not been a public market for the stock of StrikeCo and trading in Shares of Sentinel Class A common stock has not been active. Accordingly, the valuation ascribed to StrikeCo in the business combination may not be indicative of the price that will prevail in the trading market following the business combination. If an active market for our securities develops and continues, the trading price of our securities following the business combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of StrikeCo’s securities may include:

 

   

actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

 

   

changes in the market’s expectations about our operating results;

 

   

success of competitors;

 

   

our operating results failing to meet the expectation of securities analysts or investors in a particular period;

 

   

changes in financial estimates and recommendations by securities analysts concerning StrikeCo or the industries in which StrikeCo operates in general;

 

   

operating and stock price performance of other companies that investors deem comparable to StrikeCo;

 

   

our ability to market new and enhanced products on a timely basis;

 

   

changes in laws and regulations affecting our business;

 

   

commencement of, or involvement in, litigation involving StrikeCo;

 

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changes in StrikeCo’s capital structure, such as future issuances of securities or the incurrence of additional debt;

 

   

the volume of shares of our Class A common stock available for public sale;

 

   

any major change in our board or management;

 

   

sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

 

   

general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies that investors perceive to be similar to StrikeCo could depress our stock price regardless of our business, prospects, financial conditions, or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Sentinel’s initial stockholders, directors, officers, advisors and their affiliates may elect to purchase shares or public warrants from public stockholders or public warrant holders, which may influence a vote on the business combination and reduce the public “float” of our Class A common stock.

Sentinel’s initial stockholders, directors, officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either before or following the completion of the business combination, although they are under no obligation to do so. There is no limit on the number of shares Sentinel’s initial stockholders, directors, officers, advisors, or their affiliates may purchase in such transactions, subject to compliance with applicable law and the rules of Nasdaq. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.

In the event that Sentinel’s initial stockholders, directors, executive officers, advisors, or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing condition in the Transaction Agreement that requires us to have a certain amount of cash at the Closing, where it appears that such requirement would otherwise not be met. In addition, the purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with the initial business combination. Any such purchases of our securities may result in the completion of the business combination that may not otherwise have been possible.

In addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing, or trading of our securities on a national securities exchange.

Sentinel’s initial stockholders have agreed to vote in favor of the business combination, regardless of how our public stockholders vote.

Our initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after Sentinel’s initial public offering, in favor of the business combination. The initial stockholders

 

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own on an as-converted basis, approximately 20% of our outstanding shares prior to the business combination. Accordingly, it is more likely that the necessary stockholder approval for the business combination will be received than would be the case if our initial stockholders agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholders.

If Strike fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results.

Strike is currently a private company. Following the consummation of the business combination, Strike will be required to comply with Section 404 of the Sarbanes-Oxley Act, which requires, among other things, Strike to evaluate annually the effectiveness of its internal controls over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of its internal controls over financial reporting in its Annual Report on Form 10-K, commencing with StrikeCo’s annual report for the year ending December 31, 2018 in accordance with applicable SEC guidance. Effective internal controls are necessary for Strike to provide reliable financial reports and to help prevent fraud. Strike’s management and other personnel will be required to devote a substantial amount of time to these compliance requirements. Moreover, these rules and regulations increase legal and financial compliance costs and make some activities more time-consuming and costly. Despite best efforts, Strike cannot be certain that it will be able to maintain adequate controls over its financial processes and reporting in the future or that Strike will be able to comply with its obligations under Section 404 of the Sarbanes-Oxley Act.

Even if we consummate the business combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for the outstanding warrants is $11.50 per share of common stock. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

If Sentinel is unable to complete the business combination with Strike or another business combination by November 7, 2019 (or such later date as Sentinel stockholders may approve), Sentinel will cease all operations except for the purpose of winding up, dissolving and liquidating. In such event, third parties may bring claims against Sentinel and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

Under the terms of Sentinel’s Existing Charter, Sentinel must complete the business combination with Strike or another business combination by November 7, 2019 (or such later date as Sentinel stockholders may approve), or Sentinel must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Sentinel. Although Sentinel has obtained waiver agreements from certain vendors and service providers (other than our independent auditors) it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims that could take priority over those of Sentinel’s public stockholders.

The Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent public accountants) for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (1) $10.00 per public share and (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net

 

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of the interest that may be withdrawn to pay taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of our company. The Sponsor may not have sufficient funds available to satisfy those obligations. We have not asked the Sponsor to reserve for such indemnification obligations, nor have we independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations. Therefore, we cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Sentinel’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.

In the event that the proceeds in the trust account are reduced below the lesser of (1) $10.00 per public share and (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of the interest that 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, Sentinel’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations.

While Sentinel currently expects that its independent directors would take legal action on its behalf against the Sponsor to enforce its indemnification obligations to Sentinel, it is possible that Sentinel’s independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If Sentinel’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to Sentinel’s public stockholders may be reduced below $10.00 per share.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

Sentinel’s stockholders may be held liable for claims by third parties against Sentinel to the extent of distributions received by them.

If Sentinel is unable to complete the business combination with Strike or another business combination within the required time period, Sentinel will cease all operations except for the purpose of winding up, liquidating and dissolving, subject to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Sentinel cannot assure you that it will properly assess all claims that may be potentially brought against Sentinel. As such, Sentinel’s stockholders could potentially be liable for any

 

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claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, Sentinel cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by Sentinel.

If Sentinel is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders 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 Sentinel’s stockholders. Furthermore, because Sentinel intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete an initial business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, Sentinel’s board of directors may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the trust account before addressing the claims of creditors. Sentinel cannot assure you that claims will not be brought against it for these reasons.

High levels of redemptions may hinder or prevent the post-combination company from executing its operations strategy.

The management of Strike and Sentinel have made certain assumptions when modeling their expectations of the operations and strategy of the post-business combination company. If a larger number of shares are submitted for redemption than assumed by the management of Strike and Sentinel, the post-combination company may not be able to execute on its operations strategy. For example, in connection with the consummation of the business combination, Strike intends to pay off existing indebtedness under its existing facilities. A high level of redemptions will negatively impact the amount of funds remaining in Sentinel’s trust account and therefore would limit the amount of funds available to pay down Strike’s indebtedness. Failure to discharge Strike’s indebtedness could limit flexibility of the post-combination company.

The ability of stockholders to exercise redemption rights with respect to a large number of shares could increase the probability that the business combination would be unsuccessful and that stockholders would have to wait for liquidation to redeem their stock.

At the time we entered into the agreements for the business combination, we did not know how many stockholders will exercise their redemption rights, and therefore we structured the business combination based on our expectations as to the number of shares that will be submitted for redemption. The agreements with Strike relating to the business combination require us to have sufficient cash available to pay the Minimum Cash Amount. If a larger number of shares are submitted for redemption than we initially expected, this could lead to a lack of liquidity, which could impair StrikeCo’s ability to fund its operations and adversely affect its business, financial condition and results of operations.

The unaudited pro forma condensed combined financial information included in this proxy statement may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma condensed combined financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the business combination been completed on the dates indicated. See the section entitled “ Unaudited Pro Forma Condensed Combined Financial Information ” for more information.

The business combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

The completion of the business combination is subject to a number of conditions. The completion of the business combination is not assured and is subject to risks, including the risk that approval of the business

 

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combination by Sentinel’s stockholders is not obtained or that there are not sufficient funds in the trust account, in each case subject to certain terms specified in the Transaction Agreement (as described under “ The Transaction Agreement — Conditions to the Closing of the Business Combination ”), or that other closing conditions are not satisfied. If Sentinel does not complete the business combination, it could be subject to several risks, including:

 

   

the parties may be liable for damages to one another under the terms and conditions of the Transaction Agreement;

 

   

negative reactions from the financial markets, including declines in the price of Sentinel’s shares due to the fact that current prices may reflect a market assumption that the business combination will be completed; and

 

   

the attention of our management will have been diverted to the business combination rather than our own operations and pursuit of other opportunities that could have been beneficial to that organization.

There can be no assurance that our Class A common stock that will be issued in connection with the business combination will be approved for listing on the NYSE following the Closing, or that we will be able to comply with the continued listing standards of the NYSE.

Sentinel intends to apply to list the shares of StrikeCo Class A common stock and warrants, upon the consummation of the business combination, on the NYSE. StrikeCo’s continued eligibility for listing may depend on the number of our shares that are redeemed. If, after the business combination, the NYSE delists the Class A common stock from trading on its exchange for failure to meet the listing standards, StrikeCo and its stockholders could face significant material adverse consequences including:

 

   

a limited availability of market quotations for its securities;

 

   

a determination that its Class A common stock is a “penny stock,” which will require brokers trading in its Class A common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for its Class A common stock;

 

   

a limited amount of analyst coverage; and

 

   

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

If Sentinel is not able to complete the business combination with Strike or another business combination by November 7, 2019 (or such later date as Sentinel stockholders may approve), Sentinel would cease all operations except for the purpose of winding up and Sentinel would redeem its public shares and liquidate the trust account, in which case its public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.

Sentinel’s Existing Charter state that it must complete its initial business combination by November 7, 2019. If Sentinel has not completed the business combination with Strike by then or another business combination by November 7, 2019 (or such later date as our stockholders may approve), Sentinel will: (1) cease all operations except for the purpose of winding up, (2) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to pay income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (3) as promptly as reasonably possible following such redemption, subject to the approval of Sentinel’s remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, Sentinel’s public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

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SPECIAL MEETING

General

Sentinel is furnishing this proxy statement to Sentinel’s stockholders as part of the solicitation of proxies by Sentinel’s board of directors for use at the special meeting to be held on                , 2019, and at any adjournment thereof. This proxy statement is first being furnished to Sentinel’s stockholders on or about                , 2019 in connection with the vote on the proposals described in this proxy statement. This proxy statement provides Sentinel’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held on                , 2019, at        a.m., Central Time, at the offices of Winston & Strawn LLP, at 2121 North Pearl Street, Suite 900, Dallas, Texas 75201.

Purpose of the Sentinel Special Meeting

At the special meeting, Sentinel is asking holders of shares of Sentinel common stock to:

 

   

consider and vote upon a proposal to approve and adopt the Transaction Agreement, which, among other things, provides for, among other things, (1) the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity, (2) the purchase by Sentinel of certain of the issued and outstanding equity interests of Strike from certain Unit Sellers for cash, with the Continuing Members retaining the remaining issued and outstanding equity interests of Strike and each such Continuing Member receiving a number of shares of StrikeCo Class B common stock equal to the number of Company Units retained by such Continuing Member, (3) the contribution by Sentinel to Strike of all remaining cash held by Sentinel, and (4) the consummation of the transactions contemplated by the Contribution Agreement (we refer to this proposal as the “business combination proposal”);

 

   

consider and vote upon three separate proposals (which we refer to, collectively, as the “charter proposals”) to approve, assuming the business combination proposal is approved and adopted, the following material differences between the Existing Charter and the Proposed Charter of StrikeCo:

 

  (1)

to approve the provision in the Proposed Charter increasing the authorized share capital from $22,100 divided into 200,000,000 shares of Sentinel Class A common stock of a par value of $0.0001 each, 20,000,000 shares of Sentinel Class B common stock of a par value of $0.0001 each and 1,000,000 shares of preferred stock of a par value of $0.0001 each, to authorized capital stock of 451,000,000 shares, consisting of (x) 450,000,000 shares of common stock, including 400,000,000 shares of StrikeCo Class A common stock, 50,000,000 shares of StrikeCo Class B common stock and (y) 1,000,000 shares of preferred (we refer to this as “charter proposal A”);

 

  (2)

to approve the provision in the Proposed Charter providing that each member of StrikeCo’s board of directors will be elected annually at each annual meeting of stockholders (or special meeting in lieu thereof) following the Closing (we refer to this as “charter proposal B”);

 

  (3)

to approve all other changes in connection with amending the Existing Charter, including (1) changing the post-business combination corporate name from “Sentinel Energy Services Inc.” to “Strike, Inc.” and making StrikeCo’s corporate existence perpetual and (2) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Sentinel’s board of directors believe are necessary to adequately address the needs of StrikeCo after the business combination (we refer to this as “charter proposal C”);

 

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consider and vote upon a proposal to approve, assuming the business combination proposal and the charter proposals are approved and adopted, for the purposes of complying with the applicable Nasdaq listing rules, the issuance of (x) shares of StrikeCo Class A common stock to (1) the Blocker Seller at the Closing, pursuant to the terms of the Transaction Agreement, (2) CSL Energy in the CSL Private Placement at the Closing, pursuant to the terms of the CSL Subscription Agreement, (3) the Fidelity Investors in the Fidelity Private Placement, pursuant to the terms of the Fidelity Subscription Agreement, (4) the Invacor Sellers, pursuant to the terms of the Contribution Agreement, and (5) to the Continuing Members who exchange the Company Units and an equal number of shares of StrikeCo Class B common stock, from time to time, held by them following the Closing, pursuant to and in accordance with, the terms of the Exchange Agreement, and (y) shares of StrikeCo Class B common stock to the Continuing Members, pursuant to the terms of the Transaction Agreement, in order to comply with the applicable listing rules of Nasdaq (we refer to this proposal as the “stock issuance proposal”);

 

   

to consider and vote upon a proposal to elect one director, assuming charter proposal B is not approved and our board of directors remains classified, to serve as a Class I director on StrikeCo’s board of directors for a term of three years expiring at the annual meeting of stockholders to be held in 2022 or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal. Assuming charter proposal B is approved and our board of directors is declassified, such nominee, if elected, will serve on our board of directors for a term expiring at the 2020 annual meeting of stockholders or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement or removal (we refer to this as the “director election proposal”). Pursuant to our Existing Charter, until the Closing, only holders of shares of Sentinel Class B common stock can vote on the election of directors. Therefore, only holders of shares of Sentinel Class B common stock will vote on the director election proposal;

 

   

consider and vote upon a proposal to approve, assuming the business combination proposal, the charter proposals and the stock issuance proposal are approved and adopted, the Strike, Inc. 2019 Equity and Incentive Compensation Plan, a copy of which is attached to this proxy statement as Annex D (we refer to this proposal as the “incentive award plan proposal” and, collectively with the business combination proposal, the charter proposals and the stock issuance proposal, the “condition precedent proposals”); and

 

   

consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, any of the condition precedent proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the Transaction Agreement is not satisfied or waived (we refer to this proposal as the “adjournment proposal”).

Recommendation of Sentinel Board of Directors

Sentinel’s board of directors has unanimously determined that the business combination proposal is in the best interests of Sentinel and its stockholders, has unanimously approved the business combination proposal, and unanimously recommends that stockholders vote “FOR” the business combination proposal, “FOR” each of the separate charter proposals, “FOR” the stock issuance proposal, “FOR” the director nominee set forth in the director election proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the special meeting.

The existence of financial and personal interests of Sentinel’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Sentinel and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Sentinel’s Directors and Officers in the Business Combination” for a further discussion.

 

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Record Date; Who is Entitled to Vote

Sentinel has fixed the close of business on                , 2019, as the “record date” for determining Sentinel stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on        , 2019, there were        shares of Sentinel common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote per share at the special meeting.

Our initial stockholders and our other officers and directors at the time of the IPO entered into letter agreements to vote their founder shares, as well as any public shares purchased during or after the IPO, in favor of the business combination proposal and for all other proposals presented to Sentinel’s stockholders in this proxy statement. As of the date hereof, our initial stockholders own 20.0% of our total outstanding shares of Sentinel common stock.

Quorum

The presence, in person or by proxy, of stockholders holding a majority of the shares entitled to vote at the special meeting constitutes a quorum at the special meeting.

