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Inflection Point Acquisition Corp.

Inflection Point Acquisition Corp.

Mar 5, 2021 by Matt Cianci

PROPOSED BUSINESS COMBINATION: Intuitive Machines, LLC

ENTERPRISE VALUE: $815 million
ANTICIPATED SYMBOL: tbd

Inflection Point Acquisition Corp. proposes to combine with Intuitive Machines, LLC, a leading space exploration, infrastructure, and services company founded in 2013.

  • Intuitive Machines, LLC is a diversified space company focused on space exploration.
  • They supply space products and services to support sustained robotic and human exploration to the Moon, Mars, and beyond.
  • Their products and services are offered through four business units:
    • Lunar Access Services
    • Orbital Services
    • Lunar Data Services, and
    • Space Products and Infrastructure.

SUBSEQUENT EVENT – 2/23/23 – LINK

  • Polar Multi-Strategy Master Fund provided notice of its optional early termination of that certain Forward Purchase Agreement with respect to the full 1.25 million shares of Class A common stock
    • In connection with such termination in full by Polar, Polar will pay Intuitive the Redemption Price for the Terminated Shares.

SUBSEQUENT EVENT – 2/9/23 – LINK

  • Inflection Point and Intuitive Machines entered into separate Forward Purchase Agreements with Polar Multi-Strategy Master Fund and The HGC Fund LP.
    • The Sellers (Polar and HGC) have separately agreed to hold a maximum of 1,250,000 Class A ordinary shares of Inflection Point in connection with the closing of the Business Combination.
    • The Sellers may reverse their election to redeem their Inflection Point Shares in connection with the Business Combination or to purchase the shares through a broker in the open market, such that they own up to 1,250,000 shares as of the closing.
  • The Sellers may terminate their Forward Purchase Agreement in whole or in part with respect to any number of shares by giving notice on any day the Nasdaq is open for trading following the date of the Closing.
    • The Counterparties (Inflection Point and Intuitive Machines) will pay an amount equal to the difference between the Termination Price and the Initial Price.
    • The Counterparties will have the right to purchase the Terminated Shares at the Termination Price.
    • If the Terminated Shares are not sold or purchased by the Counterparties, the Forward Purchase Agreements will terminate, and the Prepayment Amount will be refunded to the Sellers, paid directly out of Inflection Point’s trust account after the Closing or disbursement of assets.
    • The Prepayment Amount is equal to the Redemption Price per share plus $0.30 per share multiplied by the number of shares specified in the Forward Purchase Agreement.
  • The Forward Purchase Agreement matures one month after the Closing, and the Counterparties must pay the Maturity Consideration to the Seller.
  • The Forward Purchase Agreement may be terminated if:
    1. The Business Combination is not consummated.
    2. The Business Combination Agreement is terminated.
    3. It becomes unlawful for the Seller to perform obligations.
    4. A Material Adverse Change of the Counterparties occurs.
  • The seller has agreed to waive redemption rights but may exercise them if it becomes unlawful or in case of a Material Adverse Change of the Counterparties.

SUBSEQUENT EVENT – 12/2/22 – LINK

  • In light of the execution of the Securities Purchase Agreement by and between the Company, Intuitive Machines, LLC, Kingstown 1740 Fund, L.P. and certain other investors, dated as of September 16, 2022, as previously disclosed, the Company does not intend to ask the Purchaser to purchase, and the Purchaser does not intend to purchase, any shares under the Forward Purchase Agreement.
    • The FPA was initially signed at the IPO and was terminated today.

TRANSACTION

  • Pursuant to the transaction, Inflection Point, which currently holds approximately $330 million of cash in trust, including $29 million of committed capital from an affiliate of its sponsor, will combine with Intuitive Machines.
  • The pro forma implied enterprise value of the combined company is approximately $815 million.
  • Intuitive Machines’ existing equity security holders are expected to hold approximately 62% of the issued and outstanding shares of common stock of the combined company immediately following the consummation of the transaction, assuming no redemptions by Inflection Point’s existing shareholders.