Abstentions and Broker Non-Votes

Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to Sentinel but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. They will also not be treated as shares voted on the matter. If a stockholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on “non-routine” proposals, such as the business combination proposal.

Vote Required for Approval

Approval of the business combination proposal, the stock issuance proposal, the incentive award plan proposal and the adjournment proposal require the affirmative vote of holders of a majority of the votes cast by Sentinel’s stockholders present in person or represented by proxy at the special meeting and entitled to vote thereon. Approval of each of charter proposal A and C requires the affirmative vote of holders of a majority of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting. Approval of charter proposal B requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Sentinel common stock entitled to vote thereon at the special meeting.

Pursuant to Sentinel’s Existing Charter, until the consummation of our initial business combination, only holders of shares of Sentinel Class B common stock can elect, remove and replace directors. Therefore, only holders of Sentinel Class B common stock will vote on the election of directors at the special meeting. The election of directors is decided by a plurality of the votes of the Sentinel Class B common stock present in person or represented by proxy at the special meeting and entitled to vote on the election of directors. This means that the director nominee will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors.

A stockholder’s failure to vote by proxy or to vote in person at the special meeting will not be counted towards the number of shares of common stock required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on any of the proposals other than the charter proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the outcome of the vote on any of the proposals except for the charter proposals. Failure to vote by proxy or to vote in person or an abstention from voting on any of the charter proposals will have the same effective as a vote “AGAINST” such charter proposal.

 

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Under the Transaction Agreement, the approval of each of the condition precedent proposals is a condition to the consummation of the business combination. The adoption of each condition precedent proposal is conditioned on the approval of all of the condition precedent proposals. The director election proposal and the adjournment proposal are not conditioned on the approval of any other proposal. If our stockholders do not approve each of the condition precedent proposals, the business combination may not be consummated.

Voting Your Shares

Each share of common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of Sentinel common stock that you own. 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. There are two ways to vote your shares of Sentinel common stock at the special 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 Sentinel’s board “FOR” the business combination proposal, “FOR” each of the separate charter proposals, “FOR” the stock issuance proposal, “FOR” the director nominee set forth in the director election proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the special meeting. Votes received after a matter has been voted upon at the special meeting will not be counted.

 

   

You Can Attend the Special meeting and Vote in Person . You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way Sentinel can be sure that the broker, bank or nominee has not already voted your shares.

Revoking Your Proxy

If you are a Sentinel stockholder and you give a proxy, you may 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 Kent Jamison, Sentinel’s General Counsel and Secretary, in writing before the special meeting that you have revoked your proxy; or

 

   

you may attend the special meeting, revoke your proxy, and vote in person, as indicated above.

Who Can Answer Your Questions About Voting Your Shares

If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of common stock, you may call Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing STNL.info@morrowsodali.com.

Vote of Sentinel’s Sponsor, Directors and Officers

Sentinel entered into agreements with its initial stockholders, directors and officers, pursuant to which each agreed to vote any shares of Sentinel common stock owned by them in favor of an initial business combination. These agreements apply to Sentinel’s initial stockholders, including the Sponsor, as it relates to the founder shares and the requirement to vote all of the founder shares in favor of the business combination proposal and for all other proposals presented to our stockholders in this proxy statement.

 

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Our initial stockholders, directors and officers have waived any redemption rights, including with respect to any shares of Sentinel purchased in Sentinel’s initial public offering or in the aftermarket, in connection with business combination. The founder shares held by our initial stockholders have no redemption rights upon our liquidation and will be worthless if no business combination is effected by us by November 7, 2019. However, our initial stockholders are entitled to redemption rights upon our liquidation with respect to any public shares they may own.

Redemption Rights

Public stockholders may seek to redeem the public shares that they hold, regardless of whether they vote for the proposed business combination, against the proposed business combination or do not vote in relation to the proposed business combination. Any public stockholder may request redemption of their public shares for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest earned on the funds held in the trust account and not previously released to us to pay income taxes, if any, divided by the number of then outstanding public shares. If a holder properly seeks redemption as described in this section and the business combination is consummated, the holder will no longer own these shares following the business combination.

Notwithstanding the foregoing, a public stockholder, together with any affiliate of such holder or any other person with whom such holder 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 20% or more of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Sentinel’s initial stockholders will not have redemption rights with respect to any shares of Sentinel common stock owned by them, directly or indirectly.

You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to        a.m., Central Time, on                , 2019 (a) submit a written request to the transfer agent that StrikeCo redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Public shares that have not been tendered (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 $80 and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed business combination is not consummated this may result in an additional cost to stockholders for the return of their shares.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. No fractional public warrants will be issued upon separation of the units. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so.

Any request to redeem public shares, once made, may be withdrawn at any time until immediately prior to the vote on the proposed business combination. Furthermore, if a holder of a public share delivers its certificate

 

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in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that Sentinel instruct its transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement.

If the business combination is not approved or completed for any reason, then Sentinel’s public stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares. In such case, Sentinel will promptly return any shares previously delivered by public holders.

The closing price of shares of Sentinel common stock on November 20, 2018, the most recent closing price, was $10.02. For illustrative purposes, the cash held in the trust account on September 30, 2018 was $348,956,985 or approximately $10.12 per public share, as of September 30, 2018. Prior to exercising redemption rights, stockholders should verify the market price of shares of Sentinel common stock as they may receive higher proceeds from the sale of their shares of Sentinel common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. Sentinel cannot assure its stockholders that they will be able to sell their shares of Sentinel common stock 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 stockholders wish to sell their shares.

If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own those public shares. You will be entitled to receive cash for your public shares only if you properly exercise your right to redeem the public shares you hold, no later than the close of the vote on the business combination proposal, and deliver your public shares (either physically or electronically) to the transfer agent, prior to        a.m., Central Time, on                , 2019, and the business combination is consummated.

In order for public stockholders to exercise their redemption rights in respect of the proposed business combination, public stockholders must properly exercise their right to redeem the public shares they hold no later than the close of the vote on the business combination proposal and deliver their public shares (either physically or electronically) to the transfer agent, prior to        a.m., Central Time, on                , 2019. Immediately following the consummation of the business combination, StrikeCo shall pay public stockholders who properly exercised their redemption rights in respect of their public shares.

Appraisal Rights

Neither Sentinel stockholders nor Sentinel warrant holders have appraisal rights in connection with the business combination under the DGCL.

Proxy Solicitation Costs

Sentinel is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. Sentinel and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Sentinel will bear the cost of the solicitation.

Sentinel has hired Morrow Sodali LLC to assist in the proxy solicitation process. Sentinel will pay that firm a fee of $22,500 plus disbursements. Such fee will be paid with non-trust account funds.

Sentinel 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. Sentinel will reimburse them for their reasonable expenses.

 

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Potential Purchases of Public Shares and/or Warrants

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Sentinel or its securities, the Sentinel initial stockholders, Strike and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Sentinel common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that (1) the proposals presented to stockholders for approval at the special meeting are approved and/or (2) Sentinel has sufficient cash available to pay the Minimum Cash Amount. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement, 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.

Entering into any such arrangements may have a depressive effect on shares of Sentinel common stock. 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 he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Sentinel 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 proposals to be put to the special meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

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THE BUSINESS COMBINATION PROPOSAL

We are asking our stockholders to approve and adopt the Transaction Agreement and the transactions contemplated thereby. Our stockholders should read carefully this proxy statement in its entirety for more detailed information concerning the Transaction Agreement, which is attached as Annex A to this proxy statement. Please see the subsection entitled “The Transaction Agreement” below, for additional information and a summary of certain terms of the Transaction Agreement. You are urged to read carefully the Transaction Agreement in its entirety before voting on this proposal.

Because we are holding a stockholder vote on the business combination, we may consummate the business combination only if it is approved by the affirmative vote of the holders of a majority of shares of Sentinel common stock that are voted at the special meeting.

The Transaction Agreement

This section describes the material provisions of the Transaction Agreement, but does not purport to describe all of the terms of the Transaction Agreement. The following summary is qualified in its entirety by reference to the complete text of the Transaction Agreement, a copy of which is attached as Annex A hereto, which is incorporated herein by reference. Stockholders and other interested parties are urged to read the Transaction Agreement, carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the business combination.

The Transaction Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Transaction Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Transaction Agreement. The representations, warranties and covenants in the Transaction Agreement are also modified in important part by the disclosure letter (the “Disclosure Letter”) and annexes attached thereto which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders. The Disclosure Letter was used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the Disclosure Letter contains information that is material to an investment decision.

General; Structure of the Business Combination

On October 18, 2018, Sentinel entered into the Transaction Agreement with Blocker, the Sellers, Strike, the Seller Representative and Blocker Merger Sub. The Transaction Agreement provides for among other things:

 

   

the merger of Blocker Merger Sub with and into Blocker, with Blocker continuing as the surviving entity, immediately followed by the merger of Blocker with and into Sentinel, with Sentinel continuing as the surviving entity;

 

   

the purchase by Sentinel from the Unit Sellers of a certain number of issued and outstanding equity interests of Strike, with certain of the Unit Sellers retaining the remaining issued and outstanding equity interests of Strike; and

 

   

the contribution by Sentinel to Strike of all remaining cash held by Sentinel.

In connection with the business combination, assuming no redemptions by public stockholders, Sentinel is expected to acquire approximately 65%, of the issued and outstanding equity interests of Strike from the Unit Sellers, with the Continuing Members (as defined below) expected to retain the remaining approximately 35% of the issued and outstanding equity interests of Strike (such retained equity interests, the “Retained Company Units”). Prior to the Closing, the equity interests in Strike (referred to as “Company Units”) will be held by the Unit Sellers and indirectly by the Blocker Seller.

 

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Following the Closing, Sentinel and Strike will be organized in an “Up-C” structure, meaning that:

 

   

substantially all of our assets and operations will be held and conducted by Strike;

 

   

Sentinel’s only assets will be the equity interests of Strike acquired from the Unit Sellers, representing a majority economic interest in Strike, expected to be approximately 65%;

 

   

Sentinel will be the managing member of Strike pursuant to the terms of Strike’s Third Amended and Restated Regulations (the “A&R Regulations”);

 

   

the Retained Company Units will be owned by the Unit Sellers, who elected to retain certain of their Company Units instead of receiving all cash consideration (the “Continuing Members”);

 

   

the shares of StrikeCo Class B common stock generally will vote together with the shares of StrikeCo Class A common stock on matters submitted to a vote of our stockholders but will represent a non-economic interest in us, such that one Retained Company Unit and one share of StrikeCo Class B common stock, together, will represent an economic and voting interest that is equivalent to one share of StrikeCo Class A common stock; and

 

   

each Retained Company Unit, together with one share of StrikeCo Class B common stock, will be exchangeable in the future, subject to certain conditions, for either one share of StrikeCo Class A common stock or, at our election, the cash equivalent to the market value of one share of StrikeCo Class A common stock, subject to adjustment as provided in the Exchange Agreement.

Post-Business Combination Ownership Structure

After the business combination, assuming no redemptions by public stockholders, Sentinel will own approximately 65% of Strike, with the Continuing Members owning the remaining 35% of Strike. Specifically, it is anticipated that, upon completion of the business combination, the ownership interests in StrikeCo will be as set forth in the table below.

 

     Assuming No
Redemptions
of Public

Shares
    Assuming
Maximum

Redemptions
of Public
Shares (1)
 

Sentinel’s public stockholders

     39     3

Initial Stockholders

     10     15

CSL Energy

     4     7

Fidelity Investors

     12     20

Sellers

     35     55

 

(1)

Assumes that holders of 32,632,412 shares of Sentinel Class A common stock exercise their redemption rights (maximum redemptions scenario based on $348,956,985 held in trust as of September 30, 2018 and a redemption price of approximately $10.12 per share).

The ownership percentages set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the closing of the business combination) or (b) the issuance of any shares upon completion of the business combination under the Incentive Plan, a copy of which is attached to this proxy statement as Annex D, but does include the founder shares, which, on the effective date of the business combination, will convert into one share of StrikeCo Class A common stock in accordance with the terms of the Existing Charter. If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

For more information, please see the section entitled “ Unaudited Pro Forma Condensed Combined Financial Information .” In addition, following the business combination, the ownership of Sentinel and Strike

 

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will change based on the exercise of the rights set forth in the Exchange Agreement. For additional information on the Exchange Agreement, please see the section entitled “ Related Transaction Agreements — Exchange Agreement ” below.

Consideration to be Received in the Business Combination

Subject to the terms and conditions set forth in the Transaction Agreement, Sentinel has agreed to pay to the Sellers approximately $124.4 million in cash and issue to the Sellers an aggregate of approximately 30.6 million shares of StrikeCo common stock, with Blocker Seller receiving a portion of such cash and shares of StrikeCo Class A common stock and the Unit Sellers, who have elected to sell all of their Company Units receiving cash and the Continuing Members receiving cash and/or a number of shares of StrikeCo Class B common stock equal to the number of Retained Company Units held by them, in each case as calculated pursuant to the terms of the Transaction Agreement. Each Retained Company Unit, together with one share of StrikeCo Class B common stock, will be exchangeable in the future, subject to certain conditions, for either one share of StrikeCo Class A common stock or, at our election, the cash equivalent to the market value of one share of StrikeCo Class A common stock, subject to adjustment as provided in the Exchange Agreement.

Closing of the Business Combination

The Closing is expected to take place on the third business day following the day on which the last of the conditions to the Closing (as described under the subsection entitled “ — Conditions to Closing of the Business Combination ”) have been satisfied or waived (other than those conditions which by their terms are required to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) or on such other date or at such other time and place as may be mutually agreed to by Sentinel and Strike in writing (the date upon which the Closing occurs is referred to as the “Closing Date”). Assuming timely satisfaction of the necessary closing conditions, Sentinel and Strike currently expect the Closing to occur promptly after the special meeting of stockholders is concluded.

Conditions to Closing of the Business Combination

The respective obligations of the parties to consummate the business combination are subject to the satisfaction or waiver (if permitted by applicable law) at or prior to the Closing of each the following conditions:

 

   

None of the parties being subject to any order of a court of competent jurisdiction or law that prohibits the consummation of the transactions contemplated by the Transaction Agreement. If any such order has been issued, each party will use commercially reasonable efforts to have any such order overturned or lifted.

 

   

The expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1975, as amended (“HSR Act”). On October 22, 2018, Blocker Seller, Blocker, Strike, Blocker Merger Sub and Sentinel filed the required forms under the HSR Act with the Antitrust Division of the United States Department of Justice and the U.S. Federal Trade Commission. The Antitrust Division of the United States Department of Justice and the U.S. Federal Trade Commission granted early termination of the applicable waiting period under the HSR Act on October 31, 2018.

 

   

The approval of the Transaction Agreement and the transactions contemplated thereby (including the business combination) by a majority of votes cast by stockholders that are present in person or by proxy at our special meeting (the “Buyer Stockholder Approval”).

 

   

The Buyer Closing Cash not being less than an amount sufficient to pay the cash purchase price, repay any indebtedness of Strike to the extent such indebtedness is required to be repaid pursuant to its terms as a result of the business combination, and pay transaction expenses, including all phantom unit payments (the “Minimum Cash Amount”).

 

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In addition, the obligations of Blocker, Strike and the Sellers to consummate the business combination are subject to the satisfaction or waiver (if permitted by applicable law) at or prior to the Closing of each of the following additional conditions:

 

   

Each of the representations and warranties of Sentinel set forth in the Transaction Agreement (without giving effect to any limitation as to “materiality” qualifiers) being true and correct in all respects at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty will be true and correct only as of such earlier date), except for such inaccuracies that, individually or in the aggregate, would not materially and adversely affect the ability of Sentinel to consummate the business combination; provided, that notwithstanding the foregoing each of the representations and warranties of Sentinel and Blocker Merger Sub relating to (1) Existence and Good Standing, Validity and Enforceability, Ownership of Blocker Merger Sub, and Brokers (without giving effect to any limitation as to “materiality”) being true and correct in all material respects at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty will be true and correct in all material respects only as of such earlier date) and (2) Capitalization being true and correct in all respects, except for inaccuracies that are de minimis in amount and effect, at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty will be true and correct in all material respects only as of such earlier date).