Inflection Transaction Overview

PIPE

  • Inflection Point entered into a Securities Purchase Agreement with each purchaser identified on the signature pages thereto.
  • The Series A Investors have agreed to purchase approximately $26.0 million (the “Series A Investment”) of Series A Preferred Stock and Preferred Investor Warrants in the Series A Investment.
  • Inflection Point will issue and sell to each Series A Investor:
    • (i) shares of Preferred Stock which will be convertible into shares of New Intuitive Machines Class A Common Stock and
    • (ii) Preferred Investor Warrants which will be exercisable to purchase Warrant Shares in accordance with the terms of the Preferred Investor Warrants.

BACKSTOP AGREEMENT

  • Inflection Point and Intuitive Machines entered into a non-redemption agreement (the “Non-Redemption Agreement”) with Kingstown 1740 Fund L.P., an affiliate of the Sponsor, pursuant to which Kingstown agreed not to redeem the 2,900,000 Cayman Class A Shares held by it.

CANTOR SHARE PURCHASE AGREEMENT

  • Inflection Point entered into a Common Stock Purchase Agreement (the “Cantor Purchase Agreement”) with CF Principal Investments LLC (the “Investor”) relating to an equity facility (the “Equity Facility”).
  • New Intuitive Machines will have the right, but not the obligation, from time to time at its sole discretion, until the first day of the month following the 18-month period from and after the initial satisfaction of the conditions to the Investor’s obligation to purchase shares of New Intuitive Machines Class A Common Stock, to direct the Investor to purchase up to the lesser of:
    • (i) $50 million of newly issued New Intuitive Machines Class A Common Stock and
    • (ii) the Exchange Cap, by delivering written notice to the Investor prior to the Commencement of trading on any trading day.
    • The purchase price of the shares of New Intuitive Machines Class A Common Stock that New Intuitive Machines elects to sell to the Investor will be 97.5% of the volume weighted average price of the shares of New Intuitive Machines Class A Common Stock during the applicable purchase date.
  • To induce the Investor to enter into the Cantor Purchase Agreement, Inflection Point agreed that, after the Closing Date, New Intuitive Machines will deliver to the Investor a number of shares of New Intuitive Machines Class A Common Stock equal to the quotient obtained by dividing
    • (i) $1,000,000 and
    • (ii) the closing price of the New Intuitive Machines Class A Common Stock on an agreed date.
  • The entire amount of the Commitment Shares shall be fully earned by the Investor and shall be non-refundable as of the Closing, regardless of whether any purchases are made or settled.
  • To the extent, after the resale of all Commitment Shares by the Investor, the net proceeds of the resale of such Commitment Shares by the Investor is less than $1,000,000, New Intuitive Machines will pay the Investor the difference between $1,000,000 and the net proceeds of the resale of the Commitment Shares received by the Investor in cash.
  • In no event may New Intuitive Machines issue to the Investor under the Cantor Purchase Agreement more than 19.99% of the voting power or number of shares of New Intuitive Machines Class A Common Stock outstanding, calculated in accordance with applicable Nasdaq rules (the “Exchange Cap”), unless
    • (i) New Intuitive Machines obtains stockholder approval to issue shares of New Intuitive Machines Class A Common Stock in excess of the Exchange Cap
    • (ii) the average purchase price per share for all of the shares of New Intuitive Machines Class A Common Stock sold to the Investor under the Cantor Purchase Agreement equals or exceeds the lower of
      • (a) the Nasdaq official closing price for the ordinary shares of the Company on the date of the Cantor Purchase Agreement and
      • (b) the arithmetic average of the five Nasdaq official closing prices for the Common Stock during the five-trading day period ending on the date of the Cantor Purchase Agreement.

LOCK-UP

Sponsor Lock-Up Agreement:

  • At the Closing, the Sponsor and New Intuitive Machines will enter into a Lock-Up Agreement, pursuant to which the Sponsor and its permitted assigns will agree not to sell shares held by them prior to the date that is six months after the Closing Date.

Intuitive Machines Lock-Up Agreement:

  • At the Closing, New Intuitive Machines, certain equity holders of Intuitive Machines will enter into a Lock-Up Agreement, pursuant to which the Lock-Up Holders will agree not to sell shares held by them prior to the date that is six months after the Closing.