 

   

Sentinel and Blocker Merger Sub having performed in all material respects all obligations required to be performed by it under the Transaction Agreement at or prior to the Closing.

 

   

The Unit Sellers having received the Cash Purchase Price (as defined in the Transaction Agreement).

 

   

The Blocker Seller having received the Blocker Cash Payment and the shares of StrikeCo Class A common stock to be issued pursuant to the terms of the Transaction Agreement.

 

   

The Continuing Members having been issued the StrikeCo Class B common stock in accordance with the Transaction Agreement.

 

   

The Sellers having received a counterpart signature page for each Ancillary Agreement (as defined in the Transaction Agreement) to which Sentinel is specified to be a party, duly executed by Sentinel as well as all other documents required to be delivered by Sentinel on or prior to the Closing Date pursuant to the Transaction Agreement or otherwise reasonably required in order to consummate the business combination.

 

   

The Sellers having received a certificate of the secretary or an assistant secretary (or equivalent officer) of Sentinel certifying (1) that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Sentinel authorizing the execution, delivery and performance of the Transaction Agreement and the Ancillary Agreements and the consummation of the transactions contemplated by the Transaction Agreement, including the business combination, that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the business combination and (2) that to the knowledge and belief of such officer, the conditions specified in the first and second bullets above have been fulfilled.

 

   

The Sellers having received evidence of the resignations of each director, officer and employee of Sentinel, other than certain persons listed in the Disclosure Letter, each in form and substance reasonably satisfactory to the Sellers.

 

   

Sentinel and the Continuing Members having entered into the Registration Rights Agreement.

 

   

After giving effect to the business combination, Sentinel being listed as a public company on, and the shares of StrikeCo Class A common stock being tradable over, the applicable stock exchange(s).

 

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Sentinel’s Amended and Restated Certificate of Incorporation having been adopted by its board of directors and approved by its stockholders, and Sentinel’s bylaws having been adopted by its board of directors, and each being effective as of the Closing.

 

   

The members of Sentinel’s board of directors, and any committees thereof, in each case as set forth in Annex I to the Transaction Agreement, having been approved and appointed to their respective position(s) (including any role as chairman indicated thereon), and Sentinel having offered each of the same the opportunity to enter an agreement for indemnification, effective as of the Closing.

 

   

The Strike, Inc. 2019 Equity and Incentive Compensation Plan having been approved by Sentinel’s stockholders, and its board of directors having recommended equity awards to be awarded to each individual set forth in the Disclosure Letter in the amount set forth opposite such individual’s name; provided, however, that such awards will not be issued until approved by Sentinel’s compensation committee and a registration statement on Form S-8 has been filed with the SEC covering the shares of capital stock subject to such awards.

 

   

The Voting and Support Agreement remaining in full force and effect, and the parties thereto being in compliance with the terms and conditions thereof in all material respects, and if the Sellers have exercised its rights to enforce the Voting and Support Agreement pursuant to the terms thereof and the Transaction Agreement, the parties thereto having complied with and consummated their respective obligations with respect thereto.

 

   

Except for (1) the shares of StrikeCo Class A common stock to be issued in respect of the Sentinel Class A common stock and Sentinel Class B common stock outstanding as of the Effective Date, (2) the shares of StrikeCo Class A common stock to be issued pursuant to the Subscription Agreements executed in connection with the Equity Financing and (3) the shares of StrikeCo Class B common stock to be issued to the Continuing Members pursuant to the Transaction Agreement, from the Effective Date through the Closing no Sentinel capital stock having been issued to any person in an amount or on terms other than those approved with the prior written consent of the Sellers Representative (which consent will not be unreasonably withheld, conditioned or delayed).

 

   

The redemption of shares in connection with the shareholder vote to approve the business combination having been completed in accordance with this proxy statement.

 

   

The Continuing Members having received a fully-executed Lock-Up Agreement.

 

   

The Continuing Members and Blocker Seller having received a fully-executed Investor Rights Agreement.

In addition, the obligations of Sentinel and Blocker Merger Sub to consummate the business combination are subject to the satisfaction or waiver (if permitted by applicable law) at or prior to the Closing of each of the following additional conditions:

 

   

Strike’s A&R Regulations having reflected that (A) the number of common units outstanding will be equal to the number of shares of StrikeCo Class A common stock and StrikeCo Class B common stock outstanding as of the Closing and (B) Sentinel is the holder of a number of common units equal to the number of shares of StrikeCo Class A common stock outstanding as of the Closing, in each case after giving effect to the business combination.

 

   

Each of the representations and warranties of Sellers and Strike set forth in the Transaction Agreement (without giving effect to any limitation as to “materiality” or “material adverse effect” qualifiers) being true and correct in all respects at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty shall be true only as of such earlier date), except for such inaccuracies that, individually or in the aggregate, would not result in a material adverse effect; provided that, notwithstanding the foregoing, (a) the representations and warranties of (1) the Sellers relating to

 

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Existence and Good Standing, Capacity, Authority, Validity and Enforceability, and Brokers, (2) Strike relating to Existence and Good Standing; Books and Records, Authority, Validity and Enforceability, and Brokers, and (3) Blocker relating to Existence and Good Standing, Authority, Validity and Enforceability, Title, and Brokers (without giving effect to any limitation as to “materiality” or “material adverse effect” qualifiers) being true and correct in all material respects at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects only as of such earlier date) and (b) the representations and warranties of (1) the Sellers related to Title and (2) Strike relating to Capitalization, being true and correct in all respects, except for inaccuracies that are de minimis in amount and effect, at and as of the Effective Date and at and as of the Closing Date (except to the extent that any representation or warranty speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects only as of such earlier date).

 

   

Each of Blocker, Strike and the Sellers having performed in all material respects all obligations required to be performed by such person under the Transaction Agreement at or prior to the Closing.

 

   

Sentinel having received a certificate of the secretary or an assistant secretary (or equivalent officer) of Strike, dated as of the Closing Date, certifying (1) as to the resolutions of the board of directors of Strike authorizing the execution, delivery and performance by Strike of the Transaction Agreement and the Ancillary Agreements to which it is a party and (2) that, to the knowledge and belief of such officer, the conditions specified in the second, third and ninth bullet herein have been fulfilled.

 

   

Sentinel having received a counterpart signature page for each Ancillary Agreement to which the Sellers or Strike is specified to be a party, duly executed by the Sellers or Strike as well as all other documents required to be delivered by the Sellers, Strike or its subsidiaries on or prior to the Closing Date pursuant to the Transaction Agreement or otherwise reasonably required in order to consummate the business combination.

 

   

Sentinel having received evidence of the termination of certain contracts with affiliates that are set forth in the Disclosure Letters;

 

   

Sentinel having received certificates or non-foreign person affidavits sufficient to prevent the obligation of Sentinel to withhold any amounts under Sections 1445 or 1446(f) of the Code executed by Blocker Seller.

 

   

Sentinel having received certificates or non-foreign person affidavits sufficient to prevent the obligation of Sentinel to withhold any amounts under Sections 1445 or 1446(f) of the Code executed by each Unit Seller.

 

   

There having not occurred a Material Adverse Effect since the Effective Date that is continuing and no Material Adverse Effect is reasonably expected to occur.

 

   

Sentinel having received payoff letters reflecting all of Strike’s debt and evidence that all liens associated with Strike’s debt have been or are authorized to be released in full.

 

   

The A&R Regulations having been amended and restated and being in effect as of the Closing.

 

   

Sentinel having received a fully-executed Lock-Up Agreement.

 

   

Sentinel having received a fully-executed Investor Rights Agreement from Blocker Seller and the Continuing Members.

 

   

Sentinel having received a fully-executed restrictive covenants agreement from the persons set forth in the Disclosure Letter.

 

   

Sentinel having received fully-executed employment agreements from the persons set forth in the Disclosure Letter and amendments evidencing the termination or revised termination date, as applicable, of all other employment agreements between the persons set forth in the Disclosure Letter and Strike or its subsidiaries, each in form and substance materially agreed at the Effective Date.

 

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We cannot provide assurance as to when or if all of the conditions to the business combination will be satisfied or waived by the appropriate party. As of the date of this proxy statement, we have no reason to believe that any of these conditions will not be satisfied.

Efforts to Obtain Stockholder Approval and Consummate the Business Combination; Regulatory Matters

Unless the Transaction Agreement is terminated in accordance with its terms, we have agreed to call a special meeting of our stockholders, for the purpose of such stockholders considering and voting on the approval of the Transaction Agreement and any other matters required to be voted upon by such stockholders in connection with the transactions contemplated in the Transaction Agreement (including the business combination). We may, without the prior consent of the Sellers, make one or more successive postponements or adjournments of such special meeting (1) if required by applicable law or a request from the SEC or its staff, (2) to the extent necessary to ensure that any supplement or amendment to the proxy statement that our board of directors, after consultation with its outside legal counsel, has determined in good faith, is required by applicable law is provided to the Buyer’s stockholders, or (3) if, on a date for which such special meeting is scheduled, the Buyer has not received proxies representing a sufficient number of shares of Sentinel capital stock to obtain the Buyer Stockholder Approval, whether or not a quorum is present; provided, that (A) the duration of any such adjournment or postponement shall be limited to the minimum duration reasonably necessary to remedy the circumstances giving rise to such adjournment or postponement, (B) no single such adjournment or postponement shall be for more than five business days except as may be required by federal securities laws, and (C) in the case of clause (3), such special meeting shall not be postponed to later than the date that is ten business days after the date for which such special meeting was originally scheduled without the prior written consent of the Sellers. All other postponements or adjournments shall require the prior written consent of the Sellers. Our board of directors has, by a unanimous vote, approved the business combination and directed that the Transaction Agreement and the business combination be submitted to our stockholders for their consideration.

Moreover, each of the parties to the Transaction Agreement has agreed to execute and deliver such documents and take such further actions as may be reasonably necessary or desirable to carry out the provisions of the Transaction Agreement and the transactions contemplated thereby, including the business combination. Upon the terms and subject to the conditions of the Transaction Agreement, each of the parties will use commercially reasonable efforts under the circumstances including by taking, or causing to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated by the Transaction Agreement, including the business combination, including using commercially reasonable efforts to (1) obtain all necessary consents from any person, including governmental authorities, and making of all filings and the taking of all steps as may be necessary to obtain such consents or to avoid an action by any governmental authority, (2) defend any Actions, whether judicial or administrative, challenging the Transaction Agreement or the consummation of the transactions contemplated by the Transaction Agreement, including the business combination, including seeking to have any stay or temporary restraining order entered by any court or other governmental authority vacated or reversed and (3) fulfill all conditions to the consummation of the transactions contemplated by the Transaction Agreement, including the business combination. Without limiting the generality of the preceding sentence, Strike will, and will cause its subsidiaries and each of their respective officers and employees to, use commercially reasonable efforts to provide to Sentinel such customary cooperation reasonably requested by Sentinel in connection with the solicitation of proxies to obtain the Buyer Stockholder Approval, including attending and participating in such presentations, meetings and roadshows reasonably requested by Sentinel and providing such information, financial or otherwise, reasonably requested by Sentinel in connection therewith.

In addition, Blocker Seller, Blocker, Strike, Blocker Merger Sub and Sentinel were required, as promptly as practicable, but in no event later than two business days following the execution and delivery of the Transaction Agreement, to submit all filings required by the HSR Act, and thereafter provide any supplemental information requested in connection therewith pursuant to the HSR Act and make any similar filing within, to the extent reasonably practicable, a similar time frame with any other governmental authority for which such filing is

 

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required. On October 22, 2018, Blocker Seller, Blocker, Strike, Blocker Merger Sub and Sentinel filed the required forms under the HSR Act with the Antitrust Division of the United States Department of Justice and the U.S. Federal Trade Commission. The Antitrust Division of the United States Department of Justice and the U.S. Federal Trade Commission granted early termination of the applicable waiting period under the HSR Act on October 31, 2018.

Termination

Notwithstanding any other provision of the Transaction Agreement, the Transaction Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Closing Date by:

 

   

the mutual written consent at any time of Sentinel and Strike;

 

   

Sentinel or Strike, upon written notice to the other parties, if the transactions contemplated by the Transaction Agreement have not been consummated on or prior to February 13, 2019 or such later date, if any, as Sentinel and Strike agree upon in writing (such date is referred to as the “Termination Date”); provided, however, that the right to terminate the Transaction Agreement pursuant to this paragraph is not available to (1) Sentinel if Sentinel’s or Blocker Merger Sub’s failure to comply in all material respects with the covenants and agreements contained in the Transaction Agreement results in or causes the failure of the transactions contemplated by the Transaction Agreement to be consummated by such time or (2) Strike if Blocker’s, Strike’s or the Sellers’ failure to comply in all material respects with the covenants and agreements results in or causes the failure of the transactions contemplated by the Transaction Agreement to be consummated by such time;

 

   

Sentinel or Strike, upon written notice to the other parties, if a governmental authority has issued an order permanently making illegal the business combination, enjoining, restricting or otherwise prohibiting the consummation of the transactions contemplated by the Transaction Agreement, and such order has become final and non-appealable; provided, however, that the right to terminate the Transaction Agreement pursuant to this paragraph is not available to any party whose breach of any provision of the Transaction Agreement results in or causes such order or such party is not in compliance with its obligation under the Transaction Agreement to take such further actions as may be reasonably necessary or desirable to carry out the provisions of the Transaction Agreement and the transactions contemplated by thereby;

 

   

Strike if (1) Sentinel or Blocker Merger Sub has materially breached or failed to perform any of its covenants or other agreements contained in the Transaction Agreement to be complied with by Sentinel such that certain closing conditions would not be satisfied; or (2) there exists a breach of any representation or warranty of Sentinel or Blocker Merger Sub contained in the Transaction Agreement such that certain closing conditions would not be satisfied and, in the case of clauses (1) and (2) of this paragraph, such breach or failure to perform has neither been waived by Blocker, Strike and the Sellers nor cured within 30 days after receipt of written notice thereof (in which event, the Termination Date shall automatically be extended until the end of such 30-day period); or

 

   

Sentinel if (1) Blocker, Strike and the Sellers have breached or failed to perform any of their respective covenants or other agreements contained in the Transaction Agreement to be complied with by such party such that certain closing conditions would not be satisfied; or (2) there exists a breach of any representation or warranty of Blocker, Strike or the Sellers contained in the Transaction Agreement such that certain closing condition would not be satisfied and, in the case of clauses (1) and (2) of this paragraph, such breach or failure to perform has neither been waived by Sentinel nor is cured within 30 days after receipt of written notice thereof (in which event the Termination Date shall automatically be extended until the end of such 30-day period).

In the event the Transaction Agreement is validly terminated, all further obligations of the parties under the Transaction Agreement will terminate and will be of no further force and effect (except that certain obligations

 

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related to public announcements, confidentiality, termination, general provisions and the confidentiality agreement between the parties will continue in effect), and no party will have any further liability to any other party except for liability for any pre-termination willful breach or intentional fraud.

Fees and Expenses

At the Closing, Sentinel will on behalf of the Sellers, Blocker or Strike or any of its subsidiaries, as applicable, pay or cause to be paid, (1) the Company’s unpaid transaction expenses and (2) Sentinel’s unpaid transaction expenses, to the applicable recipients thereof, with neither amount subject to a cap.

No Termination Fees . If the Transaction Agreement is validly terminated, each party will be responsible for all costs and expenses (including all legal, accounting, broker, finder or investment banker fees) incurred in connection with the Transaction Agreement and the business combination and will be paid by the party incurring such cost and expense, with no party responsible to the other for any termination fees.

Interim Operations Pending the Closing

From the Effective Date until the Closing Date (or, if earlier, the date the Transaction Agreement is validly terminated), Strike has undertaken covenants that place customary restrictions on it and its subsidiaries. Strike has agreed to, and has agreed to cause its subsidiaries to, operate and carry on Strike’s and its subsidiaries’ operations in the ordinary course of business and use commercially reasonable efforts to (1) preserve the present business relationships, organization and goodwill of Strike and its subsidiaries and (2) preserve the present relationships with those persons having material business relationships with Strike or any such subsidiaries.

Without limiting the generality of the preceding paragraph, except (x) as set forth in the Disclosure Letter, (y) as expressly contemplated by the Transaction Agreement or any Ancillary Agreement, or (z) with the prior written consent of Sentinel (which consent, other than in the case of subclauses (b), (h), (i), (j), (s), (t) below and, solely with respect to the foregoing subclauses, subclause (u) below, shall not be unreasonably withheld conditioned or delayed), Strike will not and will not permit any of its subsidiaries to take any of the following actions:

 

  (a)

(1) acquire, or dispose of, any property or assets having a fair market value in excess of $2,000,000 individually or $5,000,000 in the aggregate, except in the ordinary course of business and for fair value, (2) mortgage or encumber any property or assets (other than permitted liens), except in the ordinary course of business, or (3) cancel any debts owed to or claims held by Strike or its subsidiaries, except in the ordinary course of business;

 

  (b)

borrow any amount or incur any liability or obligation in excess of $2,500,000 other than borrowings under lines of credit existing on such date, obligations under customer contracts or other liabilities incurred in the ordinary course of business that do not exceed $10,000,000 in the aggregate;

 

  (c)

enter into any agreement that would constitute a material contract, except agreements made in the ordinary course of business;

 

  (d)

terminate or amend in a manner adverse to Strike any material contract except as required by the terms of such material contract;

 

  (e)

acquire any real estate or enter into any new lease with an annual cost greater than $1,000,000 per year;

 

  (f)

engage in any transactions or enter into any agreement (or amend or modify any existing agreement) with any affiliates of Strike (excluding any intercompany agreements or employee plans), except to the extent required by law or any existing agreement as of the Effective Date;

 

  (g)

make any material change to its accounting methods, principles or practices, except as may be required by GAAP or other applicable law;

 

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  (h)

make any amendment to, waive or, to the extent Strike is aware of a breach or threatened breach of a material provision of its organizational documents or fail to seek to enforce such material provision pursuant to the terms of its organizational documents;

 

  (i)

make any distributions of assets (other than cash) to the Sellers or any of their affiliates;

 

  (j)

issue or sell any equity interests or options, warrants or other rights to purchase any equity interests of Strike or its subsidiaries or split, combine or subdivide the equity interests of Strike or its subsidiaries;

 

  (k)

make any new commitments for capital expenditure (other than capitalized software in the ordinary course of business) in excess of $2,000,000 individually or $5,000,000 in the aggregate;

 

  (l)

(1) enter into any agreement with any taxing authority with respect to any tax or tax returns of Strike or its subsidiaries, (2) surrender a right of Strike or any of its subsidiaries to a tax refund, (3) change an accounting period of Strike or any of its subsidiaries with respect to any tax except as required by law, (4) file an amended tax return for Strike or any of its subsidiaries, (5) make (other than in the ordinary course of business) any election with respect to taxes or tax returns of Strike or any of its subsidiaries, (6) change or revoke any election with respect to taxes or tax returns of Strike or any of its subsidiaries except as required by law, or (7) extend the applicable statute of limitations with respect to any tax of Strike or any of its subsidiaries other than in the ordinary course of business, in the case of each of clauses (1)-(7), if such action could reasonably be expected to have an adverse tax impact on Sentinel or any of its affiliates;

 

  (m)

waive, release, compromise, settle or make any payments in respect of any pending or threatened judicial, administrative, investigative or arbitral action, suit, proceeding, investigation, audit, cause of action, examination, demand, hearing, claim, complaint, inquiry or dispute by or before any governmental authority (“Actions”) except for Actions (1) with respect to which an insurer has the right to control the decision or settle or (2) as to which the settlement does not materially restrict the operations of Strike or its subsidiaries and involves the monetary payment, prior to the Closing, of less than $2,000,000;

 

  (n)

write down the value of any tangible asset or assets in excess of $1,000,000 individually or $5,000,000 in the aggregate other than in the ordinary course of business;

 

  (o)

except as required by law or required by any existing contract or employee plan, (1) increase the salary or other compensation (including any bonuses paid, other than any bonuses paid in connection with the business combination or bonus amounts paid in the ordinary course of business based on 2018 year-end performance) of any corporate officer, manager, consultant or employee who was paid or is expected to be paid more than $175,000 annually, in each case other than any field employees, operational personnel, project managers or operational managers, (2) make or grant any increase in any employee plan, or amend or terminate any existing material employee plan, or adopt any new material employee plan or (3) make any commitment or incur any liability to any labor organization;

 

  (p)

amend or terminate any collective bargaining agreement or adopt any new employee plan or collective bargaining agreement or, in either case, otherwise agree to do so in the future;

 

  (q)

hire any corporate officer, manager or other employee with an annual base salary greater than $200,000, in each case other than any field employees, operational personnel, project managers or operational managers;

 

  (r)

terminate the employment of any executive officer for any reason other than for cause;

 

  (s)

make, or commit to make, any acquisition (including, by merger, consolidation or acquisition of stock or assets) of any corporation, partnership or other business organization or entity or division thereof or otherwise enter into a new line of business or abandon or discontinue an existing line of business;

 

  (t)

adopt a plan of complete or partial liquidation; or

 

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  (u)

enter into any agreement or commitment to do any of the foregoing, or knowingly take any action or fail to take any action that would result in any of the foregoing.

Blocker Seller has similarly undertaken covenants that place customary restrictions on it from the Effective Date until the Closing Date (or, if earlier, the date the Transaction Agreement is validly terminated). Except (x) as set forth in the Disclosure Letter, (y) as expressly contemplated by the Transaction Agreement or any Ancillary Agreement, or (z) with the prior consent of Sentinel, Blocker Seller will not permit Blocker to take any of the following actions:

 

  (a)

(1) acquire, or dispose of, any material property or assets or (2) mortgage or encumber any property or assets (other than permitted liens);

 

  (b)

enter into any contract;

 

  (c)

engage in any transactions with, or enter into any agreement (or amend or modify any existing agreement) with, any affiliates of Blocker (excluding any intercompany agreements), except to the extent required by law or any agreement that will terminate at or before the Closing;

 

  (d)

make any amendment to, waive, to the extent Blocker is aware of a breach or threatened breach of a material provision of its organizational documents, or fail to seek to enforce such material provision pursuant to the terms of its organizational documents;

 

  (e)

issue or sell any equity interests or options, warrants or other rights to purchase any equity interests of Blocker or split, combine or subdivide the equity interests of Blocker;

 

  (f)

make any material change to its accounting methods, principles or practices, except as may be required by GAAP or other applicable law;

 

  (g)

make, or commit to make, any acquisition (including by merger, consolidation or acquisition of stock or assets) of any corporation, partnership or other business organization or entity or division thereof or otherwise enter into a new line of business or abandon or discontinue an existing line of business;

 

  (h)

undertake any operations or actions, except for operations or actions as are reasonable and appropriate in furtherance of the business combination; or

 

  (i)

enter into any agreement to do any of the foregoing, or take any action or fail to take any action that would result in any of the foregoing.

Sentinel has also undertaken covenants that place customary restrictions on it from the Effective Date until the Closing Date (or, if earlier, the date the Transaction Agreement is validly terminated). Except (x) as necessary to effect the domestication, (y) as contemplated by the Transaction Agreement or set forth in the Disclosure Letter, or (z) with the prior consent of Strike (which consent will not be unreasonably withheld, conditioned, or delayed), neither Sentinel nor Blocker Merger Sub will take any of the following actions:

 

  (a)

make any amendment or modification to any of the organizational documents of Sentinel or Blocker Merger Sub;

 

  (b)

take any action in violation or contravention of any of the organizational documents of Sentinel or Blocker Merger Sub, applicable law or any applicable rules and regulations of the SEC and applicable stock exchange(s);

 

  (c)

split, combine or reclassify Sentinel’s capital stock;

 

  (d)

make any amendment or modification to the trust account;

 

  (e)

effect any recapitalization, reclassification, equity split or like change in its capitalization;

 

  (f)

make or allow to be made any reduction in the trust account, other than as expressly permitted by the Sentinel’s organizational documents;

 

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  (g)

contact (or permit any of its employees, agents, representatives or affiliates to contact) any customer, supplier, distributor, joint-venture partner, lessor, lender or other material business relation of Strike or its subsidiaries regarding Strike, its subsidiaries, its and their businesses or the business combination;

 

  (h)

(1) incur any indebtedness or (2) issue or sell any equity interests or options, warrants or other rights to purchase any equity interests of Sentinel, other than pursuant to the Equity Financing or the Contribution Agreement;

 

  (i)

undertake any operations or actions, except for operations or actions as are reasonable and appropriate in furtherance of the business combination;

 

  (j)

hire any employee;

 

  (k)

amend, waive or terminate, in whole or in part, any Subscription Agreements or the Voting and Support Agreement;

 

  (l)

establish any subsidiary or acquire any interest in any asset;

 

  (m)

commence a public tender offer for the repurchase of the then-outstanding public warrants; or

 

  (n)

enter into any agreement to do any of the foregoing, or knowingly take any action or fail to take any action that would result in any of the foregoing.

Additional Covenants of the Parties

The Transaction Agreement also contains additional customary agreements among Strike, Sentinel and the Sellers relating to, among other matters:

 

   

access to information;

 

   

confidentiality;

 

   

press releases and public announcements relating to the Transaction Agreement and the business combination;

 

   

the retention of various books and records;

 

   

financing cooperation;

 

   

notices of certain breaches of the Transaction Agreement and other material events;

 

   

exclusivity with respect to the transactions contemplated by the Transaction Agreement (and with respect to any alternative transactions);

 

   

the preparation, filing and distribution of this proxy statement;

 

   

the preservation of Sentinel’s status as a listed company on a stock exchange;

 

   

communications between the parties;

 

   

Blocker name change;

 

   

termination of certain agreements;

 

   

adoption of the A&R Regulations;

 

   

use of certain names and marks of Strike;

 

   

filing a Certificate of Domestication with the Delaware Secretary of State;

 

   

termination of the Phantom Unit Plan (as defined in the Transaction Agreement); and

 

   

a tax indemnity by the Unit Sellers (severally, but not jointly and severally) for certain taxes relating to the Blocker and income Taxes of any Unit Seller and the Strike and its subsidiaries.

 

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Indemnification of Directors and Officers; Directors’ and Officers’ Insurance

The Transaction Agreement provides that, for a period of six years after the Closing Date, Sentinel will, and will cause the Surviving Corporation, Strike and its subsidiaries, as applicable, to, indemnify and hold harmless, and provide advancement of expenses to, all of the respective past and present directors, officers and employees of Blocker, Strike and its subsidiaries (collectively, the “Indemnitees”) to the same extent the Indemnitees are entitled to be indemnified or have the right to advancement of expenses pursuant to the certificates of incorporation, certificate of formation, bylaws, limited liability company agreement or similar organizational or governing documents of Blocker, Strike and its subsidiaries, as applicable, and indemnification agreements with any of Blocker, Strike and its subsidiaries, as applicable, in existence on the Effective Date with, or for the benefit of, any Indemnitee for acts or omissions occurring on or prior to the Closing Date.

The Transaction Agreement further provides that, except as required by applicable law, for a period of six years after the Closing Date, Sentinel will not, and will not permit the Surviving Corporation, Strike and its subsidiaries to, amend, repeal or modify any provision providing for rights to indemnification and exculpation from liability for acts or omissions occurring on or prior to the Closing Date now existing in favor of the Indemnitees contained in the certificates of incorporation, certificate of formation, bylaws, limited liability company agreement or similar organizational or governing documents of Blocker, Strike and its subsidiaries, as applicable, and indemnification agreements with any of Blocker, Strike or its subsidiaries, as applicable, in existence on the Effective Date with, or for the benefit of, any Indemnitee for acts or omissions occurring on or prior to the Closing Date; provided, that if any claims are made or asserted within such six-year period, all rights in respect of any such claims will continue until the full disposition of all such claims.

At or prior to the Closing, Strike and its subsidiaries are required to obtain an irrevocable “tail” officers’ and directors’ liability insurance policy (the “D&O Tail”) naming the Indemnitees as direct beneficiaries with a claims period of at least six years from the Closing Date in respect of acts or omissions occurring on or prior to the Closing Date, and such policy must contain terms with respect to coverage and be in an amount not less favorable than the officers’ and directors’ liability insurance policy maintained by Blocker, Strike and its subsidiaries in existence on the Effective Date. Sentinel will cause Blocker, Strike and its subsidiaries to maintain the D&O Tail in full force and effect, for its full term.

If the Surviving Corporation, Strike or any of its subsidiaries or any of their successors or assigns (a) consolidates with or merges into any other person and will not be the continuing or surviving entity of such consolidation or merger or (b) transfers or conveys all or substantially all of its properties and assets to any person, then, in each such case, to the extent necessary, Sentinel is required to cause proper provision to be made so that the successors and assigns of, as the case may be, assume the indemnification obligations set forth in the Transaction Agreement.

The provisions in the Transaction Agreement relating to foregoing indemnification obligations, are intended to be for the benefit of, and will be enforceable by, each indemnified party, his or her heirs and his or her representatives.

Employee Benefit Matters

The Transaction Agreement provides that for a period of one year following the Closing Date, Sentinel will (or will cause its affiliates to) provide the employees of Strike and its subsidiaries who remain employed by Strike, its subsidiaries or Sentinel (collectively, the “Covered Employees”) with (a) base salary or wages, as applicable, that is no less favorable in the aggregate than each such Covered Employee’s total cash compensation immediately prior to the Closing Date, and (b) employee benefits (excluding any equity-based compensation, synthetic equity, and defined benefit plan benefits) that are no less favorable in the aggregate than those provided to the Covered Employees immediately prior to the Closing Date.

The Transaction Agreement further provides that, with respect to any employee benefit plan, program or arrangement of Sentinel and its affiliates in which any Covered Employee first becomes eligible to participate on

 

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or after the Closing Date (a “Buyer Plan”), Sentinel will (or will cause its affiliates to) use commercially reasonable efforts to: (1) waive all pre-existing condition exclusions or limitations and waiting periods with respect to participation and coverage requirements applicable to each such Covered Employee and his or her eligible dependents under any such Buyer Plan providing health or welfare benefits, except to the extent such pre-existing condition exclusions or limitations or waiting periods applied immediately prior to the Closing Date under an analogous employee plan; (2) provide such Covered Employee and his or her eligible dependents with credit for any co-payments, co-insurance and deductibles paid prior to becoming eligible to participate in any such Buyer Plan providing group health and welfare benefits under the analogous employee plan (to the same extent that such credit was given under such employee plan) in satisfying any applicable deductible requirements under such Buyer Plan during the plan year in which such participation begins; and (3) recognize all service of such Covered Employees with Strike, its subsidiaries and their predecessors (including recognition of all prior service with any entity that was recognized by Strike or its subsidiaries prior to the Closing Date), for purposes of eligibility and vesting under any Buyer Plan (other than for purposes of benefit accruals under a defined benefit plan, equity based or other incentive compensation plans, or any retiree health or welfare plan or arrangement and except to the extent such service recognition would result in a duplication of benefits), to the extent that such service was recognized for such purpose under an analogous employee plan.