EARNOUT

Member Earn-Out:

  • As part of the Recapitalization, the applicable Members will be entitled to receive, pro rata, up to 10,000,000 Earn Out Units that will be deposited into escrow at the Closing and will be earned, released, and delivered upon satisfaction of the following milestones:
    • (i) 2,500,000 Earn Out Units will vest if, during the Earn-Out Period, Intuitive Machines is awarded the OMES III Contract by NASA (“Triggering Event I”)
    • (ii) 5,000,000 Earn Out Units will vest if, within the Earn Out Period, Triggering Event I occurs and the volume weighted average closing sale price of New Intuitive Machines Class A Common Stock equals or exceeds $15.00 per share (“Triggering Event II-A”)
    • (iii) 7,500,000 Earn Out Units will vest if, within the Earn Out Period, Triggering Event I has not occurred and the volume weighted average closing sale price of New Intuitive Machines Class A Common Stock equals or exceeds $15.00 per share (“Triggering Event II-B”), and
    • (iv) 2,500,000 Earn Out Units will vest if, within the Earn Out Period, the volume weighted average closing sale price of New Intuitive Machines Class A Common Stock equals or exceeds $17.50 per share (“Triggering Event III”), provided, that Triggering Event II-A and Triggering Event II-B may not both be achieved.
  • If a Change of Control occurs during the Earn Out Period that results in the holders of New Intuitive Machines Class A Common Stock receiving a per share price greater than or equal to $15.00 or $17.50, respectively, then immediately prior to the consummation of such Change of Control, to the extent not previously paid, then Triggering Event II-A or Triggering Event II-B will be deemed to have occurred, as applicable, and the Earn-Out Units shall vest. Upon the vesting of any Earn-Out Units, each of the applicable Members will be issued an equal number of shares of New Intuitive Machines Class C Common Stock, in exchange for the payment to New Intuitive Machines of adequate consideration (in each case, not to exceed a per-share price equal to the par value per share of such New Intuitive Machines Class C Common Stock).
  • The “Earn-Out Period” means:
    • (i) with respect to Triggering Event I, the time period beginning on the Signing Date and ending on December 31, 2023, and
    • (ii) with respect to Triggering Event II-A, Triggering Event II-B and Triggering Event III, the time period beginning on the date that is 150 days following the Closing Date and ending on the date that is the 5 year anniversary of the Closing Date.

Stock Escrow and Earn Out Agreement:

  • If immediately prior to the Closing
    • (i) The deferred underwriting commission paid to the underwriters of Inflection Point’s initial public offering at the Closing is greater than $5,770,625, then the Sponsor will deposit 500,000 shares of New Intuitive Machines Class A Common Stock into escrow (the “Sponsor Earn Out Shares”).
  • Pursuant to the Escrow and Earn Out Agreement, the Sponsor Earn Out Shares will vest and New Intuitive Machines will instruct the Escrow Agent to release the Sponsor Earn Out Shares if during the time period beginning on the date that is 150 days following the Closing Date and ending on the date that is the 5 year anniversary of the Closing Date,
    • (i) the Common Share Price of New Intuitive Machines Class A Common Stock equals or exceeds $15.00 per share (the “Sponsor Earn Out Trigger”) or
    • (ii) prior to the occurrence of the Sponsor Earn Out Trigger, there is a Change of Control that will result in the holders of New Intuitive Machines Class A Common Stock receiving a per share price equal to or in excess of $15.00.

NOTABLE CONDITIONS TO CLOSING

  • The obligations of Inflection Point and Intuitive Machines to consummate the Business Combination are subject to:
    • Inflection Point having at least $5,000,001 of net tangible assets.
    • Kingstown 1740 Fund L.P. not exercising redemption rights with respect to its 2,900,000 Cayman Class A Shares.

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated by either Inflection Point or Intuitive Machines if the Closing has not occurred on or before September 16, 2023.
  • Upon termination of the Merger Agreement, Intuitive Machines will reimburse Inflection Point for any amounts due and owing to the Sponsor, up to $1,500,000.

ADVISORS

  • J.P. Morgan Securities LLC is serving as the exclusive financial advisor to Intuitive Machines.
  • Cantor Fitzgerald & Co. is serving as exclusive financial advisor and capital markets advisor to Inflection Point.
  • Cantor Fitzgerald & Co. is also serving as exclusive placement agent for the PIPE financing.
  • Latham & Watkins LLP is serving as legal advisor to Intuitive Machines
  • White & Case LLP is serving as legal advisor to Inflection Point.
  • DLA Piper LLP (US) is serving as legal counsel to Cantor Fitzgerald & Co.