Trust Account Waiver

The Sellers, Strike and its subsidiaries have acknowledged that Sentinel established the Trust Account for the benefit of its public stockholders. In addition, the Sellers, Strike and its subsidiaries have acknowledged that, prior to Closing, it does not have any right, title, interest or claim of any kind in or to monies in the Trust Account, including, without limitation, any claim for indemnification and have waived any claim for monies in the Trust Account it may have in the future as a result of, or arising out of, the Transaction Agreement and the business combination, and will not seek recourse against the Trust Account for any reason whatsoever.

Remedies

Consequences of Breach . Except (1) in the case of intentional fraud, (2) as expressly contemplated by the Transaction Agreement or (3) claims to enforce the performance of the covenants required to be performed in whole or in part after the Closing, the Seller Parties (as defined below) will have no liability to Sentinel, Blocker Merger Sub, the Surviving Company, the Surviving Corporation, Strike, its subsidiaries or its and their respective successors and permitted assigns, officers, directors, managers, employees, affiliates and representatives (collectively, the “Buyer Parties”) for any and all losses that are sustained or incurred by any of the Buyer Parties by reason of, resulting from or arising out of any breach of or inaccuracy in any of the Sellers’ representations or warranties contained in the Transaction Agreement. Except (1) in the case of intentional fraud, (2) as expressly contemplated by the Transaction Agreement or (3) claims to enforce the performance of the covenants required to be performed in whole or in part after the Closing, the Buyer Parties will have no liability to the Sellers and their respective successors and permitted assigns, officers, directors, managers, employees, affiliates and representatives (collectively, the “Seller Parties”) for any and all losses that are sustained or incurred by any of the Seller Parties by reason of, resulting from or arising out of any breach of or inaccuracy in any of Sentinel’s or Blocker Merger Sub’s representations or warranties contained in the Transaction Agreement.

No Recourse . Except in the case of intentional fraud, all Actions that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to: (a) the Transaction Agreement, (b) the negotiation, execution or performance of the Transaction Agreement (including any representation or warranty made in, in connection with, or as an inducement to, the Transaction Agreement), (c) any breach of the Transaction Agreement and (d) any failure of the business combination to be consummated, may be made only against (and, without prejudice to the rights of any express third party beneficiary to whom rights under the Transaction Agreement inure) the persons that are expressly identified as parties to the Transaction Agreement. Except in the case of intentional fraud, no other person, including any director, officer, employee, incorporator, member, partner, manager, stockholder, optionholder, affiliate, agent, attorney or representative of, or any

 

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financial advisor or lender to, any party, or any director, officer, employee, incorporator, member, partner, manager, stockholder, affiliate, agent, attorney or representative of, or any financial advisor or lender to any of the foregoing, will have any liabilities (whether in contract or in tort, in law or in equity, or granted by statute whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil) for any claims, causes of action, obligations or liabilities arising under, out of, in connection with or related in any manner to the items in the immediately preceding clauses (a) through (d), and each party, on behalf of itself and its affiliates, irrevocably release and discharge of such persons from any such liability or obligation.

Specific Performance . Additionally, the parties are entitled to an injunction and other equitable relief to restrain such party from committing or continuing any breach or threatened of the Transaction Agreement, or to seek to compel specific performance of the obligations of any other party under the Transaction Agreement, in addition to any other remedy to which they are entitled at law or in equity.

Representations and Warranties

The Transaction Agreement contains customary representations and warranties made by each of the Sellers relating to, among other things: corporation matters, including due organization, existence and good standing; power and authority relative to the execution, delivery and performance of to enter into the Transaction Agreement and the Ancillary Agreements to which any Seller is or will be a party and the consummation of the transactions contemplated by the Transaction Agreement, including the business combination; absence of conflicts with, or violations of, organizational documents, applicable laws and contracts, and required consents; good and valid title to the equity interests of Strike; broker’s fees payable in connection with the business combination and/or the Transaction Agreement; and the accuracy of information supplied for inclusion in this proxy statement and other similar documents.

The Transaction Agreement also contains customary representations and warranties made by Strike relating to, among other things: corporate matters, including due organization, existence and good standing; power and authority relative to the execution, delivery and performance of to enter into the Transaction Agreement and the Ancillary Agreements to which Strike is or will be a party and the consummation of the transactions contemplated by the Transaction Agreement, including the business combination; capitalization and ownership of subsidiaries; absence of conflicts with, or violations of, organizational documents, applicable laws and contracts, and required consents; fair presentation of financial statements; the absence of certain undisclosed liabilities; the absence of certain changes since December 31, 2017; the payment of taxes, the filing of tax returns and other tax matters; real and personal property; intellectual property; material contracts; insurance policies; absence of certain litigation; compliance with applicable laws and orders; permits; labor matters; employee benefit plans and other benefits and compensation agreements; environmental matters; material customers and material suppliers; accounts receivable; retainage; related party transactions; broker’s fees payable in connection with the business combination and/or the Transaction Agreement; the accuracy of information supplied for inclusion in this proxy statement and other similar documents; bank accounts; absence of certain payments in violation of the Foreign Corrupt Practices Act; and service warranty claims.

The Transaction Agreement also contains customary representations and warranties made by Blocker relating to, among other things: corporation matters, including due organization, existence and good standing; power and authority relative to the execution, delivery and performance of to enter into the Transaction Agreement and the Ancillary Agreements to which Blocker is or will be a party and the consummation of the transactions contemplated by the Transaction Agreement, including the business combination; good and valid title to the Company Units held by Blocker; capitalization; absence of conflicts with, or violations of, organizational documents, applicable laws and contracts, and required consents; the payment of taxes, the filing of tax returns and other tax matters; no prior business activities or operations; absence of certain litigation; the accuracy of information supplied for inclusion in this proxy statement and other similar documents; and broker’s fees payable in connection with the business combination and/or the Transaction Agreement.

 

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The Transaction Agreement also contains customary representations and warranties jointly and severally made by Sentinel and Blocker Merger Sub relating to, among other things: accredited investor status; corporate matters, including due organization, existence, good standing and books and records; power and authority relative to the execution, delivery and performance of to enter into the Transaction Agreement and the Ancillary Agreements to which Sentinel and Blocker Merger Sub is or will be a party and the consummation of the transactions contemplated by the Transaction Agreement, including the business combination; absence of conflicts with, or violations of, organizational documents, applicable laws and contracts, and required consents; capitalization; absence of certain litigation; SEC filings, the absence of misstatements or omissions from such filings and compliance with the Sarbanes-Oxley Act of 2002; fair presentation of financial statements; the absence of certain undisclosed liabilities; ownership and operations of Blocker Merger Sub; the funds in the Trust Account; Subscription Agreements; broker’s fees payable in connection with the business combination and/or the Transaction Agreement; and independent investigation and non-reliance.

No Survival of Representations and Warranties

The representations and warranties set forth in the Transaction Agreement and all covenants that are to be fully performed prior to Closing, will not survive the Closing, except with respect to certain tax matters.

Definition of Material Adverse Effect

Many of the representations and warranties in the Transaction Agreement are subject to materiality or material adverse effect qualifications. For purposes of the Transaction Agreement, “Material Adverse Effect” means any effect, change, development, circumstance, occurrence or event that with all other effects, changes, developments, circumstances, occurrences or events has had a material adverse effect on the business, properties, assets, liabilities, results of operations or condition (financial or otherwise but not prospects) of Strike and its subsidiaries, taken as a whole, or Blocker, as applicable; except that Material Adverse Effect will not include any change, occurrence or event, directly or indirectly, arising out of or attributable to:

 

  (a)

general business or economic conditions, market events, occurrences, developments or circumstances affecting the industries in which Strike or its subsidiaries conduct their respective businesses;

 

  (b)

conditions generally affecting the industries in which Strike, its subsidiaries or Blocker conduct their businesses;

 

  (c)

the announcement or performance of, or the public or industry knowledge of, the Transaction Agreement or the business combination, including the impact thereof on relationships with customers, suppliers or employees;

 

  (d)

changes in the U.S. or global financial, banking or securities markets generally, including changes in currency exchange rates or interest rates;

 

  (e)

changes in applicable laws or accounting rules (including GAAP);

 

  (f)

acts or omissions of the Sellers or Strike or its subsidiaries expressly contemplated to be taken pursuant to the Transaction Agreement or at the written request of Sentinel;

 

  (g)

natural disasters, acts of terrorism or war (whether or not declared); or

 

  (h)

the failure, in and of itself, of the financial or operating performance of Strike, its subsidiaries or Blocker to meet projections, forecasts or budgets for any period;

provided, however, that, with respect to subclauses (a), (d), (e) and (g) above, any effect, change, development, circumstance, occurrence or event referred to above will be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such effect, change, development, circumstance, occurrence or event has a disproportionate effect on Strike and its subsidiaries compared to other participants in the industries in which Strike and its subsidiaries primarily conduct their businesses (in which case only such disproportionate effect may be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur).

 

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Amendment of the Transaction Agreement

The Transaction Agreement may be amended or modified only by an instrument in writing duly executed by the Sellers Representative (on behalf of the Sellers) and Sentinel; provided, however, that no amendment may be made that materially alters the terms, substance or meaning of the agreements, rights, liabilities or covenants contained in the Transaction Agreement in any material respect without the approval of the affected party.

The description of the transaction agreement in this proxy statement has been included to provide you with information regarding its terms. The transaction agreement contains representations and warranties made by and to the parties as of specific dates. The statements embodied in those representations and warranties were made for purposes of the contracts between the parties and are subject to qualifications and limitations agreed by the parties in connection with negotiating the terms of the transaction agreement. In addition, certain representations and warranties were made as of a specified date or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. Accordingly, the representations and warranties and other provisions of the transaction agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement. If subsequent information concerning the subject matter of the representations, warranties, and covenants in the transaction agreement is not fully reflected in this proxy statement or in our other public disclosures, sentinel’s future public disclosures, which are available without charge through the sec’s website at www.sec.gov, will include any material information necessary to provide its stockholders a materially complete understanding of the transaction agreement disclosures. See “ Where You Can Find More Information .”

Related Agreements

This section describes the material provisions of certain additional agreements to be entered into pursuant to the Transaction Agreement, which we refer to as the “Related Agreements,” but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements. Forms of the Exchange Agreement, Investor Rights Agreement, Amended and Restated Registration Rights Agreement, Tax Receivable Agreement, Lock-Up Agreements and copies of the CSL Subscription Agreement, Fidelity Subscription Agreement, Contribution Agreement and Voting and Support Agreement are attached to this proxy statement as Annexes E, F, G, H, I, J, K, L and M, respectively. Stockholders and other interested parties are urged to read such Related Agreements in their entirety prior to voting on the proposals presented at the special meeting.

Exchange Agreement

At the Closing, StrikeCo, Strike and the Continuing Members will enter into the Exchange Agreement, substantially in the form attached as Annex E to this proxy statement. The Exchange Agreement entitles each Continuing Member and such other Strike Unitholders from time to time party thereto, to exchange, one time per calendar quarter, any or all of the Retained Company Units and surrender an equal number of shares of StrikeCo Class B common stock, held by them for either (at StrikeCo’s option):

 

   

a number of shares of StrikeCo Class A common stock equal to the number of Retained Company Units exchanged multiplied by the exchange rate (which initially will be one, subject to customary conversion rate adjustments as described in the Exchange Agreement), or

 

   

cash in an amount equal to the product of (a) the number of Retained Company Units exchanged, multiplied by (b) the then-applicable exchange rate multiplied by (c) the average of the daily VWAP (as defined in the Exchange Agreement) of a share of StrikeCo Class A common stock for the twenty (20) trading days immediately prior to the date of delivery of the relevant date of exchange.

StrikeCo may provide shares of StrikeCo Class A common stock that are registered pursuant to the Securities Act, unregistered shares of StrikeCo Class A common stock or any combination thereof, as it may

 

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determine in its sole discretion, it being understood that all such unregistered shares of StrikeCo Class A common stock shall be entitled to the registration rights set forth in the A&R Registration Rights Agreement, to the extent such Continuing Member or other Strike Unitholders are a party to the A&R Registration Rights Agreement.

In addition, in connection with a Change of Control (as defined in the Exchange Agreement) of StrikeCo, StrikeCo will have the right to require each Continuing Member or such other Strike Unitholders from time to time party thereto to exchange some or all Retained Company Units beneficially owned by such Continuing Member or such other Strike Unitholders from time to time party thereto (and an equal number of shares of StrikeCo Class B common stock), in consideration for the issuance by StrikeCo to such Continuing Member or such other Strike Unitholders from time to time party thereto of a number of shares of StrikeCo Class A common stock equal to the number of Retained Company Units surrendered  multiplied by  the exchange rate.

Each party to the Exchange Agreement will bear their own expenses in connection with the consummation of any exchange. Generally, StrikeCo will also bear any transfer taxes, stamp taxes or duties, or other similar taxes as well as any other expenses incurred by it in connection with an exchange.

Investor Rights Agreement

At the Closing, StrikeCo will enter into the Investor Rights Agreement with the Blocker Seller and the Continuing Members (collectively and together with Blocker Seller, the “Investors”) and OEP-Strike Seller Representative, LLC, in its capacity as representative of the Investors (the “Investors Representative”), substantially in the form attached as Annex F to this proxy statement.

The Investor Rights Agreement provides that, so long as the Investors beneficially own, on a continuous basis, in the aggregate, at least 10% in voting power of the then outstanding capital stock of StrikeCo entitled to vote generally in the election of directors (the “Minimum Threshold”), the Investors, acting through the Investors Representative, shall have the right to cause StrikeCo, and, if so directed, StrikeCo will take all reasonable necessary action to nominate up to two director nominees (the “IRA Directors”) selected by the Investors (acting through the Investors Representatives) to the StrikeCo board of directors at each applicable annual or special meeting of the stockholders of StrikeCo at which directors are generally elected. Subject to applicable stock exchange requirements and applicable SEC rules, at least one IRA Director will be entitled to serve on each standing or ad hoc committee of the StrikeCo board of directors, and the StrikeCo board of directors will not create any new committees without the consent of at least one IRA Director. Furthermore, one of the IRA Directors will be the chairperson of the nominating and corporate governance committee. So long as the Investor Rights Agreement is in effect, in addition to any requirements under StrikeCo’s Proposed Charter, the StrikeCo bylaws or the DGCL, the size or structure of the StrikeCo board of directors will not be increased without the approval of a majority of the StrikeCo board of directors present and voting, which approval must include at least one IRA Director. The Investors’ right to nominate any person to the StrikeCo board of directors shall automatically terminate, and be of no further force and effect, on the date that the Investors beneficially own less than the Minimum Threshold; provided, further, that if the Investors beneficially own less than the Minimum Threshold, the IRA Directors will, at the request of remaining members of the StrikeCo board of directors, resign from the StrikeCo board of directors.

Further, the Investor Rights Agreement provides that, so long as the Investors beneficially own on a continuous basis, in the aggregate, at least 15% in voting power of the then outstanding capital stock of StrikeCo entitled to vote generally in the election of directors, StrikeCo will permit a representative of the Investors selected by the Investors, acting through the Investors Representative, to attend any and all meetings of the StrikeCo board of directors, in a non-voting capacity and, in this respect, StrikeCo shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors, provided that the representative agrees to hold in confidence and trust all information so provided.

 

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Amended and Restated Registration Rights Agreement

At the Closing, StrikeCo, the Blocker Seller, the Continuing Members, the Sponsor and Marc Zenner and Jon A. Marshall, will enter into the A&R Registration Rights Agreement, substantially in the form attached as Annex G to this proxy statement. The A&R Registration Rights Agreement will amend, restate and replace in its entirety the registration rights agreement, entered into by Sentinel, the Sponsor and Mr. Zenner in connection with Sentinel’s initial public offering, in order to provide substantially similar registration rights to each of the signatories to the A&R Registration Rights Agreement, pursuant to which StrikeCo will be required to register for resale all of the (1) founder shares; (2) private placement warrants; (3) shares of StrikeCo Class A common stock issued or issuable upon exercise of the private placement warrants; (4) shares of StrikeCo Class A common stock into which the Retained Company Units and StrikeCo Class B common stock may be exchanged pursuant to the Exchange Agreement; (5) any outstanding shares of StrikeCo Class A common stock or any other equity securities (including shares of StrikeCo Class A common stock issued or issuable upon the exercise or exchange of any equity security) of StrikeCo held by a party to the A&R Registration Rights Agreement or their affiliates as of the date of the A&R Registration Rights Agreement; and (6) other equity securities issued or issuable with respect to any Registrable Security by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization (including upon exercise of the private placement warrants) (collectively, the “Registrable Securities”) held by each of the parties thereto.

The Registrable Securities will consist of an aggregate of approximately 39,109,093 shares of StrikeCo Class A common stock and 5,933,333 private placement warrants. In addition, as described under “ CSL Subscription Agreement ” and “ Fidelity Subscription Agreement ” below, StrikeCo will also be required to register 13,200,000 shares of StrikeCo Class A common stock issuable pursuant to the Subscription Agreements.

StrikeCo will be required, within 45 calendar days after the consummation of the business combination, to file a registration statement registering the resale of all of the Registrable Securities and will use commercially reasonable efforts to cause the registration statement to be declared effective as soon as practicable after the filing thereof, but no later than the 75th calendar day (or 105th calendar day if the SEC notifies StrikeCo that it will “review” the registration statement. In addition, if an underwritten offering is reasonably expected to result in gross proceeds of at least $10 million, the holders of Registrable Securities will be entitled to demand no more than either (1) one underwritten offering during one 180-day period or (2) a total of three underwritten offerings initiated by (A) the Sponsor, (B) OEP or (C) Pate Holding. The holders of Registrable Securities will also have certain “piggy-back” rights with respect to the underwritten offerings initiated by StrikeCo or other StrikeCo stockholders.

StrikeCo will be required to bear all expenses incurred in connection with the filing of any such registration statements and any such offerings, other than underwriting discounts and commission on the sale of Registrable Securities, transfer taxes, costs or expenses related to marketing efforts and the fees and expenses of counsel to holders of Registrable Securities. The A&R Registration Rights Agreement also will include customary provisions regarding indemnification and contribution.

Tax Receivable Agreement

At the Closing, StrikeCo, Strike, the Continuing Members and the Seller Representative will enter into the Tax Receivable Agreement, substantially in the form attached as Annex H to this proxy statement. The Tax Receivable Agreement will generally provide for the payment by StrikeCo to the Continuing Members of 85% of the net cash savings in respect of such Continuing Member, if any, in U.S. federal, state and local income tax that StrikeCo actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing as a result of the utilization of certain tax attributes of StrikeCo. StrikeCo will retain the benefit of the remaining 15% of these cash savings.

 

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Lock-Up Agreements

At the Closing, StrikeCo will enter into Lock-Up Agreements with the Continuing Members with respect to the shares of StrikeCo Class A common stock that may be issued to them pursuant to the Exchange Agreement, substantially in the form attached as Annex I to this proxy statement. Pursuant to the Lock-Up Agreements, each signatory thereto will agree that, from the completion of the transactions contemplated by the Transaction Agreement until the earliest of: (1) the first anniversary of the Closing Date (other than OEP, whose lock-up period is discussed below); and (2) the date following Closing Date on which StrikeCo completes a liquidation, merger, stock exchange or other similar transaction that results in all of StrikeCo’s stockholders having the right to exchange their shares of StrikeCo’s capital stock for cash, securities or other property (the period between the Closing Date and the earliest of clauses (1) and (2), the “Lock-Up Period”), such Continuing Member will not (1) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate a decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to shares of StrikeCo Class A common stock issued to them pursuant to the Exchange Agreement (such shares of StrikeCo Class A common stock, collectively, the “Lock-Up Shares”), (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Lock-Up Shares, in cash or otherwise, or (3) publicly announce any intention to effect any transaction specified in clause (1) or (2). Notwithstanding the foregoing, pursuant to the Lock-Up Agreements, each signatory thereto may sell or otherwise transfer any Lock-Up Shares to its respective equity holders or to any of its other affiliates, provided that the transferee thereof agrees to be bound by the restrictions set forth in the Lock-Up Agreements.

The terms of the Lock-Up Agreement to be entered into by OEP will generally be the same, other than the lock-up period. The lock-up period for OEP will be until the earliest of (a) (x) with respect to one-third (1/3) of the shares of StrikeCo Class A common stock, the three-month anniversary of the Closing Date, (y) with respect to an additional one-third (1/3) of the shares of StrikeCo Class A common stock, the six-month anniversary of the Closing Date, and (z) with respect to the remaining shares of StrikeCo Class A common stock, the twelve-month anniversary of the Closing Date, and (b) the date following the Closing Date on which StrikeCo completes a liquidation, merger, stock exchange or other similar transaction that results in all of StrikeCo’s stockholders having the right to exchange their shares of StrikeCo’s capital stock for cash, securities or other property. Further, from the Closing Date until the earliest of: (1) the 12-month anniversary of the Closing Date and (2) the date following the Closing Date on which StrikeCo completes a liquidation, merger, stock exchange or other similar transaction that results in all of StrikeCo’s stockholders having the right to exchange their shares of StrikeCo’s capital stock for cash, securities or other property, OEP will provide prior written notice to the board of directors of StrikeCo prior to selling, offering to sell, or contracting to sell any StrikeCo Class A common stock issued to OEP pursuant to the Exchange Agreement (“OEP Lock-Up Shares”), even though such OEP Lock-Up Shares are no longer subject to OEP’s lock-up agreement and will use commercially reasonable efforts to ensure such OEP Lock-Up Shares are sold in an orderly fashion in consultation with the board of directors of StrikeCo.

Subscription Agreements

In order to finance a portion of the Cash Consideration payable in the business combination and the costs and expenses incurred in connection therewith, Sentinel entered into the Subscription Agreements, copies of which are attached as Annexes J and K hereto, each dated as of October 18, 2018, with certain investors, including (1) one or more investment funds controlled by CSL Capital Management, L.P. (“CSL Energy”), an energy services-focused private equity fund (the “CSL Subscription Agreement”) and (2) certain funds and accounts managed by Fidelity Management & Research Company (the “Fidelity Investors” and, collectively with CSL Energy, the “Subscribed Investors”) (the “Fidelity Subscription Agreement”), pursuant to which, among other things, Sentinel agreed to issue and sell in a private placement an aggregate of 13,200,000 shares of Sentinel Class A common stock to the Subscribed Investors for $10.00 per share, or an aggregate cash purchase price of $132.0 million (the “Private Placement”). The Private Placement is expected to close concurrently with the Closing.

 

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Pursuant to the Subscription Agreements, the Subscribed Investors will be entitled to certain registration rights, subject to customary black-out periods and other limitations as set forth therein. In addition, the Fidelity Investors will be entitled to liquidated damages payable by Sentinel in certain circumstances, including in the event that (a) a resale registration statement for the Fidelity Investor’s shares of Class A common stock issued in the Private Placement has not been filed with the SEC within 45 calendar days following the Closing (the “Filing Deadline”), (b) the registration statement has not been declared effective by the SEC by the 75th calendar day (or 105 th  calendar day if the SEC notifies Sentinel that it will “review” the registration statement) following the Filing Deadline, (c) following the effectiveness of the registration statement, the registration statement ceases to remain continuously effective or the Fidelity Investors are not permitted to utilize the registration statement to resell their acquired shares of Class A common stock, subject to a special grace period for post-effective amendments or (d) after six months following the Closing, the Fidelity Investors who are not affiliates of Sentinel are unable to sell their acquired shares of Class A common stock without restriction under Rule 144 of the Securities Act as a result of Sentinel failing to file with the SEC required reports under Section 13 or Section 15(d) of the Exchange Act such that Sentinel is not in compliance with Rule 144(e)(1) (or Rule 144(i)(2), if applicable) (each such event referred to in clauses (a) through (d), a “Registration Default”). The Fidelity Subscription Agreement provides that liquidated damages will be payable monthly by Sentinel during the time of a Registration Default in the amount of 0.5% of the purchase price paid by the applicable Fidelity Investor for its acquired shares of Class A common stock, subject to a cap of 5.0%.

Contribution Agreement

In connection with its entry into the Transaction Agreement, on October 18, 2018, Sentinel entered into a purchase and contribution agreement (the “Contribution Agreement”) with Strike, LLC, a wholly owned subsidiary of Strike (“Strike LLC”), CSL Energy Holdings III Corp, LLC (“CSL Holdings”) and Invacor Pipeline and Process Solutions, LLC, an entity under common control with CSL Holdings (“Invacor” and, together with CSL Holdings, the “Invacor Sellers”), pursuant to which (1) immediately prior to the Closing, the Invacor Sellers have agreed to transfer all of the issued and outstanding membership interests (the “Pipelogic Interests”) in Pipelogic Services, L.L.C. (“Pipelogic”) to Sentinel in exchange for 1,800,000 shares of Sentinel Class A common stock at $10.00 per share and (2) immediately following the Closing, Sentinel has agreed to contribute the Pipelogic Interests to Strike LLC in exchange for 1,800,000 units of Strike.

Voting and Support Agreement

In connection with its entry into the Transaction Agreement, on October 18, 2018, Sentinel’s initial stockholders, including the Sponsor, and Charles S. Leykum entered into the Voting and Support Agreement with Strike, a copy of which is attached as Annex M hereto. Pursuant to the Voting and Support Agreement, the initial stockholders and Mr. Leykum agreed to vote: (1) in favor of the adoption of the Transaction Agreement and approval of the business combination and other transactions contemplated by the Transaction Agreement; (2) against any actions that would result in a breach by Sentinel of any representations, warranties, covenants, obligations or agreements contained in the Transaction Agreement; (3) in favor of the proposals set forth in Sentinel’s proxy statements/prospectus on Form S-4 related to the domestication and this proxy statement (including in favor of the election of designees of the board of directors of Sentinel as set forth in the Voting and Support Agreement); (4) for any proposal to adjourn or postpone the applicable special meeting of stockholders to approve matters related to Sentinel’s domestication and the business combination to a later date if there are not sufficient votes for approval of such matters; (5) against any alternative proposals or transactions to the domestication and the business combination; and (6) in favor of any proposal submitted to shareholder for approval in connection with the domestication.

The Voting and Support Agreement generally prohibits the initial stockholders and Mr. Leykum from transferring, or permitting to exist any liens on, any shares held by such party prior to the termination of such agreement. The Voting and Support Agreement will automatically terminate, as to the initial stockholders and Mr. Leykum, upon the first to occur of (1) the mutual written consent of Strike and such party thereto, (2) the Closing or (3) the date of termination of the Transaction Agreement in accordance with its terms.

 

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Under the Voting and Support Agreement, the initial stockholders and Mr. Leykum agreed to waive any and all rights such party has or may have (including pursuant to any side letters between the initial stockholders and Sentinel or otherwise) to receive any additional warrants or any equity securities of Sentinel or any of its subsidiaries, whether in connection with the repayment of any loans to Sentinel or otherwise.

Background of the Business Combination

Sentinel is a blank check company incorporated in the Cayman Islands on June 5th, 2017, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The business combination was the result of an extensive search for a potential transaction utilizing the global network and investing and operating experience of Sentinel’s management team and Board. The terms of the business combination were the result of extensive negotiations between Sentinel’s management team, the Sponsor, representatives of Strike, and One Equity Partners (“OEP”). The following is a brief description of the background of these negotiations, the business combination and related transactions.

Prior to the consummation of Sentinel’s initial public offering, neither Sentinel, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with Sentinel.

After Sentinel’s initial public offering, Sentinel commenced an active search for prospective businesses and assets to acquire. Representatives of Sentinel, including the Chairman of Sentinel, Mr. Andrew Gould, the CEO of Sentinel, Mr. Krishna Shivram, and the Sponsor (who are affiliates of CSL Capital Management), (“CSL”), contacted and were contacted by a number of individuals and entities with respect to acquisition opportunities.

During that period, Sentinel’s management and the Sponsor:

 

   

considered and conducted an analysis of approximately seventy potential acquisition targets other than Strike (the “Other Potential Targets”); and

 

   

other than Strike, ultimately engaged in detailed discussions, due diligence and negotiations with nine target businesses or their representatives, entering into non-disclosure agreements with all nine potential acquisition targets.

The nine potential targets included (1) a manufacturer of onshore and offshore oilfield equipment (“Company A”), (2) a compression services provider (“Company B”), (3) a manufacturer of production equipment and diamond cutters with onshore services (“Company C”), (4) an international asset integrity business (“Company D”), (5) an onshore oilfield services provider (“Company E”), (6) a U.S. based directional drilling provider (“Company F”), (7) a manufacturing company specializing in completions equipment (“Company G”), (8) a drill bit manufacturer (“Company H”), and (9) a global technology focused oilfield services provider (“Company I”).

 

   

Company A — conducted diligence and submitted offers but ultimately seller was unwilling to go forward at proposed valuation.

 

   

Company B — conducted diligence and ultimately decided the strategy did not fit Sentinel’s investment criteria and Sentinel would be unable to pursue without a partner.

 

   

Company C — submitted second round bids but ultimately seller decided to pursue alternative exit strategies.

 

   

Company D — conducted diligence but ultimately decided the company did not fit Sentinel’s investment criteria.

 

   

Company E — conducted diligence and submitted an LOI but ultimately decided the company did not fit Sentinel’s investment criteria.

 

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Company F — conducted diligence and submitted an LOI but complexity with previous owners did not merit a transaction.

 

   

Company G — conducted diligence but ultimately decided the company was not organized well enough for Sentinel’s purposes.

 

   

Company H — conducted diligence and submitted offers but could not meet sellers’ expected price.

 

   

Company I — conducted diligence but ultimately decided the company’s valuation was too small for Sentinel’s purposes.

Based on the discussions and negotiations with multiple target opportunities, Strike emerged as a frontrunner to pursue a business combination.

On April 6, 2018, Mr. Shivram met with Steve Pate, Cole Pate, Frank Victor-McCawley and Rob Jessen and representatives of J.P. Morgan, Strike’s advisor, to discuss the potential of a transaction involving Strike and Sentinel. Following the meeting, Mr. Shivram concluded that in his judgment of Strike at the time, Sentinel should schedule a follow-up meeting with Strike to continue diligence efforts. Mr. Shivram subsequently communicated his reflections on Strike to Sentinel’s board.

On May 2, 2018, Messrs. Gould, Shivram and representatives of CSL met with Messrs. S. Pate, C. Pate, Victor-McCawley and Jessen to receive further information from Strike and J.P. Morgan regarding a potential business combination. Messrs. S. Pate, C. Pate, Victor-McCawley and Jessen provided Sentinel and Messrs. Gould, Shivram and Leykum with information on Strike including its corporate history, the history of its operations and business lines, financial results and future growth plans. The parties agreed to make available additional diligence upon request.