MANAGEMENT & BOARD

Executive Officers

Michael Blitzer, 43
Co-Chief Executive Officer and Director

Mr. Blitzer is the founder and co-CIO of Kingstown Capital Management, which he founded in 2006 with less than $5 million of capital and grew to a multi-billion asset manager with some of the world’s largest endowments and foundations as clients. Over 15 years, Kingstown has invested in public and private equities, SPACs, PIPEs, and derivatives. At Kingstown, Mr. Blitzer oversaw and participated in nearly all of the firm’s investment decisions including countless public and private investments in the consumer and technology industries. Mr. Blitzer brings an in-depth understanding of public markets and has invested in a variety of corporate transactions such as spin-offs, rights offerings, public offerings, privatizations and mergers & acquisitions. He was also a public company director of Signature Group Holdings after its exit from bankruptcy in 2011, where he also sat on the audit committee, and was on the board of directors of the European mutual fund TREND AD. Mr. Blitzer began his Wall Street career at J.P. Morgan Securities in 1999 advising companies globally in private debt and equity capital raises followed by work at the investment fund Gotham Asset Management, which was founded by the author and investor Joel Greenblatt. Mr. Blitzer has taught courses in Investing at Columbia Business School for five years in the 2010s. He holds an MBA from Columbia Business School and a BS from Cornell University where he received the Cornell Tradition Fellowship. Mr. Blitzer currently sits on the board of the Executive Advisory Board of the Heilbrunn Center for Graham & Dodd Investing at Columbia Business School and is a trustee of Greens Farms Academy in Westport, CT where he is also Treasurer and Chair of the Investment Committee.

Guy Shanon, 47
Co-Chief Executive Officer and Director

He is co-CIO of Kingstown Capital Management, where he co-manages the firm’s portfolio and directs research efforts related to Kingstown’s special situation investment strategy. Over the last 15 years at Kingstown Mr. Shanon has invested in the debt and equity of a wide variety of public and private consumer-oriented businesses. He was the founder and CEO of Cityfeet.com, a venture-backed internet company that was sold to Loopnet.com. He also held positions in the Financial Sponsors Group at Merrill Lynch and Jones Lang LaSalle earlier in his career. He earned an MBA from Columbia Business School, a JD from George Washington University, and an undergraduate degree from the University of Michigan. Mr. Shanon is a CFA charter holder and a former adjunct professor at Columbia Business School where he taught Security Analysis.

Brian Pitz, 48
Chief Financial Officer and Director

Mr. Pitz is Founder & CEO of Amagansett Technology Capital Partners LLC, a deep relationship and data-driven boutique advisor focused on public and private technology companies at all stages. Mr. Pitz processes all securities transactions through Four Points Capital Partners LLC, a registered broker dealer and member of FINRA and SIPC. Previously, Mr. Pitz was Managing Director and Head of Global Internet & Interactive Entertainment Investment Banking at Deutsche Bank, where he oversaw significant IPO, follow-on, convertible, M&A, and advisory deal volume. Before Deutsche Bank, Mr. Pitz spent nearly 20 years as a top Institutional Investor ranked senior equity research analyst covering the Internet, Interactive Entertainment, and related software companies at Jefferies & Co., UBS Investment Bank, Banc of America Securities LLC, and nearly a decade at Morgan Stanley as part of their top-ranked tech franchise. Mr. Pitz commenced his professional career as a consultant in the Business Consulting practice of Arthur Andersen LLP in New York.