Between May 2 and May 24, 2018, Sentinel and representatives of CSL conducted their initial due diligence on Strike based on the information provided by Strike and other publicly available sources. Sentinel also engaged Winston & Strawn, LLP (“Winston & Strawn”) as counsel to Sentinel. Based on Sentinel’s and CSL’s review of the diligence materials, Sentinel and CSL determined that (1) Strike was well-positioned to capitalize on the North American infrastructure services market, (2) Strike had a robust set of internal controls and systems in place to serve as a platform for growth, (3) Strike was well-regarded among customers as a leading provider of integrity services, and (4) Strike was well-positioned to capitalize on the growing levels of North American oil and gas production, and, on the basis of the foregoing concluded that Strike was a highly attractive target for Sentinel. Over the same time frame, J.P. Morgan, on behalf of Strike, informed Sentinel that Strike was actively considering strategic alternatives to a transaction with Sentinel but would like to continue furthering discussions with Sentinel at the same time.

On May 24, 2018, Mr. Gould and Mr. Shivram met with Messrs. S. Pate, Jessen and Victor-McCawley along with a representative of J.P. Morgan to further discuss a potential transaction between Strike and Sentinel.

On May 30, 2018, Mr. Shivram sent J.P. Morgan a non-binding letter agreement that outlined the basic terms for a potential transaction whereby Sentinel would acquire an interest in Strike and OEP being bought out for an aggregate of $312,000,000 in cash while the minority owners would receive Sentinel shares. The letter agreement requested an exclusivity period, was subject to confirmatory due diligence and proposed an initial enterprise value. The terms of the letter agreement were determined jointly by Mr. Shivram, Sentinel’s board of directors and representatives of CSL. Mr. Shivram, Sentinel’s board of directors and CSL analyzed the net present value of estimates of future after-tax cash flows, precedent merger and acquisition transaction metrics and public company trading metrics prepared internally by Sentinel and CSL in determining a reasonable enterprise value for the basis of beginning negotiations with Strike.

On June 20, 2018, Mr. Shivram met with Messrs. S. Pate, C. Pate and Victor-McCawley to discuss the details of the non-binding letter agreement and the timeline and mechanics of consummating a transaction

 

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between Strike and Sentinel. Among other things, the representatives of Strike and Sentinel discussed the regulations and requirements governing public companies and the exact level to which current owners of Strike would be shareholders in the surviving entity following the transaction.

On July 1, 2018, J.P. Morgan on behalf of Strike responded to Mr. Shivram with further clarifications on the points discussed in the June 20, 2018 meeting.

On July 12, 2018, J.P. Morgan on behalf of Strike contacted Mr. Shivram stating that Strike had received a better monetary offer from another party but would like to continue pursuing a business combination with Sentinel due to the high quality of Sentinel’s board and management, provided Sentinel could improve on its previous offer. Mr. Shivram provided the Sentinel board of directors with additional information and informed them that a refinement of the original letter agreement would be required for Strike to continue considering a business combination with Sentinel

On July 18, 2018, J.P. Morgan on behalf of Strike contacted Mr. Shivram and delivered a counter to Sentinel’s original proposed valuation. J.P. Morgan on behalf of Strike countered with a higher enterprise value than initially proposed by Mr. Shivram.

On July 20, 2018, Mr. Shivram delivered a revised offer with an enterprise value higher than initially proposed but lower than counterproposed by on July 18, 2018 to J.P. Morgan.

On July 23, 2018, J.P. Morgan on behalf of Strike communicated to Mr. Shivram that Strike was willing to begin negotiations of definitive transaction agreements founded on Sentinel’s latest proposal.

On July 27, 2018, Mr. Shivram and representatives of CSL met with management team members of Strike to further diligence Strike and meet with members of Strike’s executive management team. In this day-long meeting, Strike provided information related to each business unit, financial performance and expected financial performance as well as strategy and growth planning for the future business. Mr. Shivram and representatives of CSL were given the opportunity to meet with key leaders of the various business units and ask detailed diligence questions of the underlying business and future growth drivers.

On August 1, 2018, Mr. Shivram conducted a meeting of the board of directors of Sentinel to discuss the developments pertaining to Strike, among other targets.

Between August 2 and August 13, 2018, Sentinel and members of CSL conducted extensive due diligence on Strike and based upon due diligence findings concluded that an enterprise value lower than that proposed on July 20, 2018 was appropriate based on their analysis of the net present value of estimates of future after-tax cash flows, precedent merger and acquisition transaction metrics and public company trading metrics prepared internally by Sentinel and CSL.

On August 13, 2018, Mr. Shivram presented the revised proposal to Sentinel’s board of directors. Sentinel’s board unanimously approved the proposal.

On the morning of August 14, 2018, Mr. Shivram and representatives of CSL met with Mr. Pate and representatives of OEP for a breakfast meeting to further discuss terms of the transaction.

On August 14, 2018, Mr. Shivram delivered the proposal to Strike. Sentinel’s proposal was discussed at length during Strike’s board meeting and Strike came back to Sentinel with a variety of changes that were amenable to Sentinel.

On August 21, 2018, Strike countersigned the written term sheet with Sentinel.

Between August 22 and September 18, 2018, Mr. Gould, Mr. Shivram, and members of CSL worked with Strike to compile and refine the investor presentation that would be used for the Private Placement roadshow.

 

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JP Morgan and Citi also assisted based on their roles as advisors for Strike and Sentinel, respectively. The goal of the Private Placement roadshow was not only to raise capital from new investors but to preview the deal with several of the largest initial Sentinel investors. During this time, Jones Day, counsel to OEP, and Winston & Strawn, counsel to Sentinel, began drafting the purchase agreement and related transaction documents as well as a proxy statement and Sentinel, CSL, OEP, and Strike provided comments. Additionally, Mr. Shivram and CSL worked with Strike to conduct confirmatory due diligence on Strike through numerous conference calls, visits to J.P. Morgan’s downtown Houston office, visits to Strike’s Woodlands office, and a facility visit to Strike’s Baytown field office.

On August 30, 2018, Mr. Shivram and representatives of CSL met with Messrs. S. Pate, C. Pate and Victor-McCawley to initiate discussion around the contribution of Pipelogic to Sentinel concurrently with the closing of the business combination. Strike acknowledged CSL’s view that a contribution of Pipelogic would be synergistic for Strike as Pipelogic was active in integrity services, including pipeline cleaning and in-line inspection.

On September 10, 2018, Strike’s management team was provided with an information packet detailing out the various aspects of the Pipelogic business and the growth plans in progress. The information packet highlighted a potential valuation range of $30,000,000 to $35,000,000 for Pipelogic and the broader corporate opportunity. The Strike team assigned an internal team to conduct due diligence and come up with a view on valuation.

On September 12, 2018, the Strike management team, which included Messrs. S. Pate and C. Pate, had an introductory dinner with the Pipelogic management wherein the Strike management team was able to ask detailed due diligence questions on the business, growth prospects, and collaboration opportunities.

On the morning of September 19, 2018, Strike management, Sentinel and representatives of CSL agreed to expand their ongoing negotiations to re-evaluate the purchase price and other deal terms. On the afternoon of September 19th, Mr. Shivram communicated a proposed reduction in enterprise value in person to Mr. Pate. The day ended with no valuation agreed to and the parties agreed to continue discussions over the weekend.

On September 20, 2018, representatives of OEP communicated to Mr. Shivram a revised enterprise value higher than proposed by Mr. Shivram on September 19, 2018.

On September 23, 2018, Mr. Shivram, representatives of OEP, and Strike held a call during which Sentinel, OEP and Strike agreed to a revised enterprise value.

From September 24th through October 1, 2018, Sentinel, CSL, Strike, JP Morgan, and Citi worked to refine the Private Placement roadshow presentation through several in person meetings at Strike’s Woodlands office.

On October 1, 2018, Sentinel launched the 4-day Private Placement roadshow with a target raise of $100,000,000, visiting eight investors in San Francisco, Los Angeles, Baltimore, New York and Boston, which included a mix of larger existing Sentinel shareholders and also new investors. Proceeds from the Private Placement would be used to repay Strike indebtedness and to add growth capital to the balance sheet. On October 5, 2018, Sentinel received a non-binding commitment of $110,000,000 from Fidelity. On October 10th, the Private Placement commitment window ended with no additional commitments. On or about this date Strike, Sentinel and CSL tentatively agreed that CSL would contribute approximately $40 million to the business combination, consisting of all the equity of Pipelogic at a to-be-agreed upon valuation, with the remainder as a subscription for shares of common stock of StrikeCo at $10.00 per share. In parallel, the Strike team continued their internal due diligence on Pipelogic, including an in-person all-afternoon session at Strike’s office on October 3, 2018 with Pipelogic management.

From October 1 through October 18, 2018, Sentinel, CSL, Strike and OEP continued to negotiate various points, including, but not limited to, the Strike purchase agreement and other key transaction related documents,

 

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the net working capital peg, Strike management employment agreements, and the valuation of Pipelogic. In parallel, all parties continued the drafting of the proxy statement with Jones Day and Winston & Strawn over numerous calls.

On October 17, 2018, the final points of the transaction were negotiated during a six-hour negotiation at Strike’s Woodlands office. During this session, the parties agreed to a valuation for Pipelogic of $18,000,000.

On October 18, 2018, the Sentinel board of directors reviewed the final form of the transaction agreements and approved the business combination.

On October 19, 2018, Sentinel announced the agreement to acquire a majority of the equity interests of Strike.

Sentinel’s Board of Directors’ Reasons for the Approval of the Business Combination

Sentinel’s board of directors considered a wide variety of factors in connection with its evaluation of the business combination. In light of the complexity of those factors, Sentinel’s board of directors, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of Sentinel’s board of directors may have given different weight to different factors. This explanation of Sentinel’s reasons for the board of directors’ approval of the business combination, and all other information presented in this section, is forward-looking in nature and, therefore, should be read in light of the factors discussed under “ Cautionary Note Regarding Forward-Looking Statements .”

Before reaching its decision, Sentinel’s board of directors reviewed the results of the due diligence conducted by its management, which included:

 

   

research on comparable public companies;

 

   

extensive meetings and calls with Strike’s management team regarding operations and forecasts;

 

   

extensive meetings and calls with OEP regarding Strike;

 

   

multiple visits to Strike’s headquarters in Woodlands, Texas;

 

   

a visit to Strike’s field office in Baytown, Texas;

 

   

review of Strike’s material contracts, financial, tax, legal, and accounting due diligence;

 

   

consultation with Sentinel’s management and legal and financial advisors and industry experts;

 

   

financial and valuation analysis of Strike and the business combinations;

 

   

Strike’s audited and unaudited financial statements; and

 

   

financial projections provided by Strike management team;

The factors considered by the board of directors include, but are not limited to, the following:

Strike positively met all the criteria for the various investments themes highlighted during Sentinel’s IPO in November 2017. Sentinel’s management team had stated that they would focus on Land, rather than Offshore; North America, rather than International; Differentiated businesses, rather than commoditized ones; Private Company targets as opposed to Carve-Outs; and Production oriented businesses, rather than Exploration focused ones. The acquisition of Strike fulfils all of these criteria laid out at the beginning. Strike is a U.S. Land focused pipeline and facilities infrastructure services business, directly linked with Production. It is vastly differentiated in its footprint and breadth of technical capabilities and services offered. It is a private business that now needs access to a larger pool of capital to capitalize on multiple growth opportunities that are available in an industry

 

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that is slated to have secular growth tailwinds for a number of years. Being a large pure play pipeline and facilities infrastructure services business, and working off of a large sticky and renewable backlog that has been growing over time, makes this investment extremely defensible.

Favorable market dynamics provide significant tail winds for Strike’s continued growth . As the pipeline infrastructure in place in the U.S. continues to age, with over 50% of the installed pipelines more than 50 years old, the need for maintenance is ever-growing. These factors, coupled with increasing regulation, are making the pipeline infrastructure compliance programs more onerous, technical and difficult to manage for midstream operators. With increasing environmental responsibilities being imposed on operators, the current regulatory footprint, which covers just about a third of the installed pipeline infrastructure, is bound to grow. Additional drivers include customer and midstream asset consolidation through customer M&A and also vendor consolidation programs by customers. Furthermore, Independent Oil Companies (“IOCs”), with their enhanced focus on Safety and Operational Execution, and key financial sponsors, with little operational capability or experience, have entered the midstream market and are in need of professional one-source service providers. All these dynamics at play are pushing the midstream infrastructure market directly into the fairway for Strike, who with its high quality service delivery and safety track record, nationwide footprint and wide array of technical services, is well poised to benefit from all of these growth drivers.

Strike has a proven track record of organic growth coupled with strategic M&A . Strike was formed in 2003 in the wake of the passage of the Pipeline Safety Act of 2002. The founders, led by CEO Steve Pate, recognized the market opportunity for a high-performance, safety-focused company that clients would trust to comply with these new regulations. Starting small and gaining the customers’ trust over time on the back of a strong performance track record, the management team expanded operations as a maintenance services company, which still remains at the core of Strike’s offerings. As its capabilities grew over time, several customers provided Strike with opportunities to manage their major capital projects, providing Strike an entry into the Major Projects market in 2012. From 2007 through 2017, Strike’s revenue grew at a Compounded Annual Growth Rate of 35%, with more than 75% of this growth being organic. Strike’s revenue and Adjusted EBITDA growth for the period 2014-2018 spanning the downcycle has far outstripped all of its identified public comparatives, with 2018 revenue and Further Adjusted EBITDA estimated (as of the date that the board of directors approved the business combination) at $1.8 billion and $134 million, respectively (a significant milestone for a 15-year-old company). Over the last several years, Strike has also acquired two regional infrastructure service providers – one expanded the footprint into the Rockies north through the Bakken and the other solidified Strike’s north eastern footprint.

Strike is led by an exceptional management team that has stayed true to its core over the years. Strike was started 15 years ago by Steve Pate, who is still the CEO of Strike, and other Strike founders. Strike had its beginnings in the maintenance-focused IIS segment) which is still over 60% of the overall Company revenue and the segment that management will continue to focus on for future growth. The management team’s dedication to maintaining an extremely high focus on safety and service delivery, their ability to attract, retain and develop entrepreneurial talent while exercising very strong risk mitigation controls on their business has allowed them to grow aggressively, but with control. Of particular note is their conservative attitude towards risk management and consequently, contractual structures.

Strike serves a widely-diversified customer base in the upstream, midstream and downstream markets. Strike has more than 400 master service agreements with its customers for the IIS segment and the majority of this revenue base renews itself at about 88% annually. This presents a highly reliable, sticky business that continues to enjoy a secular growth phase. The extensive footprint that Strike has developed over the years has also allowed it to become a nationwide provider of midstream infrastructure services. This allows its customers to work with a single-source provider rather than with a fragmented supplier base. This local and regional fragmentation presents the opportunity to leverage their consolidation approach going forward. Additionally, the contract mix at Strike has a relatively low concentration of Lump Sum contracts, reflecting Strike’s desire to

 

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mitigate risk. The bulk of the contracts are based on Time & Materials, or Unit Price basis with some being based on a Cost-Plus methodology. In summary, the Strike team are service providers who execute their customers’ decisions.

Strike is well-positioned to become a successful company in the public markets. As Strike has grown over the years, not only did Strike establish a strong “One Strike” common culture, but also aggressively adopted technology and developed a common platform to provide a strong centralized hub of administrative services to the field operations, including finance, IT, HR, legal, contract management and other such services, allowing Strike to develop a unified “look and feel” nationally in front of customers and employees. In addition, this approach liberates the field operations to focus exclusively on safety, operations execution, customers and delivering financial results. This investment in a common platform will allow Strike to scale up the business significantly without adding much additional G&A costs, while retaining a superior ability to integrate acquired businesses and build on the “One Strike” image. Strike presents an opportunity with a sound business model with room to grow, a business well-positioned to benefit from Sentinel team’s background, a business at an inflection point, a potential for expansion geographically and technically, and all this coupled with a strong, healthy balance sheet.

The transaction is attractively structured. The current owners of Strike, namely the Strike founders along with senior management and OEP, have agreed to roll over 75% and 80%, respectively of their current holdings, clearly signifying their expectation of a higher future valuation. At closing, their combined holdings will exceed 34%. Because of the high equity roll-over, and the Private Placement investment led by Fidelity, Strike expects to pay down the entire forecasted net debt of Strike at closing and have a net cash position of $33,000,000 prior to paying transaction-related expenses. Consequently, at closing, Strike will boast a categorically strong balance sheet, capable of supporting several growth initiatives.

T erms of the Contribution Agreement for Pipelogic Services. Sentinel’s board of directors, including the audit committee, reviewed the financial and other terms of the Contribution Agreement for Pipelogic Services and determined that they were the product of arm’s-length negotiations among the parties.

Opinion of Houlihan Lokey Capital, Inc. regarding the aggregate consideration to be paid by Sentinel for the Pipelogic Interests pursuant to the Contribution Agreement. On October 18, 2018, Houlihan Lokey Capital, Inc., which we refer to as Houlihan Lokey, rendered its opinion addressed to Sentinel’s board of directors as to, as of such date, the fairness, from a financial point of view, to Sentinel of the aggregate consideration of 1,800,000 shares of Sentinel Class A common stock (at $10.00 per share) to be paid by Sentinel for the Pipelogic Interests pursuant to the Contribution Agreement. Houlihan Lokey’s opinion was directed to Sentinel’s board of directors (in its capacity as such) and only addressed the aggregate consideration to be paid by Sentinel for the Pipelogic Interests pursuant to the Contribution Agreement and did not address any other aspect or implication of the transactions contemplated by the Contribution Agreement or any other agreement, arrangement or understanding. The full text of its written opinion is attached as Annex N to this proxy statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. Houlihan Lokey’s opinion is not intended to be, and does not constitute, advice or a recommendation to Sentinel’s board of directors, any security holder of Sentinel or any other person as to how to act or vote with respect to any matter relating to the business combination or any related transaction. Houlihan Lokey was engaged by Sentinel solely to provide the opinion.

Stockholder approval. The Sentinel board of directors considered the fact that in connection with the business combination Sentinel stockholders have the option to (1) remain stockholders of the combined company, (2) sell their shares on the open market or (3) redeem their shares for the per share amount held in the Trust Account.

 

 

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In the course of its deliberations, the Sentinel board of directors also considered a variety of uncertainties, risks and other potentially negative reasons relevant to the transaction, including the following:

 

   

Oil, natural gas and NGL prices are volatile. A sustained decline in oil, natural gas and NGL prices could adversely affect Strike’s business, financial condition and results of operations and its ability to meet its capital expenditure obligations and financial commitments.

 

   

Future disruptions in the U.S. financial and credit markets or increases in the costs of capital could have an adverse impact on Strike’s business.

 

   

Strike’s future projections are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these projections or underlying assumptions could materially affect the valuation and future performance of the stock.

 

   

A portion of Strike’s revenue is dependent on successfully obtaining contracts through a bid process and there is a risk of losing such contracts.

 

   

The failure to properly manage projects or project delays could result in additional costs or claims, which could have a material adverse effect on Strike’s operating results, cash flows and liquidity.

 

   

Strike’s existing businesses are lower margin and Strike may not be able to improve the margins within the existing services or grow into higher margin service lines.

 

   

Strike’s future growth plans require capital that it may be unable to obtain, which could lead to a decline in its ability to grow the business.

 

   

Strike could face intense competition and competitive pressures from other companies worldwide in the industries in which it operates.

 

   

Strike may not be able to acquire and integrate new M&A opportunities as successfully as it has done in the past.

 

   

Strike’s operations are subject to operational hazards for which it may not be adequately insured.

 

   

Any failure by Strike to comply with applicable environmental laws and regulations could result in governmental authorities taking actions that adversely affect its operations and financial condition.

 

   

The challenges resulting from members of senior management of Strike not remaining with Strike following the Closing.

 

   

The risk that other key employees of Strike might not remain with Strike following the Closing.

 

   

The challenge of attracting and retaining senior management personnel.

 

   

The risk that the business combination might not be consummated in a timely manner or that the Closing might not occur despite the companies’ efforts, including by reason of a failure to obtain the approval of Strike’s stockholders.

 

   

The risk that the Strike Approval Period may not be sufficient time to complete the business combination.

 

   

The significant fees and expenses associated with completing the business combination and the other related Transactions and the substantial time and effort of management required to complete the business combination.

 

   

We expect to be a “controlled company” within the meaning of the rules of the NYSE following the completion of the Transactions and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

 

 

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After considering the foregoing potentially negative and potentially positive reasons, the Sentinel board of directors concluded, in its business judgment, that the potentially positive reasons relating to the business combination and the other related Transactions outweighed the potentially negative reasons. In connection with its deliberations, Sentinel’s board of directors did not consider the fairness of the consideration to be paid by it in the business combination to any person other than Strike.

 

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Certain Projected Financial Information

In connection with its consideration of the potential combination, Sentinel’s board of directors were provided with prospective financial information prepared by management of Strike (collectively, the “Projections”).

The Projections are included in this proxy statement solely to provide Sentinel’s stockholders access to information made available in connection with the Sentinel’s board of directors’ consideration of the proposed business combination. The Projections should not be viewed as public guidance. Furthermore, the Projections do not take into account any circumstances or events occurring after the dates on which the Projections were prepared, which was generally September 2018.

The Projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. The Projections have not been audited. Neither the independent registered public accounting firms of Strike or Sentinel nor any other independent accountants, have compiled, examined or performed any procedures with respect to the Projections contained herein, nor have they expressed any opinion or any other form of assurance on such information or their achievability, and the independent accounting firms of Sentinel and Strike assume no responsibility for, and disclaim any association with, the Projections.

In the view of Strike’s management, the Projections were prepared on a reasonable basis, reflected the best currently available estimates and judgments of Strike and presented, to the best of their knowledge and belief, the expected course of action and the expected future financial performance of Strike. While presented with numerical specificity, the Projections are forward-looking and reflect numerous estimates and assumptions with respect to future industry performance under various industry scenarios as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the businesses of Strike, all of which are difficult to predict and many of which are beyond the preparing parties’ control including, among other things, the matters described in the sections entitled “ Cautionary Note Regarding Forward-Looking Statements ” and “ Risk Factors .”

The Projections were prepared solely for internal use to assist Sentinel in its evaluation of Strike and the business combination. Strike has not warranted the accuracy, reliability, appropriateness or completeness of the projections to anyone, including Sentinel. Neither Strike’s management nor its representatives has made or makes any representations to any person regarding the ultimate performance of Strike relative to the Projections. The Projections are not fact. The Projections are not a guarantee of actual future performance. The future financial results of Strike may differ materially from those expressed in the Projections due to factors beyond Strike’s ability to control or predict.

The Projections are not included in this proxy statement in order to induce any Sentinel stockholders to vote in favor of any of the proposals at the special meeting.

Certain of the measures included in the Projections are non-GAAP financial measures, including Adjusted EBITDA, Further Adjusted EBITDA, Unlevered pre-tax free cash flow and free cash flow conversion. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Strike are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies. For example, solely for 2018E below, Further Adjusted EBITDA includes $17.9 million adjustment, based on Strike’s management’s estimates, related to a one-time commercial contract settlement that occurred in the third quarter of 2018 in anticipation of the business combination. Sentinel and Strike considered this settlement amount relevant in evaluating Strike’s financial results in connection with negotiating the business combination; however, Strike does not intend to present Further Adjusted EBITDA as part of its historical financial results following the consummation of the business combination.

 

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We encourage you to review the financial statements of Strike included in this proxy statement, as well as the financial information in the sections entitled “Selected Historical Financial Information of Strike” and “Unaudited Pro Forma Condensed Consolidated Combined Financial Information of Strike” in this proxy statement and to not rely on any single financial measure.

Neither Sentinel nor Strike or any of their respective affiliates intends to, and, except to the extent required by applicable law, each of them expressly disclaims any obligation to, update, revise or correct the Projections to reflect circumstances existing or arising after the date such Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are shown to be in error or any of the Projections otherwise would not be realized.

Revenue

 

In billions

   2018E      2019E      2020E  

IIS Segment

   $ 1.1      $ 1.1      $ 1.3  

Major Projects Segment

   $ 0.7      $ 0.8      $ 0.8  

Total

   $ 1.8      $ 1.9      $ 2.1  

Gross Profit

 

In millions (1)

   2018E     2019E     2020E  

IIS Segment

   $ 114     $ 143     $ 160  

Major Projects Segment

   $ 79     $ 97     $ 115  

Total

   $ 193     $ 240     $ 275  

Margin (%)

     11     13     13

 

(1)

Gross profit was calculated using historical private company audited financial statements of Strike and reclassifications of business development and insurance expenses to SG&A.

Other

 

In millions

   2018E     2019E     2020E  

Further Adjusted EBITDA and Adjusted EBITDA (1)

   $ 134     $ 155     $ 185  

Margin (%)

     8     8     9

Unlevered Pre-Tax Free Cash Flow (2)

   $ 117     $ 126     $ 155  

FCF conversion (3) (%)

     87     81     84

 

(1)

Further Adjusted EBITDA is shown for 2018E only and is defined as Adjusted EBITDA, plus a $17.9 million adjustment, based on Strike’s management’s estimates, related to a one-time commercial contract settlement that occurred in the third quarter of 2018 in anticipation of the business combination. Adjusted EBITDA is defined as net income before interest expense, income tax expense, depreciation and amortization, and also excludes (a) non-cash charges related to compensation expense recognized under stock option plans or otherwise accrued or realized from any deferred equity compensation plan or grants of equity appreciation or similar rights, equity options, restricted equity or other similar rights officers, directors, and employees, and (b) non-recurring fees, cash charges and other cash expenses made or incurred in connection with the contemplated business combination that are paid or otherwise accounted for.

(2)

Unlevered Pre-Tax Free Cash Flow is defined as Adjusted EBITDA — Net Capital Expenditures.

(3)

Free Cash Flow Conversion is defined as (Adjusted EBITDA — Net Capital Expenditures)/EBITDA.

 

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Certain Benefits of Sentinel’s Directors and Officers and Others in the Business Combination

In considering the recommendation of Sentinel’s board of directors in favor of the business combination, it should be noted that directors and officers of Sentinel have interests in the business combination that may be different from, or in addition to, the interests of Sentinel’s stockholders. These interests include:

 

   

the continuation of five directors, including two current independent directors, of Sentinel as members of the board of directors of StrikeCo;

 

   

the repayment of loans made by, and the reimbursement of out-of-pocket expenses incurred by, certain officers or directors or their affiliates in the aggregate amount of approximately $1,500,000 (which right to receive such repayment in the form of warrants was waived in connection with entering into the Voting and Support Agreement); and

 

   

the continued indemnification of former and current directors and officers of Sentinel and the continuation of directors’ and officers’ liability insurance after the business combination.

In addition, certain of Sentinel’s founders, directors and entities affiliated with certain of Sentinel’s directors and executive officers, own shares of Sentinel common stock that were issued prior to Sentinel’s initial public offering. Such purchasers have waived their right to receive distributions with respect to the shares of Sentinel Class B common stock held by them upon Sentinel’s liquidation which will occur if we are unable to complete an initial business combination by November 7, 2019. Accordingly, the shares of Sentinel Class B common stock will be worthless if Sentinel is forced to liquidate. In addition, in the event of Sentinel’s liquidation, Sentinel’s warrants, including the private placement warrants held by certain of Sentinel’s directors and executive officers, will expire worthless. These financial interests of the founders, officers and directors and entities affiliated with them may have influenced their decision to approve the business combination. You should consider these interests when evaluating the business combination and the recommendation of Sentinel’s board of directors to vote in favor of the business combination proposal and other proposals to be presented to the stockholders.

Satisfaction of 80% Test

After consideration of the factors identified and discussed in the section entitled “ The Business Combination Proposal — Sentinel’s Board of Directors’ Reasons for Approval of the Business Combination ,” Sentinel’s board of directors concluded that the business combination met all of the requirements disclosed in the prospectus for its initial public offering, including that the business of Strike had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Transaction Agreement.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of Sentinel’s board of directors in favor of approval of the business combination proposal, you should keep in mind that Sentinel’s initial stockholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to those of Sentinel stockholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

If we do not consummate an initial business combination by November 7, 2019, we will cease all operations except for the purpose of winding up, redeem all of the outstanding public shares for cash and, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under the Delaware law to provide for claims of creditors and the requirements of other applicable law. In such event, the 8,625,000 founder shares owned by our initial stockholders would be worthless because following the redemption of the public shares, we would likely have few, if any, net assets and because our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete an initial business combination by November 7, 2019. Our initial stockholders

 

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purchased the founder shares for an aggregate purchase price of $25,000. Upon the Closing, such founder shares will convert into 8,625,000 shares of StrikeCo Class A common stock, and such securities, if unrestricted and freely tradable would be valued at approximately $            , based on the closing price of $         per share of Class A common stock on Nasdaq on ,                 2019.

 

   

Simultaneously with the closing of the IPO, Sentinel consummated the sale of 5,933,333 private placement warrants at a price of $1.50 per warrant in a private placement to our initial stockholders. The private placement warrants are each exercisable commencing 30 days following the Closing for one share of Class A common stock at $11.50 per share. If we do not consummate an initial business combination by November 7, 2019, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by our initial stockholders will be worthless. The warrants held by our initial stockholders had an aggregate market value of $         based upon the closing price of $         per warrant on Nasdaq on                 , 2019.

 

   

Our Sponsor, officers and directors will lose their entire investment in us if we do not complete a business combination by November 7, 2019.

 

   

Andrew Gould, Krishna Shivram, Charles S. Leykum, Jon A. Marshall and Marc Zenner will continue to be directors of StrikeCo after the consummation of the business combination. As such, in the future they will receive any cash fees, stock options or stock awards that the StrikeCo board of directors determines to pay to its directors.

 

   

Our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if Sentinel fails to complete an initial business combination by November 7, 2019.

 

   

In order to protect the amounts held in the trust account, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the trust account. This liability will not apply with respect to any claims by a third-party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.

 

   

Following the consummation of the business combination, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to Sentinel and remain outstanding. As of the date of this proxy statement, we have no working capital loans outstanding. If we do not complete an initial business combination by November 7, 2019, we may use a portion of our working capital held outside the trust account to repay any working capital loans then outstanding, but no proceeds held in the trust account would be used to repay the working capital loans.

 

   

Following the consummation of the business combination, we will continue to indemnify our former and existing directors and officers and will maintain our directors’ and officers’ liability insurance.

Potential Purchases of Public Shares and/or Warrants

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Sentinel or its securities, the Sentinel initial stockholders, Strike and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Sentinel common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that (1) the proposals presented to stockholders for approval at the special meeting are approved and/or (2) that Sentinel satisfy the minimum cash condition. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been

 

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possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement, 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.

Entering into any such arrangements may have a depressive effect on shares of Sentinel common stock. 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 he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Sentinel 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 proposals to be put to the special meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the business combination. Where actual amounts are not known or knowable, the figures below represent Sentinel’s good faith estimate of such amounts assuming a closing as of the indicated date.

Sources and Uses of Proceeds

($ in 000s)

 

Sources

   No
Redemption
     Max
Redemption
 

Proceeds from Trust Account (1)

   $ 348,957      $ 18,900  

Private placement (2)

     132,000        132,000