Board of Directors

Paula Sutter, 53
Executive Chairwoman

Ms. Sutter began her career over 25 years go at the Donna Karan Company serving in a variety of roles. She currently serves on the board of ThredUp Inc. (“ThredUp”), a high-growth re-commerce platform backed by Goldman Sachs and Park West. Ms. Sutter served as Global President of Diane von Furstenberg (“DvF”) from 1999 to 2013. She joined DvF with the task of relaunching and rebuilding the brand. Ms. Sutter led DvF’s transformative growth and developed a vast range of accessories and home furnishings, spearheading the company’s evolution into a true lifestyle omnichannel brand. During her tenure, she built the business from its commercial launch to an iconic international brand, expanding its global footprint of freestanding DvF stores, launching DvF.com as well as establishing a substantial presence in department stores worldwide. From 2014 to 2017, Ms. Sutter was Operating Partner at TSG Consumer Partners and CEO of TSG Fashion (collectively, “TSG”). As group CEO, Ms. Sutter provided hands-on strategic planning as well as operational and management strategy to her portfolio, which included Revolve Group, Inc. (NYSE: RVLV) (“Revolve”), Forward by Elyse Walker, Alexis Bittar, Backcountry, and Paige Denim. During her tenure at TSG, Ms. Sutter was deeply involved in the management and sales processes for Paige Denim and Alexis Bittar. Ms. Sutter was also instrumental in driving topline growth and margin expansion at Revolve which resulted in a successful IPO of the business in 2019. Additionally, Ms. Sutter helped source and diligence new investment opportunities in the broader apparel and retail space. After leaving TSG Consumer Partners, Ms. Sutter founded Paula Sutter LLC, a brand advisory consulting firm focused on strategic planning, top line growth initiatives and product development and expansion. Beginning in 2018, she worked closely with a number of private PE- and VC-backed companies, including Alexander Wang, Mackage and MeUndies Inc. in both advisory and board of director roles, as well as advising investment firms including Lee Equity Interluxe and Permira. Ms. Sutter is also a Series A investor in Allbirds, Inc. Ms. Sutter is a graduate of Villanova University, and currently resides in New York.

Nicholas Shekerdemian, 26
Director

Mr. Shekerdemian is the Founding Partner of The Venture Collective, a venture capital firm focused on the intersection between transformational technology and deep positive impact. The Venture Collective is backed by a series of exited founders, hedge fund managers and Fortune 500 executives and has invested in the likes of Axiom Space, Infogrid, VitroLabs, and HelixNano. Mr. Shekerdemian was previously Founder and CEO (now Chairman) of a venture backed business called Headstart. At Headstart, he received backing from investors including Peter Thiel, Y Combinator, FoundersX Ventures, Hack VC, Plug and Play, and the founders of Zynga and Unity. Mr. Shekerdemian is an advisor to the United Nations on education through the United National Technology Innovation Lab (UNTIL). Personally, Mr. Shekerdemian is an active angel investor with 30+ personal investments spanning consumer, enterprise software and biotech.

Erin Clift, 49 [Appointed 9/21/22]
Director

Ms. Clift is a business and marketing executive with more than 25 years of experience building global consumer brands, leading product, consumer and business marketing, global communications, revenue strategies, business development and partners. Ms. Clift has expertise in building passion brands, winning teams and successful businesses at companies going through rapid growth or radical evolution. Since October 2021, Ms. Clift has served as Chief Marketing Officer of CrossFit, LLC, one of the most recognizable global fitness brands with more than 13,000 affiliated gyms in 155 countries and host to the world’s largest athletic competition. In her role, Ms. Clift is responsible for evolving CrossFit’s brand and business strategy to meet the changing needs of today’s fitness consumer. From December 2017 to September 2021, Ms. Clift served as the Chief Marketing Officer at Waze, where she was responsible for the world’s largest community based navigation platform fueled by over 150 million active Wazers in more than 185 countries. In that role, she had overall responsibility for the Waze brand, partnerships and marketing and external communications worldwide. Before joining Waze, Ms. Clift served as Chief Marketing Officer at Kik, a mobile messaging platform, from February 2016 to November 2017. During her tenure, she was instrumental in the creation of Kin, a cryptocurrency to serve as the foundation of a decentralized ecosystem of digital services. Prior to Kik, Ms. Clift was the Vice President, Global Marketing & Partnerships at Spotify from December 2011 to January 2016, where she was responsible for consumer and business marketing, revenue expansion and strategy, brand partnerships, and agency programs. Ms. Clift came to Spotify from AOL, where she was SVP, Global Sales Development responsible for advertising revenue growth and creating their Branded Entertainment platform. Before joining AOL, she held various leadership positions for Google including Director of North American Agency Development where she was responsible for Google’s business strategy and overall revenue management from advertising agencies. Prior to Google, Ms. Clift spent 10 years working in various marketing and media consulting roles, including Director of Marketing at Oprah.com. She was inducted to the AAF Hall of Achievements in 2012 and was recently named as one of Forbes top 50 game changing marketers for 2019.

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ByMatt Cianci